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April 20, 2010

COMMENT: Automakers feel volcano knock-on effect

As Iceland's Eyjafjallajoekul volcano continues to vent its fury across Europe, it is not just the hundreds of thousands of stranded tourists who are feeling the strain.

As Iceland’s Eyjafjallajoekul volcano continues to vent its fury across Europe, it is not just the hundreds of thousands of stranded tourists who are feeling the strain.

In these days of just-in-time production, automakers are heavily reliant on fast air bridges maintaining a constant stream of highly complex components and the vast cloud of ash currently blanketing Europe is starting to take its toll.

BMW has already begun the process of temporarily shutting a factory in Dingolfing, while knock-on effects could also ripple out to sites such as Leipzig and Regensburg.

As the powerhouse of European vehicle manufacture – and sitting as it does at the crossroads of Europe – Germany has been particularly vulnerable to the ongoing effects of the extraordinary eruption.

Some German flights are now apparently operating under ‘visual flight rules’ conditions but these windows – as in the UK – could be abruptly slammed shut as Eyjafjallajoekul struts its stuff on the world stage.

Manufacturers are remaining coy just how much all this disruption is costing, but it’s safe to say its getting larger by the day as they potentially mothball lines.

BMW ‘s plant at Spartanburg may also feel the effects of 500t of ash per second being spewed miles high into the atmosphere.

“If the air lanes do not open up towards the end of the week, we could have some problems,” a US spokesman for BMW told just-auto. “It may shut down the plant for some time.

Spartanburg builds the X5 and X6 with production of the X3 also slated for the South Carolina plant – but it needs that vital air support for the two larger models.

For its part Nissan said around 2,000 units had been affected by the supply situation with production affected at its Oppama factory.

“It is some parts from Ireland,” a Nissan spokeswoman told just-auto.

“These are pressure sensors which are engine air intakes.”

The sensors are used for the Cube, Morano and Rogue vehicles – so they’re a vital component.

It might strike the casual observer as extraordinary that a Japanese company – of all entities – needs to import sensors such a vast distance from Ireland and that air disruption to deliveries can cause such chaos, but it neatly illustrates the complex and intertwined web of truly global companies.

For its part, Renault is preferring to stay above the aerial fray, insisting its reliance on local sourcing has not led to any production issues arising from delivery delays. “We rarely have recourse to air transport for competent supply,” Renault said.

“We prefer local sourcing – for example 60% of our large factory purchases come from local suppliers in France and we use sea transport for overseas flows. In general, we only use aircraft for emergency situations.”

But it’s not only on a production level that Eyjafjallajoekul has affected so much of European daily life.

Delicate negotiations appear to be going on at Opel and its union with a view – or not – to closing its Antwerp factory with a potential loss of some 2,300 jobs.

European Metalworkers Federation company policy director Tony Murphy was due in Brussels today as the Opel talks continue but instead finds himself grounded in the more prosaic surroundings of Stoke. 

Will the last week’s events lead to a rethink on supply procedures? Could there be a re-evaluation of automakers’ reliance on just-in-time procedures? What if Eyjafjallajoekul decides to blow its – or its sister’s top again?

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