CHICAGO Sapa AS
North America sees opportunities in the automotive and building
construction markets, but expects billet premiums to slide
going into 2014 contract negotiations.
"increased substantially last year," but the market has
"flattened out" this year as capacity was added, Patrick
Lawlor, president of the North American wing of Oslo,
Norway-based extruder Sapa AS said in an interview with
"We expect a bit of
softening in billet premiums going into contract negotiations
looking at next year," he said. "The extrusion market is down
1.5 percent this year, which is a bit unlike the situation
going into the last contract negotiation season. And with more
capacity coming onboard, we feel generally that there should be
a downward pressure on billet premiums.
billet premium is currently at a range of 10.75 to 12.25 cents
Lawlor declined to say
where he thought billet premiums might be in 2014. "No idea.
But theyll be lower," he said.
But while Sapa sees
billet premiums sliding, the company is bullish on its
prospects in North America thanks to a rebounding construction
market and increased use of aluminum in cars and trucks to meet
stricter fuel economy standards, Lawlor said. "We see
automotive as a major, high-potential growth market for us, and
we have been quite successful in the last two years in gaining
contracts," he said.
For example, the next
generation of the Ford F-150 is expected to enter production in
2014 with aluminum extrusions in such applications as roof
rails and running boards, Lawlor said. "There is a lot more
aluminum on that vehicle than there has been in the past,
including extrusions," he said.
Sapa AS, a joint
venture between Norsk Hydro ASAs extruded products unit
and Orkla ASA subsidiary Sapa Group that was established Sept.
amm.com, Sept. 3), should also allow the company
to gain a larger footprint in the Americas. The company has 20
plants in the United States, three in Canada and one each in
Brazil and Argentina. That will give Sapas North American
operations about 70 extrusion presses, which combined will be
able to offer diameters from 3 inches to 21 inches, as well as
sophisticated machining capability for fabrication, he
The combined company
will also have five anodizing lines, 10 paint lines and nine
casthouses in the Americas, Lawlor said. It is expected to have
23,000 employees and $8.5 billion in annual revenue worldwide,
with 6,500 workers and $2.5 billion of that revenue coming from
the Americas, he said.
also see opportunities in the Americas and will support future
investments, Lawlor said. "There could be a few selective
acquisitions either in a geographic segment where we dont
have a plant today or a product niche we dont have
capabilities in," he said, although he added that Sapa
doesnt currently foresee any "major acquisitions."
Sapa has already
invested $35 million in a new press dedicated to rod and bar
for the distribution market at its Cressona, Pa., facility (
amm.com, April 18, 2012), which pushed its first
billet within the past two weeks, Lawlor said. Sapa also has a
new press in Brazil at what was formerly a Norsk Hydro site, he
There could be some
limited changes to commercial operations as a result of the two
organizations coming together, although Sapa generally will
look to use its bigger sales force to bring in more business
and better serve customers, Lawlor said. "If there are any
redundancies on the commercial side, it will be few and it will
be swift," he said.
On the operational
side, Sapa expects to continue to feed its casthouses in the
Americas with scrap generated internally or by its customers as
it looks to reduce its outside scrap requirements, Lawlor said.
"We still buy a large volume externally, but a much higher
volume comes from our internal casthouses," he said.
In addition, Sapa
expects to focus on its North American technical center as it
looks to develop alloys, find new customers and markets for
extrusions and compete with steel and plastic in a variety of
products. "Our market offerings really start with the needs of
the customers, and we deal with all kinds of customers, from
the very large, global guys ... all the way down to the
customer who buys 10,000 pounds of metal a year," he said.