North America's scrap metal producers and
processors might feel buoyed by automotive production in 2010
compared with the previous year, but the unvarnished opinion
from one auto industry consultant is they should be lowering
their forecasts for automotive metal needs for the next
"Demand factors are going to remain negative
for some time," Dennis DesRosiers, president of DesRosiers
Automotive Consultants Inc., Richmond Hill, Ontario, said at
the Metals Service Center Institute's Economic Forecast Summit
in Chicago. He listed a host of reasons for his analysis.
First, the corporate average fuel economy
(Cafe) goal of 35.2 miles per gallon by 2020, even if the
requirement gets pushed further into the future, will "force a
reinvention of the product," meaning smaller, lower-power
vehicles much like those that European automakers have been
producing for more than 10 years.
Second, Americans are no longer able to use
their home equity as cash machines to buy vehicles, which at
one point pushed North American auto sales to an annual rate of
20 million vehicles. Years of massive overbuying means there is
a 25-million to 30-million vehicle overhang-more cars than
drivers-that has to be worked off.
His forecast runs counter to some others
involved in the industry. For example, aluminum die casters in
the automotive sector are forecasting stronger business as
automakers continue to show resilience.
"The automotive industry is going well. It
hasn't recovered, but clearly going from a production of 8
million cars to 10 million is going in the right direction," an
executive member of the North American Die Casters Association
But the numbers might be on DesRosiers' side.
He projected 2011 sales of 13 million vehicles, and said it
will take four or five years to get back to 16 million units in
the United States. "North Americans are likely to buy 10
percent fewer vehicles between 2010 and 2020 than during the
prior decade," he said.
Additionally, he projected imports will
continue to take market share. "We do continue to have an
onslaught of imports," DesRosiers said, noting that first it
was Japanese and South Korean vehicles, now it's European
models and next will be vehicles made in China.
More components and automotive parts used in
American-made vehicles also will be made in China and elsewhere
in Asia, DesRosiers said. "The raw material for those parts
will be made in the exporting country, not in North America,"