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The results could be even more serious than last year's Japanese earthquake, which damaged parts factories and cut off everything from electronics to rubber components to a shiny pigment for paint. The shortages mainly affected factories run by Honda Motor Co. and Toyota Motor Corp., costing production of 400,000 cars and trucks in North America. The companies have since made up that volume, but it took nearly a year for the supply of cars to return to normal. The industry used to be on firmer footing. Twenty years ago, companies relied less on suppliers and made more of their own parts. But General Motors Co. and Ford Motor Co. spun off their parts businesses in 1999 and 2000, a move that saved money but gave them less control over inventory. "Just in time is really risky, but it's better for cost-effectiveness," Wybo says.
And it works well for parts such as bolts and fasteners because many companies make them and there are backups at the ready if the main source is knocked out. Other trends are magnifying the risk of the just-in-time approach. Parts supply companies downsized significantly during the recession, and the remaining firms don't have the money or staff to stock up on raw materials in case of a disruption. The industry also shrank because carmakers needed increasingly specialized parts to meet government safety and fuel economy standards. Suppliers without those products went out of business. In the U.S. alone, at least 57 parts makers have closed, were bought out or went into bankruptcy since 2008, according to the Original Equipment Suppliers Association. "That has condensed the number of players in some instances," says Michael Robinet, managing director of IHS Automotive Consulting. Robinet warns that there are many potential shortages throughout the industry beyond PA-12. There are relatively few suppliers of specialty metals such as boron, which is added to steel to make it stronger and lighter. "There's not a lot of extra capacity," he says.
[Associated
Press;
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