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Constellium mulls capacity hike, cites automotive

Keywords: Tags  Constellium, Pierre Vareille, Ravenswood plant, automotive, Ford Motor, F-150, body-in-white, capacity expansion aerospace

CHICAGO — Constellium NV wants to add automotive aluminum capacity in the United States as it foresees a "step change" in demand following what it predicts will be the Ford F-150—the top selling pickup truck in the country—becoming a primarily aluminum vehicle.

Ford Motor Co. uses aluminum in the hood, suspension system and engine components of the F-150, a spokesman for the Dearborn, Mich., automaker told AMM Nov. 14, brushing off speculation about the pickup truck converting to an aluminum vehicle. "We are already the leader in aluminum use in full-size pickups," he said. "And it’s premature to discuss anything that we might use on a future product."

He also declined to reveal who supplies aluminum to the F-150, noting that Ford’s policy is not to discuss sourcing.

The Amsterdam-based aluminum company has "zero" capacity to meet expected big increases in demand for aluminum in the body-in-white of U.S. cars and trucks, Constellium chief executive officer Pierre Vareille said during a conference call with analysts following the release of its third-quarter earnings results Nov. 14. But the company is "looking very actively at building capacity in the U.S. for this (automotive) market," he said. "There are two players right now in this market, and we think that there is a need for a third player."

Constellium executives didn’t reveal who those two other players might be. The company hopes to announce a decision about its plans for the U.S. automotive sector "in the months to come," Vareille said.

Given the need to source equipment and gain qualifications from original equipment manufacturers (OEMs), any U.S. automotive expansion wouldn’t have a significant impact on Constellium’s results until 2016, he said.

Constellium also doesn’t have the hot metal capacity to support a big increase in U.S. auto body sheet production, Vareille said. "But we have never said that we would go to this market alone. So a model where we could use hot-line capacity from a partner is a model that could be one we would go for," he said.

Constellium wouldn’t, at least initially, plan to use its facility in Ravenswood, W.Va., to make automotive products, Vareille said. Ravenswood isn’t fully booked, but expects to boost aerospace shipments significantly in the coming months and year, he said. "So for the time being, Ravenswood probably would not be part of the first phase of expansion in body-in-white in the U.S."

The European auto market has seen steady gains in aluminum content for decades as the light metal has moved from smaller-volume luxury vehicles to more mass produced ones, Constellium executives said. But in the United States, the change could happen quickly because of stricter emissions standards, they added.

"In the U.S., it’s very different. ... There was virtually no aluminum in the body-in-white until very recently," Vareille said. "It is a steep change from nothing to a very high volume."

The F-150 alone converting to aluminum could boost demand by several hundred thousand tonnes, Constellium executives said.

"This decision by Ford is a tipping point. There will be more OEMs continuing to switch from steel to aluminum just because they compete with Ford," Vareille said. "If they don’t, their cars will have more emissions and they will be obliged to decrease the size of their engines, so they will lose some traction with their customer base."

On the aerospace front, Constellium executives said they weren’t seeing the same inventory overhang experienced by other aluminum companies (, Oct. 9, Oct. 29 and Nov. 6). They chalked the move up to 90 percent of the company’s aerospace business being long-term contracts, generally for five years, thus shielding it from spot volume and price volatility.

The executives also pointed to Constellium gaining business at the expense of others. "Our competitors see the overhang. But part of the overhang is probably the fact that we’re taking market share, although of course it’s difficult for them to assess that," Vareille said.

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