Every January the North America International Auto Show is celebrated in Detroit, where the leaders of the auto industry announce new trends and improvements to their products. In this year’s show, Ford Motor Co. announced that its new F-150 pickup would be built with an all-aluminum body. Something that has become the best news for the aluminum industry since beer cans were converted from steel in the 1970s.
As reported in a January 13th Wall Street Journal article, Will All-Aluminum Cars Drive Metals Industry?, this is a big change since in the past only luxury cars were using aluminum for structural components—although components including engine blocks and wheels have long been made from aluminum. But this is the first time that a high-volume vehicle will be using aluminum in its structure. The reason is simple—fuel economy.
Auto industry experts say a 10% reduction in a vehicle’s weight allows for smaller powertrains and leads to a 7% improvement in fuel economy. Ford aims to shave 700 pounds off its existing about 5,000-pound truck. A 2014 Ford F-150 four-wheel drive with a 3.5 liter, eco-boost engine is rated at 17 miles a gallon in combined city and highway driving.
Alcoa Chief Executive Klaus Kleinfeld said in October that the expansion of the body sheet market, “…from luxury vehicles into the mass production, and to higher volume vehicles…” will generate “enormous opportunities” since an estimated 900 pounds of aluminum would be used to build the body of a full-size truck. This is compared with 1,500 pounds of steel, according to an analysis by Lloyd O’Carroll, a prominent metals analyst.
“This is a game changer,” said Mr. O’Carroll. The market for body sheet aluminum is currently worth around $300 million a year. He said if other cars go all aluminum, by 2025 it could be over $7.5 billion, a godsend for an industry that has been dogged by oversupply and low raw aluminum prices. And this is why Alcoa Inc. and Novelis, the top two U.S. aluminum sheet producers, invested about $1 billion last year in U.S. factories producing metal for autos since an all-aluminum car is expected to contain 15 different kinds of aluminum alloys. Automotive aluminum sheets usually contain more copper and silicon, which makes it stronger and more pliable.
But do not discount steel yet, since using aluminum still is somewhat new. Aluminum may be lighter than the more established steel, but it is about three times more expensive. Making entire cars out of aluminum, instead of merely a selection of parts, requires major investments in new machines that stamp car parts and also in assembly lines. For example, aluminum which isn’t magnetized, can’t be pulled by huge magnets through auto plants. Instead, vacuum pumps must pull these large aluminum pieces.
Ford and other carmakers regularly send engineers to aluminum companies to troubleshoot any problems. The F-150 is Ford’s highest volume, highest profit vehicle, and it doesn’t want lengthy production delays or durability problems. The company, which hasn’t publicly acknowledged the debut or any details about the truck, including the use of aluminum, added more time into the normal production schedule to avoid any postponements.
Also, the steelmakers are working on new alloys to produce lighter, high-strength steel to remain competitive. This summer, U.S. Steel and Kobe Steel opened a new line in Leipsic, Ohio, designed specifically to compete with aluminum. They also point to their relative advantage. Along with being more expensive than steel, aluminum is difficult to weld. Aluminum vehicles today are put together with adhesives and rivets, requiring big changes in the assembly process. Steel industry officials say that is a cumbersome process compared with welding advanced high-strength steel pieces together. “It’s not as simple as just switching from one material to another,” said Ron Krupitzer, vice president of the Steel Market Development Institute, an industry-funded research group.
I believe that no matter who ultimately prevails, aluminum or steel, the winner will be automation. In order to meet the new requirements from the automotive industry, metal producers would have to invest in process automation in order to be able to produce all the different alloys required by the auto industry—and make it in a very efficient way with high-quality standards. This will require companies to think out of the box and create new assembly methods, automate their smelting and refinery facilities to run production tighter to specifications, and implement maintenance practices in order to avoid production loss and quality issues. In other words, whoever wants to win this market, aluminum or steel producers, will have to embrace and implement technology and innovation.
I think that we will continue to see lighter and more efficient cars at the Detroit auto show, as well as more technology advanced metal producing facilities.
You can connect and interact with Juan Carlos and other metals & mining professionals in the Metals and Mining track of the Emerson Exchange 365 community.