WCA January 2015

From the Americas

The product line includes extruded, forged and rolled parts for aerospace applications: single-piece wing skins, fuselage skins, wing stringers, floor beams, seat tracks and other components. The company also has in development an aluminium-lithium forging for the front fan blade in Pratt & Whitney’s PurePower engines. Shortly before publication of Alcoa’s third-quarter 2014 results, Forbes noted that the company has “bet big” on the aerospace segment in its strategic shift towards value-added products. Signs are strong that the big bet will pay off. (“Value-added Businesses to Boost Alcoa’s Q3 Results,” 2 nd October) Certainly the current outlook for aluminium is favourable to Alcoa’s business in general. Cuts in global smelting capacity in response to low prices have finally taken effect. Forbes reported that London Metal Exchange warehouse stocks of aluminium were down around ten per cent in mid-2014 from the start of the year. A poll conducted by Reuters in July found that the market for aluminium is expected to move from an oversupply of 235,500 tons last year to a deficit of 4,444 tons in 2015. While that deficit will likely see some erosion from smelting capacity restarts, the tightening of the physical supply of aluminium has led to a recent rally in prices. LME aluminium prices averaged close to $2,000 per ton in the third quarter of last year. They averaged roughly $1,800 per ton over the course of the third quarter of 2013. An American steel-industry trade organisation predicts that aluminium use in cars will go into reverse around 2018 Alcoa may be setting its sights on aerospace (see “Brightening climate for aluminium,” above). But, as US carmakers work to meet stricter global emissions standards and to comply with Corporate Average Fuel Economy (CAFE) goals, automotive is the arena of the steel-aluminium faceoff. The domestic steel and aluminium industries both expect aluminium use in cars to grow. A study commissioned by the Aluminium Transportation Trade Group predicts that seven out of ten pick-up trucks will have aluminium bodies by 2025. While steelmakers acknowledge that the automotive industry is using more aluminium all the time, a report from the steel-industry trade organisation World Steel Dynamics Inc (Englewood Cliffs, New Jersey) claims that the trend will be short-lived. Over 300 pages it argues that the weight advantage of aluminium will be neutralised by the arrival of more advanced, lower-cost and lighter-weight steels. Reviewed by Stephen Edelstein in GreenCarReports , “AutoBody Warfare: Aluminum Attack” foresees aluminium use peaking around 2018, even as CAFE standards stipulate additional fuel-economy gains. (The mandated fleet average – the equivalent of around 42 miles per gallon on the window sticker – is 54.5 mpg by 2025.) Automotive

Steel Industries since 1984. According to Toshiyuki “Ted” Tamai, its current president and CEO, a firm decision was taken early on that there would be no recession-related layoffs, furloughs, or base-salary cuts. (“California Steel Industries Weathered Recession with No-Layoff Policy,” 10 th October) How was this accomplished? Among the cost-cutting measures reported by Ms Gruszecki:  Reassigning 30 employees to a furnace construction project.  Taking in-house some services that had been contracted out.  For nine months, suspending the corporate matching contribution to employee retirement plans.  Permitting voluntary reduction in employee work hours.  Most notably, paying 100-plus employees for more than $250,000 worth of community service work. Projects included cleaning up the San Bernardino National Forest, refurbishing a battered women’s shelter, rebuilding a burned-out ranch, and landscaping the grounds of a college. Even as orders tumbled, one employee was paid an hourly wage for a five-week stint with the US Forest Service. “It saved my house,” he told the Press Enterprise . “It was a real morale booster.”  Mr Tamai noted that, during his company’s full-employment retrenchment, other steel companies across North America laid off 16,300 workers. In 2009 alone, he recalled, there were 7,765 jobs cut at US Steel.  California Steel is the only West Coast steel company that makes hot rolled, pickled and oiled, galvanised, cold rolled sheet. The largest industrial employer in the inland area of the state, it has seen its workforce grow by 120 since the downturn to 1,077 today. In a brightening climate for aluminium, Alcoa ‘bets big’ on aerospace with the world’s largest aluminium-lithium plant Aircraft manufacturers are increasingly turning to lighter and stronger aluminium-lithium alloys, which are less expensive than titanium and composites and afford better fuel efficiency and lower maintenance costs. To capture that demand, Alcoa on 2 nd October opened an aluminium-lithium plant in Lafayette, Indiana, where it produces advanced third-generation aluminium-lithium alloys for the aerospace industry. The $90 million facility is the largest of three such projects for the company. New York-based Alcoa has also expanded its aluminium-lithium capabilities in Pittsburgh and at the Kitts Green facility in the United Kingdom. The cast house at Lafayette has a rated capacity of more than 20,000 metric tons annually, making it the largest aluminium-lithium facility in the world. Aluminium

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Wire & Cable ASIA – January/February 2015