Flaw in the plastic supply chain

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The fire at Evonik’s CDT plant in Germany on 31st March might have escaped your notice, but it is causing significant problems for supply chains in the automotive industry.

CDT, or cyclododecatriene, is a starting material in plastics manufacturing  – notably  polyamide 12 (PA12) which is widely used in the motor industry. And the Evonik plant, although not the only producer, is one of the largest producers in the world.

In a statement, Evonik said: “We are confident that we will be able to provide alternative solutions in the form of substitutes such as Vestamid Terra. It is possible to modify these bio-based polymers as required for many of the relevant applications to achieve much the same material attributes as PA12.”

However, this does not appear to have calmed fears among the motor manufacturers, which held what the “Financial Times” described last week as “an unusual summit meeting in Detroit” to come up with a response to the potential shortfall.

This event is another example of the risks of supply chains becoming too dependent on single sources of supply and the problems that can arise when the unthinkable happens.

Motor manufacturers were among the companies that were affected by the Japanese Tsunami, and although computer manufacturers were particularly affected by the floods in Thailand, the effects of that event were also felt in the motor industry.

The effects of these events are being exacerbated at the moment because the relatively weak state of consumer markets means that manufacturers are trying to minimise inventories.

The conundrum is: how do you improve the resilience of the supply chain without a ruinous increase in inventory? I suspect the lights will be burning late into the night in Detroit as motor manufacturers try to come up with a better answer to that.

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