Auto standards pit metal on metal
Higher gas mileage standards that automakers are required to meet by 2025 have set off a race between the steel and aluminium industries.
Automakers have been increasingly turning to aluminum as a quick way to make cars lighter and improve gas mileage. But steel is fighting back by developing stronger and lighter material that targets the auto industry.
“Steel still will be the dominant material,” said Richard Schultz, a consultant with respected automotive research firm Ducker Worldwide of Troy, Mich.
Lighter-weight aluminum is gaining ground on steel but remains a small share of the market. The steel industry now ships about 20 million tons to the auto industry, which will decline by 2025 to about 17 million as aluminum body sheet rises from about 100,000 to 1 million tons in 2020 and 1.5 million in 2025.
“Lightweighing” is the term used by both steel and aluminum producers to describe what's needed to meet aggressive standards announced in 2012 that will nearly double average fuel economy to 54.5 miles per gallon for cars and light-duty trucks.
Automakers have no choice, experts say, but to turn to aluminum. They must make decisions soon to meet long lead times needed by suppliers and themselves to develop new fuel-efficient cars and trucks.
On Thursday, the Environmental Protection Agency said new cars and trucks sold last year averaged 23.6 miles per gallon in combined city and highway driving, a record attained mainly through improvements to engines and transmissions.
While the steel industry has done a “wonderful job” developing new high-strength steels, that is only delaying aluminum's inevitable gains, Schultz said.
“There's no time. The EPA has told me the decisions for 2025 have to be made by 2016, so the manufacturers are turning to things they know,” Schultz said. A rule of thumb: Add a million tons of aluminum and take out 1.5 million tons of steel. “And that's how you save weight.”
A 2011 survey of automakers by Ducker found that use of aluminum — used for years in engines and wheels — will rise from 327 pounds in 2009 to 550 pounds in 2025. Much of the increase will come in the body, bumper, hoods and doors. Use of advanced high-strength steels in those parts will increase as well, from 261 pounds in 2017 to 375 pounds by 2025.
The first major vehicle conversion from steel to aluminum — the Ford F-150 — will ship next fall, according to Lloyd T. O'Carroll, an analyst with Davenport & Co. of Richmond, Va.
The F-150 is the best-selling pickup in North America, selling 751,674 units in 2012, in front of the Chevrolet Silverado at 454,255, and Dodge Ram at 362,618.
“Should consumer acceptance of an aluminum truck proceed smoothly, we expect that highest-volume light trucks and SUVs to be converted over the next 5 to 10 years,” O'Carroll said.
Schultz says the F-150 will be made with 900 pounds of aluminum sheet per vehicle next year.
The analysts are among several saying the F-150 will use more aluminum, although Ford Motor Co. spokesman Mike Levine said such talk is premature. Schultz says look for an announcement at the Detroit International Auto Show in January.
“As soon as the truck hits the streets next year, GM will tear it down and take it apart,” Schultz said, and the Chevrolet Silverado will be the next to convert.
Study in steel
To counter aluminum's momentum, the steel industry has issued a series of studies by WorldAutoSteel, a group of 18 producers, including U.S. Steel Corp., Nucor Corp., AK Steel Corp. and ArcelorMittal USA., promoting a small electric car design known as the FutureSteelVehicle.
“Our latest lightweighting projects show the continuing potential of steel and demonstrate how car makers can take advantage of steel's design flexibility and use of advanced steels,” said Jody Shaw, WorldAutoSteel's chairman and director of technical marketing and product research at U.S. Steel's automotive research center in Troy, Mich.
The group says its research “strongly suggests that steel auto structures in the near future can be as lightweight as today's aluminum bodies.” Weigh savings could be up to 39 percent compared with a gas-engine steel body design, the group says.
Ducker's Schultz said the steel industry did a good job on the research. But the FutureSteelVehicle design was optimized to save weight, not for manufacturing costs. “No one as yet has made any of the sophisticated parts in the FSV.”
Already on the road with about 900 pounds of aluminum are the Range Rover and Range Rover Sport, two $85,000-plus sport utility vehicles made by Jaguar Land Rover in the United Kingdom, previously owned by Ford.
Mark White, chief engineer for Land Rover's body division, said aluminum has been available since the 1930s and 1940s, but has re-emerged.
“Aluminum is now becoming a very relevant material in body structures and parts such as doors, hoods and fenders, and really throughout the vehicle in sheet form or casting form. You'll see a lot more aluminum-intensive vehicles in the next 10 years,” he said.
Alcoa to expand
Analyst O'Carroll said Alcoa Inc., Constellium Inc. and Novelis Inc. will benefit the most from demand for aluminum sheet. “We see this as the most important, transformative trend for the aluminum industry on a medium and long-term basis since the introduction of the aluminum can,” he said.
In May, Alcoa said it will spend $275 million over three years to expand production at its Alcoa, Tenn., plant, and previously announced a $300 million expansion at a plant in Davenport, Iowa. Alcoa expects a quadrupling of auto sheet volume by 2015 and a tenfold increase by 2025.
In a recent interview, CEO Klaus Kleinfeld said Alcoa has a leg up in the competition with steel to take market share in the automotive market.
“That automotive capacity we announced in Tennessee is basically booked out,” Kleinfeld said, even though it will not come online until 2016. “So you get a feel for what's currently going on in the industry.”
Also in May, U.S. Steel and Kobe Steel Ltd. completed a $400 million processing line in Leipsic, Ohio, to supply advanced steel to reduce vehicle weight and maintain strength and ability to be formed.
A continuous annealing line at their Pro-Tec Coating Co. joint venture and two other production lines that coat steel with zinc, have the capacity to produce 1.5 million tons a year of auto sheet steel.
Rob Kopf, general manager of hot-rolled markets for U.S. Steel, said the state-of-the-art annealing line at Pro-Tec enables the company to produce a next generation lighter-weight steel. It can be cold-formed at existing stamping plants, giving automakers more flexibility.
“The auto manufacturers are already incorporating these solutions into their 2014 and 2015 vehicles today,” Kopf said. “Our challenge is to give them additional products” to continue work further out.
U.S. Steel's Shaw said that until recently, automakers did not need these new steels, but now they are serious. “They need this, and they want this. It is their solution to keeping costs down. ... We have a very busy group in Detroit.”
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.
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