The 31 March blast at Evonik’s plant at Marl, Germany has again thrust the fragility of the automotive supply chain firmly into the spotlight.
The blast will cause a shortage of Cyclododecatriene – often abbreviated to CDT – a key element of a resin called PA-12. Global capacity of CDT is limited and Evonik not only produces its own CDT, but is also a key supplier to other manufacturers of PA-12.
As reported by Automotive World, Bloomberg first carried the story, citing a letter written by William Kozyra, the Chairman of TI Automotive, who told customers: “The shortage is real and immediate. The possibility of production interruptions at some of your facilities in the next few weeks is high.”
Bloomberg reports thatthis was sent out dated 12 April. The explosion, he said, resulted in a “complete loss” of CDT manufacturing. Evonik is one of just four PA-12 manufacturers, with the others reportedly being Arkema, EMS and UBE.
It’s difficult to assess the fallout from this, not least because a supply constraint of this magnitude is rare, if not unique.
How bad is this?
Conversations with a number of different sources indicate that, in the short term, there is a potential reduction in CDT availability for PA-12 production of somewhere in the order of 45-55%. By any standard, this is a very significant supply constraint.
Exacerbating the situation yet further is the fact that PA-12 is a very simple product, and is used in the fabrication of fairly prosaic componentry such as air lines and fuel lines. As a result, it is not a component required by just a single part of the automotive industry, but of all of the automotive industry, along with construction equipment (CE), agriculture and industrial users too. And, seemingly overnight, 50% of it is missing and Evonik has said it will take at least three months for production to come back on stream at Marl.
It’s difficult to assess the fallout from this, not least because a supply constraint of this magnitude is rare, if not unique. In the truck segment, the last significant supply hiatus involved a valve fitted to some Bendix products. This impacted some models manufactured by some OEMs in one market – North America – and was amenable to a ready fix, but it was enough to skew the North American class 8 market in a spectacular fashion. There is an ongoing issue with castings capacity, which is also causing problems. Some months previously, there was a problem with catalyst supplies that again impacted the North American truck market, but, once again, this was a localised and temporary constraint issue that was soon resolved.
It could prove to be not a mere temporary hiatus, but a structural supply diminution that lasts into the medium term. By any analysis, that is bad.
But the apparent 50% reduction in supply of a component compound fundamental not just to the production of cars and trucks, but also of CE, agricultural and industrial equipment must be possessed, on the most basic of read-throughs, of an impact many orders of magnitude greater. It could prove to be not a mere temporary hiatus, but a structural supply diminution that lasts into the medium term. By any analysis, that is bad.
But how bad? That’s not yet known. It’s not yet a disaster, but keep the hyperbole close to hand.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Oliver Dixon is Editor, World Truck Analysis
The AutomotiveWorld.com Expert Opinion column is open to automotive industry decision makers and influencers. If you would like to contribute an Expert Opinion piece, please contact editorial@automotiveworld.com
