Recticel has declared ‘force majeure’ to all the customers who are supplied out of the plant
Just under a week since a large fire engulfed a part of Belgian auto component maker Recticel’s plant in Most, Czech Republic, and the full impact of the incident is new becoming clear. The plant, which is operated by company’s local subsidiary RAI MOST, produces dashboard surfaces, door panels, glove boxes for passenger cars.
Recticel has declared ‘force majeure’ to all the customers who are supplied out of the plant. ‘Force majeure’ is a common clause in supply contracts invoked when unforeseen and uncontrollable events occur and prevent a party from fulfilling the contract. This, understandably, has left many clients worried about the impact on the suppliers out of the plant.
The fire was mostly contained to one production hall, but for safety reasons, production at the entire plant has been halted. The company’s second Czech plant, located in Mladá Boleslav, also manufacturers automotive interiors. It is bigger of the two plants and is expected to function normally. Tier-1 suppliers that Recticel supports from the Czech plant include Grupo Antolin, IAC, Magna, Yanfeng, Faurecia, and Visteon. Not only is Recticel a tier-2 supplier, it also supplies directly to automakers.
Who could be affected?
Automakers being directly and indirectly supplied by Recticel include Mercedes, BMW, Audi, Skoda, Volkswagen, Peugeot, Porsche, Volvo and Ford. The Mercedes E-Class, Porsche Macan, Volkswagen Tiguan and Volkswagen Passat VW Passat (Wolfsburg) are among models which rely on components from the supplier. Recticel is also a tier-1 supplier of instrument panels for the VW Tiguan in Wolfsburg, VW Passat, Mercedes E-Class, and Peugeot 408. These models could see a direct impact on production numbers from the fire.
Volvo could also be impacted by the More plant shut down as the entire supply for V90/S90 comes from this plant. The Mladá Boleslav plant was supplying components to a few models of BMW and Opel models, supply of which is expected to remain intact.
Precedent
The fire at Recticel is not the first time that fire at a supplier’s plant has interrupted a global supply chain. In 2012, a firre at Evonik Industries’ chemical plant in Germany brought production of a chemical called cyclododecatriene (CDT) to a halt. CDT was a key ingredient in producing PA-12 resin which in turn was an important component for braking and fuel systems.
It was reported then that Evonik Industries' plant in Germany supplied close to half of CDT globally. The thought that an imminent shortage of CDT could possibly lead to production delays led to a meeting of more than 200 executives from companies including General Motors, VW, Toyota and Ford in Michigan, according to a BBC report.
In May last year, a fire at India-based air-conditioner manufacturer Subros had a major impact on the country’s largest carmaker Maruti Suzuki (MSIL). Subros was supplying nearly 60% of the air conditioners used in MSIL cars. The automaker has some of the most popular models and just a few days of production halt led to a loss of 25,000 cars for MSIL.
The immediate and long-term impact of the fire at Recticel’s Czech plant will become clearer as Recticel starts the damage assessment. For the moment, Recticel has released a statement saying the company “is unable to estimate the extent of damage to the plant and machinery, or when and to what extent production will be restored,” and that it is working with the customers to minimize the impact on them.
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