Auto supply chain stretched as sector grows faster than expected

21 July 2010

21 July 2010 | Lindsay Clark

An electronics component manufacturer has said rapid recovery in the automotive sector has put its supply chain under pressure to keep up with demand.

The statement from STMicroelectronics which makes components for several sectors, follows Nissan’s decision to reopen three Japanese factories after a three-day closure caused by supply problems.

The halt to production was caused by a delay in delivery of parts from manufacturer Hitatchi. Hitatchi, in turn, uses components from ST in its Nissan parts.

A spokeswoman for ST said: “It is not ST’s policy to comment on customers’ statements.

“We can only recall it’s a known fact that the recovery of the automotive business after the crisis is taking place at a faster rate than expected and that the whole automotive electronics supply chain is currently under pressure to keep up with the market’s demand.

“The most recently disclosed data for ST show a year-over-year growth for automotive devices of 61 per cent and the company is strongly engaged in keeping the commitments it has made to its customers.”

A spokeswoman for Nissan in the UK confirmed that an interruption in supply of parts from Hitachi had caused it to suspend production last week. The plants have since re-opened.

Nissan could not comment on how much it lost because of the supply chain interruption, or whether the firm would be seeking compensation from Hitachi.

Hitachi makes electronic engine control modules (ECMs) for Nissan which last week said in a statement: “Nissan has been assured by Hitachi Automotive Systems that this is a short-term delay for ECMs and that we can expect resolution by the end of this week.”

Since the manufacturing sector has recorded strong growth this year, commentators have noted that buyers would see stretched supply lines and increasing prices, following the slashes in inventory made necessary by the recession.

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