Automakers facing parts shortage from recent recession

Reports are surfacing which suggest U.S. automakers may face significant parts shortages brought on by the effects of the recent recession if sales continue at their currently brisk pace.

“A lot of them are under pressure because they reduced their staff and temporarily mothballed some of their factories,” according to Jim Gillette, an analyst with IHS Automotive. “A number of them are struggling to keep up at the moment.”

During the Lehman Shock, over 57 makers of original auto parts closed their doors or downsized considerably, resulting in the loss of over 100,000 jobs, according to an Associated Press report just yesterday.

The parts shortage will be most keenly felt if automakers begin to outpace the sales predictions for this year, but other events are conspiring to make the problem loom larger in the immediate future.

In a related Associated Press article April 16, a March 31 explosion in the German Plastics company Evonik was reported, that killed two workers and interrupted the manufacture of a product known as CDT or PA12, used to make components like fuel and brake lines. Shortages of this essential plastic resin may begin to show up as soon as the next few weeks.

“There’s a genuine concern if that happens, we’re going to certainly have some spot outages,” J. Scot Sharland, executive director of the Automotive Industry Action Group told Tom Krisher of the AP. “There’s still a significant amount of pent-up demand in the market.”

Such problems have already arisen for GM, who has slowed production of the Chevrolet Equinox SUV due to a parts shortage. The specific part was not identified but reportedly the automaker is telling dealers to reduce their expectations for four-cylinder Equinoxes, even thought the automaker may have found a way around the problem.

In the bigger picture, GM is working with parts suppliers to respond to rising demand. The company is even projecting the results of further sales increases and trying to identify auto parts suppliers at risk in this scenario, according to spokeswoman Kelly Cusinato.

Still in a relatively free market, obstacles to progress create opportunity, showing how a boom in auto sales produces ripples throughout the economy. The true meaning of these reports is new and existing companies are going to be hiring new workers in the very near future.

Despite the apparent auto parts shortages, it would appear that rumors of the death of American manufacturing have been greatly exaggerated. Meanwhile the volatility of German plastics is still a question awaiting an answer. It may take three months to get Evonik back up and running.