A shortage of a type of shiny pigment used in automobile paints and made only in a single plant in Japan has emerged as the newest headache for the auto industry.
The Wall Street Journal said the pigment, called Xirallic, is made at a plant owned by German chemical company Merck located in Onahama, a coastal town that was damaged by the tsunami and was exposed to radiation spewing from the Fukashima nuclear reactor.
Many automakers, including Ford, Chrysler, BMW, Toyota and General Motors use Xirallic and many are now scrambling to see if they can switch to different types of paints, automakers and supplier sources told the WSJ.
Xirallic contains coated glass flakes that give paint a brilliant shine and was developed and patented by Merck researchers in Japan. The Onahama plant was built in 2000 and expanded twice since then. It ships Xirallic to auto paint makers such as BASF.
On Friday, Chrysler told dealers it was limiting orders for vehicles in 10 different colours that use the Merck’s Xirallic pigment and Ford previously told dealers it had stopped taking orders for F-150 pick up trucks and other models in the colour it calls ‘tuxedo black’ while limiting orders in three shades of red.
Merck’s Onahama plant suffered some damage because of the earthquake and has been cut off from power, water and other utilities, company spokeswoman Phyllis Carter told the paper. Onahama is about 130 miles northeast of Tokyo and about 35 miles south of the stricken Fukashima reactor. The Japanese government has told residents within about 20 miles of the reactor to evacuate.
Carter said the production halt at Onahama “could last for at least some weeks and might cause shortage of some types of pigments”.
US dealers are expected to suffer shortages of models that are made in Japan by mid-April, the WSJ report said. Vehicles exported to the US from Japan include small cars such as the Honda Fit [Jazz], Toyota Yaris and Scion xB. Most Lexus and all Infiniti models come from Japan.
On Friday, Mazda Motor said it had stopped taking orders from US dealers for its models made in Japan. A separate Wall Street Journal report quoted Mazda spokesman Tim Gilman saying the automaker did not know for how long the orders would be suspended but hoped current inventory already in the US would cover demand until the plants are fully reopened.
Ford and Chrysler both emphasised the paint shortage won’t reduce the number of vehicles they produce, but rather will only limit what colour vehicles customers can choose.
“The crisis in Japan is starting to affect automakers in the US in more material ways, and in ways that are surprising. Although the pigment shortage is not likely to affect production levels of the ‘Detroit Three’ automakers, it is definitely an unexpected twist in what has already been a very fluid situation,” wrote IHS Automotive analyst Aaron Bragman in a research note.
“The Japanese disaster is taking some unusual twists, but this is still just the beginning of what is likely to be a protracted series of issues for the global industry as auto and component production continues to be idled across Japan.”