WCA January 2015

From the Americas The projected falling-off from that point is based on an expectation that – even though aluminium-sheet deliveries to automakers could reach 2.68 billion pounds in 2018, compared to 504 million pounds in 2014 – most of it will go into “closures”. These are hanging parts like doors, hoods, and trunk lids, as distinguished from vehicle body structures or frames. In the meantime, according to analysts consulted by GreenCarReports , new high-strength steels currently under development are becoming ever more effective in cutting pounds from the car body, which accounts for most of the weight. (“Steel Vs Aluminum: Which Wins For Fuel Efficiency AND Cost?” 14 th October) These new materials will be available for the next round of car redesigns, giving engineers a lower-cost alternative to aluminium that will still keep weight down.  In fact, wrote Mr Edelstein: “Researchers claim use of new but less expensive high-strength steel could lighten future car structures enough that aluminium closure parts won’t be needed.” This would, he said, potentially reduce the cost of cars and relieve the minds of buyers who may be concerned about aluminium’s durability and ease of repair. With the jury still out on its tilt toward aluminium, Ford will extend its use to the workhorse Super Duty pickup “While Ford and General Motors trumpet their growth in China, neither would be profitable without the resurgent US market and, more specifically, Americans’ insatiable appetite for pickups.” Having identified the principal factor in the remarkable success record of pickups from Ford Motor Co, business writer Alisa Priddle reported in the Detroit Free Press that the company is tinkering with a second winner. Ford has announced that it will use aluminium on the next generation of its hard-working and greatly prized Super Duty pickup. (“Ford Doubling Down on Aluminum Trucks with Super Duty,” 4 th October) Results from Ford’s earlier foray into aluminium, with the even more popular F-150 light-duty pickup, have been modestly encouraging. But the 2015 redesign of the F-150 will likely displace more steel with aluminium, and Wall Street expects slimmer profit margins than on its steel-body predecessor. Five-year aluminium prices have averaged about $2,200 per ton, while steel ranges between about $300 per ton for sheet metal and $500 for shredded auto scrap. On 8 th October, a Morgan Stanley analyst suggested that the new F-150 would drain short-term profitability. Adam Jonas wrote in a report to clients: “In short, we believe it’s a great product that may be far less profitable than the market anticipates.” Mr Jonas estimated that more than 90 per cent of Ford’s global auto profits come from the F-150 and its larger

heavy-duty derivatives. Hence his warning: “Ford’s F-150 truck changeover is unlikely to go as smooth as investors anticipate.” Moreover, as noted by Ms Priddle, new technologies and the addition of ever-more sophisticated features in the F-Series and other Ford models will entail higher warranty costs and greater danger of recalls.  But switching the Super Duty pickup to aluminium will add an estimated 350,000 heavy-duty pickups to 750,000 aluminium-intensive light-duty Ford pickups annually, promising economies of scale that will help offset the higher cost of aluminium. However it weighed the various factors, Ford is committed to aluminium for its Super Duty workhorse pickup. “Those on the outside would say it’s a big risk,” Matt O’Leary, vehicle line director for Ford North America trucks, told the Free Press . “We don’t say it’s a big risk. We did all our homework and it was a calculated decision.” Under a more effective president than his detractors concede, the budget shortfall has narrowed for five successive years After rising to more than a trillion dollars a year at the height of the recent recession, the US federal budget deficit has fallen to pre-recession levels and is now lower than the annual average of the past 40 years. Final figures for fiscal year 2014, ended 30 th September, showed a shortfall of $483 billion. That is $197 billion less than in 2013 and $165 billion less than President Barack Obama had projected in his annual budget request. The improvement reflects the effects of economic growth, higher tax revenue, and lower-than-expected health care costs realised from the much-derided Affordable Care Act, or “Obamacare.” But, as noted by Jackie Calmes, national correspondent for the New York Times (15 th October), more significant than the dollar figures, to economists, has been the drop in the size of annual deficits as measured against the economy’s total output or GDP (gross domestic product). The 2014 deficit was equal to 2.8 per cent of GDP, below the three per cent level that many economists consider the acceptable limit in a growing economy. The budget shortfall has now declined for five consecutive years, from a high of 9.8 per cent in the 2009 fiscal year, and is the lowest it has been since 2007. Declining deficits have all but ended the budget fights that preoccupied Mr Obama and his opponents in Congress from 2011 through 2013. Indeed, Ms Calmes wrote: “The improved picture partly reflects the spending cuts that The US economy

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Wire & Cable ASIA – January/February 2015

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