CHICAGO Reliance Steel & Aluminum Co. expects its toll processing operations to benefit from strong 2014 growth in the automotive sector, company executives said.
The Los Angeles-based service centers toll processors in the United States and Mexico are forecasting better volumes in 2014 than last year, Reliance president and chief operating officer Gregg J. Mollins said in an earnings conference call with analysts Feb. 20.
Reliances returns from toll processing operations "are awesome," Mollins said. Thats especially the case for automotive aluminum, where there is less competition than on the steel side of the business and thus delivers better profit margins, he said.
As a result, Reliance is spending "well over" $10 million to expand and take advantage of opportunities in automotive aluminum as more carmakers convert from high-strength steel to the light metal, Mollins said. The money is going toward, among other things, "revolutionary" laser and blanking equipment for light-gauge aluminum for auto body sheet, he said.
"We think that the auto industry is going to be very strong in 2014," Mollins said, brushing aside concerns that increasing dealer inventories could lead to automakers scaling back production.
The aluminum supply chain is ramping up to meet expected increases in demand from the automotive industry as mass-produced vehicles, including popular pickup trucks, convert from steel- to aluminum-intensive vehicles (amm.com, Feb. 19).