Ford Motor says resin shortage won't cut production

DETROIT, April 27 Fri Apr 27, 2012 4:35pm EDT

DETROIT, April 27 (Reuters) - Ford does not expect any production disruptions due to a shortage of a rare nylon resin used in auto manufacturing, its chief financial officer said on Friday.

"We think we are going to get through this without having any issues," Ford CFO Bob Shanks said during Ford's first-quarter earnings conference call.

When Ford Motor Co announced its first-quarter net profit of $1.40 billion [ID: L2E8FR1KB] on Friday, it said in a statement, "The company has not had and does not expect any production disruptions" due to the lack of the nylon resin PA-12.

Shanks said Ford has been in daily contact with its suppliers about the shortage of an obscure nylon resin called PA-12 that is used in making most cars and trucks worldwide.

The global supply of PA-12, used in several industries including auto manufacturing, was already stretched thin before the explosion at an Evonik Industries AG plant in Marl, Germany on March 31. That blast killed two Evonik workers.

Evonik is a major producer of PA-12, which is used as a coating for tubes, fuel lines and braking systems.

The world's three other major producers of PA-do not have spare material on hand or enough output capacity to make up for Evonik's loss.

Two weeks ago, TI Automotive CEO Bill Kozyra sounded the alarm about the shortage in a letter to customers warning of a serious threat to auto production within weeks.

Since then, Ford and other automakers have been working with suppliers and chemical companies to find alternative materials to keep production going.

Those efforts appear to be successful , said David Lalain, director of business development for the Automotive Industry Action Group.

Ford has found suitable alternative materials and Shanks said he did not foresee a drop in quality.

"For the consumer, they are not going to have any issues in terms of safety or durability or anything of that sort," said Shanks.

Earlier this week, executives from several auto suppliers including Eaton Corp and Delphi Automotive said the auto industry will be able to keep production humming along.

And Mike Jackson, chief executive and chairman of the No. 1 U.S. auto dealership group AutoNation Inc, said he was told by the major automakers that the supply of cars and trucks would not be curtailed.

"On the resin, all manufacturers have confirmed their production plan for the next six weeks, no disruption. And they say, while there are challenges, they expect to have them all resolved before it becomes an issue," said Jackson on the AutoNation earnings conference call.

"The auto industry has shown that we're somewhat resilient," said Lalain.

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