Aluminum Corp. hasnt ruled out expanding into automotive
sheet, but dont expect an announcement soon, the
companys top executive said.
"At this point, we
have not made a decision to go there. But it doesnt mean
that we wont go there," Kaiser chairman, president and
chief executive officer Jack A. Hockema said Nov. 20 during
Goldman Sachs Group Inc.s annual Global Metals and Mining
Conference in New York, which was also broadcast online.
One thing the Foothill
Ranch, Calif.-based aluminum products maker wont do is
use its Trentwood facility in Spokane, Wash., to serve the
automotive sector, Hockema said. That operation will continue
to meet demand from the aerospace market, he added.
The automotive sector
is a "major growth market," but Kaiser is focused on
opportunities in automotive aluminum extrusions, Hockema said.
That market is expected to grow at a compound annual growth
rate of 5 percent, with aluminum extrusion content growing to
51 pounds per vehicle by 2025 from 26 pounds per vehicle in
2012, he said, noting also that 5 percent was likely a
acknowledged that automotive aluminum sheet is growing at a
faster clip than extrusions, estimating a sheet compound annual
growth rate of roughly 14 percent over the next 10 to 15
Inc. and Atlanta-based Novelis Inc. have been most aggressively
investing in automotive sheet capacity, he said.
Kaiser is also eyeing
aluminum lithium for the aerospace sector, but isnt yet
participating in that market, Hockema said. "We in fact do have
the capability to produce aluminum lithium," he said. "But
weve chosen not to make a major investment there
The market for
aluminum lithium is only beginning to develop, according to
Hockema. If aluminum lithium turns into a significant,
long-term market, Kaiser "will be prepared to participate," he
said, pointing to Alcoa and aluminum products maker Constellium
NV as the current leaders in the sector.
Constellium this past
week said it won a contract to supply aluminum products for
airframes, including its low-density aluminum-lithium solution
called Airware, for Chicago-based Boeing Co.s 787
amm.com, Nov. 21).
Hockema estimated that
roughly 70 percent of Kaisers value-added revenue comes
from the aerospace and automotive sectors, with the balance
from general engineering applications.
The North American
automotive sector should see build rates rebound from recession
lows to 16.2 million vehicles in 2013 before climbing as high
as 18 million vehicles in the next three to four years, Hockema
predicted. At the same time, aluminum content per vehicle will
rise, he said.
On the aerospace
front, aluminum content is expected to grow thanks to a trend
toward larger planes, with even composite-heavy planes using
more aluminum than traditional models, Hockema said. In
addition, aerospace plate should benefit as more aluminum
components are machined from plate due to a move toward
"monolithic" design, where parts are whittled away from a
single sheet of plate instead of traditional manufacturing
techniques that saw them comprised of several different
aluminum products, he said.
But despite his
bullishness on the long-term prospects of the aerospace sector,
Hockema reiterated predictions that an aerospace plate overhang
could drag into 2015 (
amm.com, Oct. 18) before the market returns to
normal demand levels in 2016 and 2017. But Kaiser still expects
strong sales in 2014, he said.
"The bigger impact ...
is on pricing. ... Some of our competitors apparently
arent going to have strong sales, and were seeing a
lot of pricing activity in the marketplace thats
affecting our spot prices," Hockema said, noting that resulting
price erosion will likely offset Kaisers sales growth in
reveal who these competitors are.