Cooperation is best solution to material shortages

David Sedgwick is a Senior Writer for Automotive NewsDavid Sedgwick is a Senior Writer for Automotive News
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Increasingly, automakers are finding themselves in a Darwinian competition for raw materials with other industries.

Over the past couple of years, automakers and suppliers have been whipsawed by spot shortages caused in part by fluctuating demand in other industries.

A good example is nylon 12, which is used to make fuel and brake lines. A decade ago, demand for nylon 12 was modest. But the photovoltaic industry started using nylon 12 and the material's sales soared.

Although a factory explosion last month in Germany triggered the nylon 12 crisis, rising demand from other industries ate up spare supplies of the stuff.

"The real demand increases were nonautomotive," said J. Scot Sharland, executive director of the Automotive Industry Action Group. "I'm not sure how you can avoid that. And it's hard to figure out what the next disruption will be."

Suppliers can't afford to build huge warehouses to store raw materials and avoid shortages caused by floods, industrial accidents, earthquakes or whatever.

But automakers can make it easier for suppliers to switch to new raw materials. That's what happened last week, when AIAG's members standardized their validation procedures. With the changes, a part produced with a substitute material can be tested more quickly and approved for the assembly line.

Automakers are struggling to secure their share of the world's resources. Cooperation with suppliers may be the only route to salvation.

You can reach David Sedgwick at dsedgwick@crain.com.

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