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Steel, aluminum still in race for automotive supremacy

Oct 31, 2013 | 08:00 PM | AMM staff

Tags  The month in metals, North America, manufacturing, steel, aluminum, automotive market

Like racers fighting for track position or commuters trying to edge their way ahead on a crowded highway, metal producers continue to work to keep themselves poised to win a bigger share of the auto market, the shining star in North America’s manufacturing sector.

Steel and aluminum producers remain the biggest fighters in the ongoing battle to provide lighter and more-fuel-efficient materials to automakers enjoying their strongest sales since the Great Recession. U.S. sales of 16 million vehicles per year are sustainable possibly to 2020, according to IHS Automotive Consulting managing director Michael Robinet, with a world total of around 106 million light vehicles annually by the end of the decade, including 18 million in the North American Free Trade Agreement region. “Welcome to Utopia, better known as automotive,” Robinet told attendees at the Metals Service Center Institute’s Economic Summit in the Utopia conference room at the Renaissance Convention Center in Schaumburg, Ill.

North American automakers today are concerned with capacity constraints, lightweighting and how fast they can create a sophisticated supply chain and infrastructure to competitively build vehicles in Mexico, which lacks automotive-quality steel production.

Most, if not all, assembly plants in the United States are running two shifts, with many running three shifts. “We are running at the edge of full capacity” at assembly and related operations and at supplier plants, Robinet said. “It’s brick-and-mortar time in North America.”

The localization-of-supply trend among the Big Three automakers and foreign transplants will continue for the next 10 years, Robinet predicted, driven by logistics costs and volatile currency exchange rates. Automakers “are tired of taping dollar bills to every part they import,” he said.

Since the recession ended, automotive suppliers are more savvy and protect their margins better than before, but they have a lot on their plates. There are 18 new-model launches this year and 32 scheduled for next year, Robinet said. “Think of how strained the supply base is already.”

As for lightweighting, Robinet advised the metals industry to “get used to smaller vehicles.” Vehicles such as Ford Motor Co.’s Fusion and Edge will make up 80 percent of the market in the near future, he said. “V-8s will be down to 10 percent” of all engine production as automakers “devote all their energy to 4- and 6-cylinder engines, and more of that on 4-cylinder powerplants. They will eke out as much fuel economy as possible.”

Metals-based innovations will be key to mass reduction because the body and structure make up 35 percent of the average vehicle’s weight and the chassis and suspension make up 25 percent, Robinet said.

Revved-up demand from the automotive sector likely will bolster die casting production in the fourth quarter, most manufacturers said earlier this fall at the North American Die Casting Association’s Die Casting Congress in Louisville, Ky.

The positive outlook came as producers continued to grapple with increased demand for lightweight auto components. While some balked at the difficulties presented by manufacturing lightweight components, most called lightweighting beneficial to the industry.

“Lightweighting is extremely positive for our sector as it is spurring a ton of new designs and has, thus far, generated a lot of work for the industry,” a source at one die caster told AMM, adding that those who don’t participate in manufacturing lightweight components could miss a majority of future automotive business. “Everything is getting lighter and people have to start to understand this whole thing is by no means going away.”

Aluminum extruders also are poised to benefit from a surge in demand from the automotive sector, but they must be vigilant against the threat posed by competing materials, especially high-strength steels, according to an Aluminum Extruders Council (AEC) consultant.

In the light vehicle market alone, aluminum extruders could see demand increase by 300 million pounds annually by 2025, with per-vehicle content expected to jump to between 38 and 39 pounds from 13.7 pounds last year, said Lynn Brown, citing data from Troy, Mich.-based market research firm Ducker Worldwide LLC.

“We’re on cruise control, right? We just have to start planning for all those additional pounds. ... Well, there are some folks who have a different view of the world,” Brown said at the AEC Management Conference in Chicago. “There is absolutely no question that the steel industry is targeting aluminum. We’re the bull’s eye for them. They want to make sure we don’t get too much larger than we are today.”

Other materials, such as magnesium and carbon fibers, also are looking to take market share away from aluminum, Brown said. “But, frankly, they have some supply chain issues, which means they are less of a significant competitor. The one we need to be prepared for is steel.”

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