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Clare Goldsberry

September 9, 2016

4 Min Read
Supply chain complexity contributes to record-high automotive recalls

It’s not a pretty picture for the booming auto industry. Automotive recalls are at record highs, and it’s not over yet. In May it was announced that eight automakers are recalling more than 12 million vehicles in the United States to replace potentially dangerous Takata airbag inflators. Seventeen automakers are adding 35 to 40 million inflators to what was the largest recall in history, said the National Highway Transportation Safety Administration (NHTSA).

Image courtesy Imagine-Freedom/flickr.

The recalls just keep coming. By percentages, 89% of recalls were for airbags; 2.8% were power-train problems; 2.3% were for seatbelt problems; electrical systems accounted for 1.2% of recalls; and 4.7% were for other problems. In 2015, 51 million vehicles were recalled for safety issues. Five automakers accounted for 82% of recalled automobile units, among them Ford Motor Co. In April of this year, Ford recalled 202,000 pickups, SUVs and cars to fix transmissions. On June 1, 1.9 million vehicles were recalled by Ford to replace airbags. Most recently Ford announced the recall of about 91,000 vehicles in North America due to faulty fuel-pump parts that could potentially cause vehicles to stall without warning. Recalled vehicles affected include the Ford Taurus, Ford Flex, Lincoln MKS and MKT SUVs, and Ford Police Interceptor sedans.

Robin Hopper is Senior Vice President of Product Management for Intelex Technologies, a developer of software platforms for environmental, health and safety, quality and supply management systems for several industries including manufacturing. Headquartered in Toronto with offices in Denver and London, Intelex has been involved with the automotive industry, providing software systems for supplier tracking and management.

Hopper told PlasticsToday that the recent spate of recalls is caused by a combination of things, including new layers of complexity in the supply chain. “It has become increasingly difficult to track using the various quality management systems, which can sometimes mask that extra layer of complexity,” said Hopper. “When a part fails, it could be the design, the material or the component itself. Then the OEM has to track what happened, and where, along the manufacturing process. It’s been a perfect storm made somewhat more complex by increased government safety regulations. Recalls haven’t gone up in actual volume, but it seems that way because we hear about so many of them.”

While recalls have a negative impact on the automaker, Hopper stated that there’s been “a relatively new-found acceptance that dealing with these issues transparently has the ability to take a negative and turn it into a positive.” Much of this general acceptance with regard to vehicle recalls is a reflection of the behavior of the automaker when these things come up. “It’s not the recall that makes people angry, it’s when companies try to hide it,” said Hopper.

Many of the recent recalls can be linked to changes that automotive OEMs are implementing in response to new regulatory demands, such as the CAFE standards, to lightweight vehicles. This often involves converting metal parts into plastic components that many times require a redesign to accommodate injection molding. “Certainly when you go through a transition, you introduce risk factors, even at the supplier’s level,” Hopper commented. “A new set of requirements for fit, form and function create questions such as tolerances being over-engineered at the supplier level and what the actual tolerances really are. That is intentionally adding risk to the process.”

Additionally, with more autonomous or self-driving vehicles projected to be on the highways over the next decade, there is a likelihood of increased risk. Tesla recently parted ways with its autopilot software maker, Mobileye, after the accident in Florida, in which the vehicle’s software mistook the white side of a tractor-trailer for the sky and drove through it, killing the driver. However, neither Tesla nor Mobileye would confirm that the accident was the reason for terminating the partnership.

The fact that so many of these new vehicles are software- and hardware-dependent adds one more layer of complexity to the supply chain. Perhaps that is part of the reason that auto suppliers are looking closely at acquiring software companies. According to a recent editorial from IHS Automotive SupplierInsight, “growth in connected car deployment and research into autonomous driving technology is driving acquisitions of software companies.

The growing importance of the integration of software and its IP significance for the industry means that “all Tier 1s need more software resources and expertise,” said SupplierInsight. “Many supplier acquisitions are prompted by the need to keep up with recent rapid changes in automotive technology.”

This new layer of complexity—software that will allow autonomous driving—will certainly contain risk. Risk sharing, such as the program General Motors announced a few years ago, will put suppliers on the hook for recall costs, something they are reluctant to do. So, perhaps it will be better if the Tier 1s own some of the supply base, particularly those companies making products that might prove to be a greater risk than those manufacturing bumpers or interior consoles.

About the Author(s)

Clare Goldsberry

Until she retired in September 2021, Clare Goldsberry reported on the plastics industry for more than 30 years. In addition to the 10,000+ articles she has written, by her own estimation, she is the author of several books, including The Business of Injection Molding: How to succeed as a custom molder and Purchasing Injection Molds: A buyers guide. Goldsberry is a member of the Plastics Pioneers Association. She reflected on her long career in "Time to Say Good-Bye."

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