SC October2011.pdf - Parts & People

Mostly good news for US collision repairers six months after Japan quake
by John Yoswick
When Hurricane Irene hit
the East Coast in late August,
much of what occurred
differed from what was
forecasted. The storm’s fury
was much less than expected
in New York City, for
example, and the flooding in
Vermont was far worse.
Susanna Gotsch, an industry
analyst with CCC Information
Services, said much the same
can be said for the impact on
the U.S. collision repair
industry following March’s
earthquake and tsunami in
Japan. Though there have been
some minor and often unexpected
ramifications within the automotive
industry six months after the devastating
natural disaster, few of the more dire
predictions of disruptions have
materialized.
As Parts & People reported last spring,
Joe Skurka of BASF says a lot of behind-the-scenes
work has countered concerns about a shortage of the
Xirallic paint pigment produced in Japan.
the most obvious concern for U.S. collision
repairers was whether supplies of
replacement sheet metal or other crash
parts would be curtailed. But Gotsch and
others were also keeping an eye on what
repercussions the Japan devastation had on
availability of some paint products and on
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factors impacting the percentage of
vehicles being declared total losses.
Availability of pigment a ‘non-story’
In a plant just 28 miles from one of the
damaged Japanese nuclear reactors, a
German-based company had been
producing 100 percent of its output of
Xirallic, a patented pigment used in many
black, gray, and red metallic automotive
paints. That factory’s closure led Ford,
GM, Honda, Chrysler, and BMW to restrict
or halt dealer orders for vehicles painted
with Xirallic-containing colors, and led
some to wonder if shops might face
challenges in getting certain toners.
By May, however, concerns about
Xirallic-containing paint was lifting. Ford
and some other automakers were able to
find an alternative for the pigment, Gotsch
said, and the company producing Xirallic
was able to get the Japanese factory back
up and running weeks ahead of
expectations.
“That was an amazing feat by the
Japanese,” Joe Skurka, manager of OEM
and industry relations for BASF, said,
acknowledging in recent weeks that the
Xirallic issue had virtually no impact on
U.S. collision repairers. “Also, as soon as
the issue was known, inventory analysis
and allocation controls were established to
ensure no repair customers would be
affected. These have since been lifted, but
it prevented hoarding and possible
shortages. Going forward, we expect a
stable supply because a second production
location is coming online in Europe. But it
took a lot of behind-the-scenes work to
make this all pretty much a non-event in
the repair world.”
Other paint companies serving the
collision repair industry reported similar
situations. A spokesperson for Akzo Nobel,
for example, said the company’s global
color organization is “back to normal
operations,” and DuPont Performance
Coatings also said “supply has been
normalized and there were no product
outages that affected the aftermarket.”
Gotsch said one of the unexpected
outcomes of the Japan situation was that it
has served as a wake-up call for
automakers on the risks of relying too
heavily on a single supplier — or a supplier
whose production is limited to one area, as
was the case with Xirallic.
“It was a reminder for the automakers
and tier one suppliers that a little
diversification is good, both in terms of the
individual suppliers that they work with,
and also the geographic location of those
suppliers, and whether or not those
Continued on page C-4
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Page C-2 October 2011 Parts & People www.partsandpeople.com