By Neal E. Boudette And Jeff Bennett
A shortage of a type of shiny pigment that is used in automobile paints and is only made in a single plant in Japan has emerged as the newest headache for the auto industry.
The pigment, called Xirallic, is made at a plant owned by a German chemical company, Merck KGaA /zigman2/quotes/200605022/delayed DE:MRK +2.20% , and is located in Onahama, a coastal town that was damaged by the tsunami and was exposed to radiation spewing from the Fukashima nuclear reactor.
Many of the world's auto makers, including Ford Motor /zigman2/quotes/208911460/composite F +1.09% Co., Chrysler Group LLC, Volkswagen /zigman2/quotes/206736865/delayed DE:VOW 0.00% AG, BMW /zigman2/quotes/209548467/delayed DE:BMW -0.53% AG, Toyota Motor /zigman2/quotes/200537742/composite TM +1.57% Corp. and General Motors /zigman2/quotes/205226835/composite GM +2.04% Co., use Xirallic in metallic paints known for their glistening, shimmering appearance. Many are now scrambling to see if they can switch to different types of paints, according to auto makers and suppliers with knowledge of the matter.
On Friday, Chrysler told dealers it is limiting orders for vehicles in 10 different colors that use the Merck's Xirallic pigment, a company spokesman said. Ford previously told its dealers it stopped taking orders for F-150 pick up trucks and other models in the color it calls "tuxedo black." It is also limiting orders in three shades of red.
Merck's Onahama plant suffered some damage because of the earthquake and has been cut off from power, water and other utilities, according to a company spokeswoman, Phyllis Carter . Onahama is located about 130 miles northeast of Tokyo and about 35 miles south of the stricken Fukashjima reactor. The Japanese government has told residents within about 20 miles of the reactor to evacuate. The U.S. government has advised Americans to stay at least 50 miles from the plant.
Ms. Carter said the production halt at Onahama "could last for at least some weeks and might cause shortage of some types of pigments."
The devastation in Japan forced most of the country's auto plants to cease production, although a few are supposed to slowly begin operating again next week. Auto dealers and industry analysts believe Toyota, Honda Motor /zigman2/quotes/207173990/composite HMC +1.66% Co. and Nissan Motor Co. have enough inventory to keep sales going for a few more weeks.
But because of the production stoppages, dealers are expected to suffer shortages of models that are made in Japan by mid-April. Vehicles that are exported to the U.S. from Japan include small cars such as the Honda Fit, Toyota Yaris and Scion xB. Most Lexus and all Infiniti models come from Japan.
On Friday, Mazda Motor said it has stopped taking orders from U.S. dealers for its models made in Japan.
Outside of Japan, auto makers can get most of the thousands of parts needed to make cars, but production could still be disrupted if only one of them becomes scarce. Worry is increasing about Japanese firms that make microchips, chemicals and other materials that are used in auto production, or are needed in key components such as controllers that manage how an engine or transmission operates.
GM, France's PSA Peugeot Citroen SA and others have already slowed production because of concerns about a shortage of air flow sensors made by a crippled Hitachi Ltd. plant in Japan. A big supplier of microchips for autos, Renesas Electronics /zigman2/quotes/203872935/delayed JP:6723 +3.53% Corp., has also stopped production at several plants.
Xirallic is a pigment that contains coated glass flakes that give paint a brilliant shine. It was developed and patented by Merck researchers in Japan, Ms. Carter said. The Onahama plant was built in 2000 and expanded twice since then. It ships Xirallic to makers of auto paint, which the industry calls coating. Coating manufactures such as Germany's BASF /zigman2/quotes/204280060/delayed DE:BAS -1.59% AG mix the pigment with other materials to produce paints that are delivered to auto plants.
Ford and Chrysler both emphasized the paint shortage won't reduce the number of vehicles they produce, but rather will only limit what color vehicles customers can choose. A Chrysler spokesman said, "at this time we do not anticipate any production impacts as a result of this action."
Mike Ramsey contributed to this article.