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TheStreet Open House

4 Auto Parts Makers Downplay Resin Shortage

TOM KRISHER

DETROIT (AP) â¿¿ Executives from four auto parts companies said Tuesday that they don't expect widespread fallout from a shortage of a key ingredient in plastic resin following a factory explosion.

Officials with Delphi Automotive, Illinois Tool Works, AK Steel and Parker Hannifin said during conference calls to discuss their companies' earnings that a shortage of PA-12 shouldn't disrupt their operations.

Automakers and parts companies have been scrambling to find substitutes since a factory in Germany that makes much of the world's supply of the ingredient suspended production after it exploded in March.

The resin is used in hundreds of parts. It's most critical in fuel and brake lines because it can carry gasoline and other fluids without deteriorating.

Companies that make fuel lines, brake lines and connectors have been worried they will run out of PA-12 and they may have to stop shipments to automakers and larger parts suppliers. One key fuel line maker, TI Automotive, warned last week that the auto production interruptions are likely in the next few weeks. TI and a trade group of suppliers held an industrywide meeting last week to look at the remaining supply of PA-12 and encourage faster testing of alternatives.

But Rodney O'Neal, CEO of Delphi, one of the largest parts suppliers, said he sees little impact on Delphi or auto production.

"I don't see this as a crisis in terms of tremendous downtime at all for anyone around the world," O'Neal said. He said the auto industry is addressing the problem quickly and with flexibility.

Delphi, a Troy, Mich., supplier of audio systems, fuel pumps, wiring connectors and other items, uses PA-12 in a small number of parts and has lined up substitutes, O'Neal said.

"We believe there's enough inventory in the channel right now to handle this," John Brooklier, vice president of investor relations for Illinois Tool Works, told investors on a separate call Tuesday. He said the Glenview, Ill., maker of metal and plastic parts such as door handles uses little PA-12 but is watching the impact on auto companies.

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