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Auto supply chain takes a hit in Germany

Workers construct cars in the Munich BMW plant in Germany. Now, one chemical made in other German factories may put a serious dent in car manufacturing in the coming months.

David Brancaccio: After the Japanese tsunami last year shut down auto parts factories for weeks, the world learned how fragile the global supply chain really is. Now, a new lesson. A key component for building cars both here and around the world has has been nearly decimated by an explosion a couple of weeks ago in Germany.

The BBC's Steve Evans in Berlin has more the missing plastic.


Steve Evans: It's not the sexiest name but the important stuff is called "cyclododecatriene" -- or CDT for short. And it matters because it's used to make a resin essential to the braking and fuel systems of cars. It's what stops fumes escaping.

When a fire shut down production at a plant in Germany two weeks ago, there might not have been big headlines around the world, but it turns out that perhaps a quarter of the world's supply of CDT was cut and will be cut for the next three months.

Tim Urquhart is an analyst at IHS automotive.

Tim Urquhart: It's potentially a pretty serious problem because this plant is one of the few plants in the world that manufactures this particular chemical, it's going to be very difficult for manufacturers to source alternative materials at short notice.

That's set off alarm bells in Detroit. This week, 200 executives from anybody who's anybody in the world car industry met, including representatives from Ford, General Motors and Toyota.

As one industry insider said: if there were easy alternatives, then they would already be in use. All this comes as the U.S. auto-industry starts to pick up after the global downturn, so the fear is that this chemical made in a plant in Germany may slow the acceleration down.

In Berlin, I'm the BBC's Steve Evans, for Marketplace.

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