For Want of a Nail: Process Risk

The old proverb says:

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

Polyamide 12 to CEO: Thought of me lately?

Process risk analysis often focuses on large capital items, large input items (by total value or by volume), and other factors based on their size or visibility. This story illustrates how a single synthetic polymer, nylon-12, and its sudden shortage due to an explosion at a single German plant, has thrown the worldwide automotive industry into a rare collaboration to deal with the shortfall.

A March 31 explosion at Evonik Industries in western Germany killed two workers and damaged a factory that makes CDT. That chemical is a key component in a nylon resin called PA12, which is used to make a specialized plastic. The plastic is used in auto fuel lines and brake lines because it is highly resistant to reacting with brake fluids and gasoline. It is also a component in solar cells, pipelines, sporting goods and household items.

Evonik has said that it may take more than six months before production can resume. The Evonik facility made half of the nylon-12 produced in the world. Industry experts estimate that there is less than two months supply available and substitutes still require testing.  On April 17th executives from eight automakers including G.M. and Toyota met in Detroit to develop a plan to deal with the potential shortage.

As some companies push for greater consolidation and scale of their factories, firms need to assess their risks from two perspectives: first, which of their suppliers have rationalized their plants to a few or perhaps only one facility that, should it cease operation due to an accident, act of sabotage, electrical black-out, or an act of nature (flood, tsunami, earth quake), would stop their processes in their tracks; second, are they themselves vulnerable because they have consolidated production to a few or one site in the name of “scale efficiency” but are now more vulnerable to sabotage, accident, or the results of extreme weather.