Car Industry Picks Up Steam, Runs Out Of Parts

Bertel Schmitt
by Bertel Schmitt
car industry picks up steam runs out of parts

Today, none of the 50,000 workers employed at Volkswagen’s Wolfsburg plant have to punch in at work. The factory is waiting for parts. You may think that is their good or tough luck.

Not so, says Dan Sharkey, a Detroit lawyer who counts many auto suppliers as his clients. The shortages affect us all. Parts shortages are “”beyond a trend; it’s an epidemic,” Sharkey told Automotive News [sub]. These shortages are stopping assembly lines around the world, just when demand is beginning to pick up.

Here is a current snapshot, taken by Automotive News:

  • Chrysler Group expects to idle its Windsor, Ontario, minivan plant for at least a week because of missing parts.
  • Ford is reopening the Detroit plant that builds the F-series pickup after a weeklong shutdown. Reason: Missing parts for V-6 engines.
  • On Friday, Ford closed its Kentucky Truck plant because of a parts shortage.

From Germany, Bloomberg reports that BMW and Daimler are “left with little wiggle room,” although no plant closures are planned –yet.

Wherever you turn, the situation is the same: Carmageddon has wiped out many suppliers. Surviving “suppliers who cut capacity to the bone during the downturn either can’t ramp up quickly enough or are gun-shy about adding equipment and workers amid the fragile recovery,” Automotive News says.

Electronic parts are especially tight. For many electronic component manufacturers, the autoparts industry is a small part of their business, said Lars Holmqvist, CEO of CLEPA, the European auto supplier association. “When the crisis came in 2008-09, they didn’t believe in the auto industry any more and closed some plants,” Holmqvist said. “They are not keen to jump back in.”

Suppliers who are keen to jump back in face another shortage: Money. “The banks are still very cold” says Holmqvist. In a way, the industry is becoming a victim of its own hype.

“We have started the decline of the combustion engine and that will kill companies,” Holmqvist told Bloomberg. The banks don’t want to invest into what is perceived as aging technologies.

Would you have expected that you have to wait in line for your F-150, because the headlines say that electric cars are the future?

Join the conversation
3 of 10 comments
  • Carlson Fan Carlson Fan on Jan 31, 2011

    "This is the downside to Just In Time manufacturing. JIT is only as efficient as its supply chain." I'd blame this on poor/lack of forecasting and/or plannning. With JIT you need the basics in place fot it to work(BOM & Inventory Accuracy for example). In otherwords you need to learn to walk before you can run.

    • Steve65 Steve65 on Jan 31, 2011

      Oh come on. You obviously have some experience in the game, and you know that your forecast is only as good as your suppliers, carriers, and customs broker can manage. I have both been told "oh yeah, it's on the truck" (when it's still stuck in Customs) and had to tell customers the same thing. And then you have your Belgian factory manager who routes his stuff to Dallas instead of Miami (where the import broker is) because hey Dallas and El Paso are both in Texas, so it'll find it's way to the warehouse somehow.

  • Dimwit Dimwit on Jan 31, 2011

    Not to mention that the weather all over has been quite a pip this winter. I don't see this as being a long term problem, just an aggravation.

  • Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
  • Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
  • William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
  • Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
  • Marvin Im a current owner of a 2012 Golf R 2 Door with 5 grand on the odometer . Fun car to drive ! It's my summer cruiser. 2006 GLI with 33,000 . The R can be money pit if service by the dealership. For both cars I deal with Foreign car specialist , non union shop but they know their stuff !!! From what I gather the newer R's 22,23' too many electronic controls on the screen, plus the 12 is the last of the of the trouble free ones and fun to drive no on screen electronics Maze !