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Alcoa mulling more auto capacity: Scheps

Jan 14, 2014 | 03:49 PM | Michael Cowden

Tags  Alcoa, Randall Scheps, automotive, new capacity, substitution, Ford, F-150, body-in-white heat treat

FORT LAUDERDALE, Fla. — Alcoa Inc. is mulling additional capacity to meet forecast increases in demand for automotive aluminum sheet, a company executive said.

The development comes because capacity at its newly finished $300-million Davenport, Iowa, auto expansion (, Jan. 14) is "100 percent sold out" despite the first coil not being run yet, according to Randall Scheps, marketing director for the Pittsburgh-based aluminum manufacturer. He added that a $275-million auto expansion in Alcoa, Tenn., (, May 2) is mostly committed as well.

"We’re actually in the planning stages and in the thinking stages of what’s the next step of capacity here beyond Tennessee," Scheps said Jan. 14 at the Platts Aluminum Symposium in Fort Lauderdale, Fla.

Scheps decribed Dearborn, Mich.-based Fort Motor Co.’s aluminum F-150 pickup truck (, Jan. 13) as" the biggest news in decades for the aluminum industry," Scheps said.

Aluminum sheet content is expected to rise from 14 pounds per vehicle in 2012 to 55 pounds in 2015 and 136 pounds by 2025—a tenfold increase, Scheps said. And because 2015 "is basically tomorrow" in the automotive industry, contracts are already negotiated and designs final, so that growth is already "locked in," he said.

"And the numbers may actually be higher ... we try to be conservative," Scheps said.

The result of the expected increase in demand is about 1 million tonnes of new incremental sheet demand by 2025, Scheps said. And because new auto programs using aluminum sheet are so large, new demand is coming in "bites" of 50,000 to 100,000 tonnes, with some vehicle programs alone potentially generating as much as 150,000 tonnes of new demand, he said.

"We’ve moved into a new era where these new programs are very, very large," Scheps said.

The main growth is expected to come from the body-in-white of vehicles switching from steel to aluminum, Scheps said. Roughly 99 percent of body-in-white in vehicles is steel, he said. "That’s about to change. It’s about to become either multi-material or full aluminum."

Scheps brushed aside concerns that there might not be enough supply to meet expected demand, saying there is "ample" primary metal supply as well as hot-rolling and cold-rolling capacity. "The challenge is heat-treating and finishing," he said.

The aluminum industry needs more continuous heat-treating capabilities for the automotive sector and chemical treatment capability to treat coils before they are shipped to automakers, Scheps said. "That’s the capacity that has to be added, and existing suppliers are investing heavily," he said.

Early involvement with customers is critical, Scheps said, noting that it takes as long as three years to add new capacity. "This is not a commodity product," he said. Producers "can’t just flip a switch" and go from producing industrial sheet to material that meets demanding automotive requirements, he said.

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