DETROIT (AP) — Executives from four auto parts companies said Tuesday that they don't expect widespread fallout from a shortage of a key ingredient in plastic resin following a factory explosion in Germany.
Officials with Delphi Automotive, Illinois Tool Works, AK Steel and Parker Hannifin said during conference calls to discuss their companies' earnings that a shortage of PA-12 shouldn't disrupt their operations.
Automakers and parts companies have been scrambling to find substitutes since a factory in Germany that makes much of the world's supply of the ingredient suspended production after it exploded in March.
The resin is used in hundreds of parts. It's most critical in fuel and brake lines because it can carry gasoline and other fluids without deteriorating.
Companies that make fuel lines, brake lines and connectors have been worried they will run out of PA-12 and they may have to stop shipments to automakers and larger parts suppliers. One key fuel line maker, TI Automotive, warned last week that the auto production interruptions are likely in the next few weeks. TI and a trade group of suppliers held an industry-wide meeting last week to look at the remaining supply of PA-12 and encourage faster testing of alternatives.
But Rodney O'Neal, CEO of Delphi, one of the largest parts suppliers, said he sees little impact on Delphi or auto production.
"I don't see this as a crisis in terms of tremendous downtime at all for anyone around the world," O'Neal said. He said the auto industry is addressing the problem quickly and with flexibility.
Delphi, a Troy, Michigan, supplier of audio systems, fuel pumps, wiring connectors and other items, uses PA-12 in a small number of parts and has lined up substitutes, O'Neal said.
"We believe there's enough inventory in the channel right now to handle this," John Brooklier, vice president of investor relations for Illinois Tool Works, told investors on a separate call Tuesday. He said the Glenview, Illinois, maker of metal and plastic parts such as door handles uses little PA-12 but is watching the impact on auto companies.
At AK Steel, CEO James Wainscott said customers are telling the company that any shortage is likely to be a challenge mostly for European automakers in the U.S.
The West Chester, Ohio, company, he said, was concerned about the problem until the last day or so.
"There may be some trickle-lower effect here, but we don't look for that to be a great concern," Wainscott told investors.
Automakers say the issue hasn't interrupted production thus far. The shortage was caused by a March 31 explosion at Evonik Industries' plant. The factory supplied at least a quarter of the world's PA-12, and about 70 percent of a chemical that's used by other companies to make resin. Evonik has said the plant will be out of operation for at least three months.
At Parker Hannifin, a maker of valves, filters, pumps and hoses, CEO Donald Washkewicz said his company isn't in the fuel line business but does use PA-12, also known as nylon-12, in air brake tubing and other parts. The Cleveland-based company, he said, has been using alternate materials.
"We're able to keep our customers out of trouble," Washkewicz said.
But Washkewicz said the shortage could drive up the cost of raw materials used to make plastic parts.
Few plastics can do what PA-12 does. The chemical doesn't absorb as much moisture as other plastics and will stand up to carrying gasoline, brake fluid and other hydrocarbon liquids. Sadhan Jana, a professor of polymer engineering at the University of Akron in Ohio, said he knows of no other plastic as as durable as PA-12.
Any substitute would have to go through rigorous testing to make sure it would work for a specific automotive part, Jana says. Those tests could take months.
Automakers and suppliers are close to agreeing on a fast-track process for testing replacements.
The Automotive Industry Action Group, a nonprofit trade group, said Monday that General Motors Co., Ford Motor Co., Chrysler Group, Honda Motor Co., Hyundai-Kia, Volkswagen AG and their suppliers, are expected to finalize new testing standards next week. The agreement would reduce the interim approval process for new materials to three weeks from the current eight weeks or longer.
AIAG said the group feels confident it can shorten the testing time because alternative resins are already well known and previous testing has accurately predicted real-world performance.
Executives from four auto parts companies said Tuesday that they don't expect widespread fallout from a shortage of a key ingredient in plastic resin following a factory explosion in Germany.