U.S. auto production might struggle to meet demand

Apr 19, 2012

U.S. auto companies are faced with pent up demand from consumers at a time when their supplies for parts and materials are getting squeezed.

The Associated Press reports the shortages could limit the number of vehicles companies can sell, and squeeze a historic turnaround for the U.S. auto industry.

The most immediate problem — a shortage of a crucial plastic resin, caused by an explosion March 31 at a plant in Germany — could surface in a few weeks. And later this year or beyond, automakers could be confronted with an even bigger crisis, running short of parts simply because there aren't enough factories and people to make them.

The AP points out that the new process for manufacturing makes automakers vulnerable to these kinds of disruptions because auto suppliers don't stockpile parts the way they used to.

Instead, to hold down warehouse and inventory costs, they rely on a "just in time" system in which parts are delivered just days or hours ahead of when they are needed.