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Sapa looks to innovate in slow market

Keywords: Tags  Sapa, Charlie Straface, MSCI, Norsk Hydro, joint venture, extrusion, press, new capacity automotive


PALM BEACH, Fla. — Sapa Group aims to speed material substitution and boost its participation in the growing automotive sector as it grapples with lackluster demand in other industries, a company executive said Oct. 29 on the sidelines of the Metals Service Center Institute’s aluminum products division conference in Palm Beach, Fla.

"You hear a lot of predictions about what next year is going to be like, but none of them would be in the high-growth category—it’s just a matter of how sluggish the economy is going to be," Charlie Straface, vice president and general manager of industrial at Sapa Extrusions North America, part of the Sapa Extrusions-Americas business, said in an interview.

Given that difficult backdrop, Sapa’s Americas business, based in Rosemont, Ill., is looking to create new applications for aluminum extrusions by converting applications in the power transmission sector to less expensive aluminum from copper and by replacing automotive steel with lighter-weight aluminum, Straface said.

The goal is to spark demand for Sapa’s products even in the current sluggish market. "That’s the challenge of a slow-growth market: you need to innovate," he said.

Sapa is also investing in its facilities to improve quality and slash the time required to make products, Straface said. It has invested about $34 million in a new indirect press line at its Cressona, Pa., operations (amm.com, Sept. 5) that is expected to be fully operational by Jan. 1.

"We can go from the start of the process to on a truck in eight hours," Straface said, adding that the company is also starting a new press in South America.

Because of tepid demand in markets like distribution, Sapa is aiming to boost its participation in the automotive market, Straface said, noting that automotive companies are looking to increase aluminum content both in auto body sheet and extrusions due to stricter fuel economy standards.

Applications for extrusions include bumper systems and crumple zones or "crash cans" and even the cab structure of vehicles, Straface said. "There is just a lot of momentum for aluminum in vehicles, and we have a lot of investment going on to make sure we have the capacity and the technology" to meet expected increased demand, he said.

Sapa will also focus on hydroformed aluminum tubes, which could be "really big," he said. "Hydroforming is going to be a process that is going to need to work really well for aluminum (extrusions) to continue to grow."

Sapa’s automotive book to date has mostly been Tier 2 or Tier 3 suppliers. "But now with the (Detroit-area) Big Three really looking at aluminum, we are in conversations with those guys. So we are excited about the growth and the use of more aluminum, but we need to do it in a sound business way," Straface said, declining to say which vehicle programs Sapa might be supplying. And while automotive business offers high volume, it doesn’t guarantee high profits, he cautioned.

Also helping Sapa on the auto front is its recent 50-50 joint venture with Oslo, Norway-based Norsk Hydro ASA (amm.com, Sept. 3), which has brought Sapa four new 10-inch presses in North Liberty, Ind.; Belton, S.C.; Phoenix; and St. Augustine, Fla. Often used for auto applications, the 10-inch presses could help the company should automotive demand "take off," Straface said.

The joint venture also gives Sapa a bigger footprint, which the company will spend the next six months examining closely.

"Our goal is to use all those assets by growing our business. ... If we can’t do that, there might be some small plant footprint decisions that might have to be made, but not of significance," he said. Any changes could involve as few as one facility, he added.


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