By on January 31, 2011

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?

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10 Comments on “Car Industry Picks Up Steam, Runs Out Of Parts...”

  • avatar

    they should be counting their blessings, whenever the demand outstrip the supply one can Raise the price. When u have too many supplies u suck up to buyers, try to sign up on anybody with a pulse!
    With a limited stock one can loaded up all the bells & whistles, all the stoopid nonsense options under the sun, u can politely tell your customers a strip model perhaps will be build just before the year end, or u can buy our fully loaded models for slightly more mulla.
    only couple of yrs ago, dealers have high inventory numbers, that transform to zero% leases , cash backs,  employees discounts, pet owners discounts etc.

  • avatar

    the good news will be wont have to celebrate any of the new cars’ 1st birthday at the stealership anymore.

  • avatar

    This is the downside to Just In Time manufacturing. JIT is only as efficient as its supply chain.

  • avatar
    Mark MacInnis

    So glad that after 17 years, I no longer work in the automotive supply industry, which is a morally bankrupt and insane industry in which to work….

  • avatar

    Remember in all the Pro/Anti-bailout debates how we went back and forth on suppliers and their ability to deliver (or not) should one or more of the major OEMs go down?  This should lend some credence to the “Pro” side of the debate—especially the idea that Toyota et al weren’t just being facetious when they were in support of bailling out GM and Chrysler
    If we’d lost an OEM or two, the margins that suppliers run at would have seen a number of them go down, which would have in turn made things very uncomfortable for Ford and the transplants.

  • avatar

    It seems clear that suppliers can’t/won’t ramp up capacity unless the OEMs will make long-term purchase committments.

  • avatar

    ******This is the downside to Just In Time manufacturing******

    I agree, after 23 years of ordering German auto parts for garages
    I found this type of inventory control does not work to maintain
    a fully stocked warehouse. You have no overstock to fall back on
    when parts do not arrive on a timely manner due to various reasons.

  • avatar
    Carlson Fan

    “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. 

    • 0 avatar

      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.

  • avatar

    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.

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