UPDATE 1-Quake-hit paint plant reopens in Japan

Tue May 10, 2011 1:43pm EDT

* German chemical company says plant reopened May 8

* Merck says will make paint pigment in Germany as well

* Merck spokesman says co has not decided where in Germany

DETROIT, May 10 (Reuters) - The Japan-based plant that was the sole provider of a glittery paint pigment for the global auto industry has reopened nearly two months after an earthquake savaged northern Japan and stopped operations.

The plant in Onahama, run by German chemical company Merck KGaA (MRCG.DE), made Xirallic paint pigment, widely used by automakers including Toyota Motor Co (7203.T), Ford Motor Co (F.N), General Motors Co (GM.N) and Honda Motor Co (7267.T).

Production of the pigment at the plant stopped after the earthquake hit Japan on March 11, triggering a tsunami and a nuclear crisis. The plant is about 35 miles, or 57 kilometers, from the Fukushima Daiichi nuclear power plant.

Merck began repair work at the plant on April 4 and it reopened on May 8, the company said in a release. The company expects the plant will achieve a regular production schedule starting in June.

The company is also looking to make the pigment at a second plant in Germany. It plans to add capacity at the German plant by the end of 2011, which will "considerably" boost future supply reliability of Xirallic pigment in 2012.

A Merck spokesman said the company had not decided yet where in Germany it would create the additional Xirallic production capacity.

The company's German car pigments production is situated in the city of Gernsheim near its Darmstadt headquarters.

In March, the loss of this shimmery paint pigment forced major automakers to stop making vehicles in certain colors and search for new paint suppliers.

Ford slowed production of vehicles in "tuxedo black" and three variations of red. Chrysler Group LLC (FIA.MI) told dealers it was restricting orders on vehicles in 10 colors, including two variations of black and three of red.

In an April interview, John Krafcik, head of North America for Hyundai Motor (005380.KS), said the company would begin using mineral mica instead of Xirallic paint. [ID:nN20189701]

Last week, Honda said it was looking for a suitable replacement for the paint and reconfigure its model line with alternative exterior paints. [ID:nN02118822]

(Reporting by Deepa Seetharaman and Ludwig Burger in Frankfurt; Editing by Richard Chang)

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