CHICAGO KSM Castings
Group GmbH is looking to benefit from expected strong long-term
demand growth for aluminum automotive castings in the United
States with its new facility in Shelby, N.C.
Growth will be driven in part by
stricter fuel economy and emission standards in the United
States, something which should benefit aluminum usage in the
automotive sector, Stefan Tyman, head of business development
at the Hildesheim, Germany-based company, told AMM in
a recent interview. "We also have strong demand from European
customers who have a manufacturing footprint in the United
Sates and want (KSM) ... to supply them on a local scale."
KSM, which is owned by Chinese
wheel manufacturer Citic Dicastal Co. Ltd., already has
manufacturing operations in Europe and in China, and a facility
in the United States will give the company a global presence,
The company plans to build a
$45-million, 110,000-square-foot facility expected to be up and
running in 2014 (
amm.com, Feb. 6). The operation will sport new
equipment and include die-casting, melting and machine shops,
as well as a shipping area and office space, Tyman said.
The new plant initially will
focus on transmission, engine and steering parts, but the site
has room for growth and the plant could one day be expanded to
include, for example, chassis and body applications, Tyman
Among KSMs key customers
are Volkswagen AG, which has manufacturing operations in
Chattanooga, Tenn.; Mercedes-Benz U.S. International Inc.,
which makes vehicles in Tuscaloosa, Ala.; and BMW AGs
plant in Spartanburg, S.C.; as well as parts suppliers such as
ZF Groups transmission plant in Gray Court, S.C.
"Fifty-percent is push by our customers. Fifty-percent is pull
by us," he said.
In addition to its existing
customer base, KSM also hopes to do business with other U.S.
automakers as well as Asia-based automakers with operations in
the United States.
KSMs U.S. plans could be
bolstered by its strong relationship with ZF, which offers an
eight-gear automatic transmission. "As (ZF) grows and increases
their market share, that is also a direct opportunity for us to
increase our business," Tyman said. "And we see a lot of
American manufacturers exchanging 4- and 5-gear shifts with
automatic transmissions with more gears."
KSM expects American automakers
could be pressed to increase aluminum usage because of tighter
emission standards or because of performance advantages offered
by the metal, he said. "We think there are some serious
considerations for Chrysler (Group LLC) and GM (General Motors
Co.), for example, increasing their aluminum share. ... We
encourage them to do that."
KSM chose to locate in North
Carolina because it wanted a manufacturing base in the North
American Free Trade Agreement region and because much of its
existing customer base is in the southeastern United States,
North Carolina won out over
sites in Alabama and Kentucky in part because, not being in the
"Deep South," it offered the possibility of supplying
automakers in the Midwest, Tyman said. The state also sports a
skilled work force and is looking to regain its status as a
"manufacturing powerhouse," something KSM would like to be a
part of, he said.
KSMs U.S. plant is
expected to create about 190 to 200 jobs in North Carolina
initially, Tyman said. If all goes to plan, the U.S. facility
will be similar in operation and culture to KSM plants in
Europe, which generally employ as many as 500 to 600
But Tyman cautioned that KSM
plans to expand gradually in the United States. "This is a very
strategic project, so we dont expect payoff after year
one," he said. "We would like to have our first plant
established and then revise our strategy after four or five
KSM initially will focus "100
percent" on aluminum in the United States, sourcing metal
locally, Tyman said. Transmission and engine parts generally
are made from secondary aluminum, while KSM uses primary
aluminum for chassis and body applications. The company makes
some products that require magnesium, Tyman said, but magnesium
"is not something that we would consider in the United States
in the first phase."
While KSM does not intend to
expand in the near term, there are several triggers for further
expansion, such as increased requirements from a customer or
demand for additional partssuch as lightweight chassis,
steering knuckles or wheel carriersthat would require
different production processes and equipment than the
high-pressure die-casting machines planned to be installed in
the Shelby plant in the first phase, he said.
"The site we have chosen offers
a maximum expansion of four times the initial production area,"
Tyman said. "But dont ask me when that will happen. ... A
440,000-square-foot building by 2025? That would be very
Still, KSM is committed to its
U.S. expansion. "We know this (new plant) requires huge effort.
... But we are ready for it," he said.