A Vehicle For Growth

Aluminum markets have benefited from an improvement in the world economy. Additionally, greater attention to fuel economy, especially in the United States, could accelerate the use of aluminum in newer models of automobiles produced in this country. Factoring in the greater interest in hybrid vehicles, it appears carmakers and consumers will be focusing on vehicles that are better for the environment and more fuel efficient.

Why automobiles? Even with the ubiquitous aluminum beverage can, the transportation sector, including automobiles, makes up the largest end market for aluminum. The Aluminum Association estimates that aluminum’s largest consuming market is transportation at 34 percent, followed by packaging at 20 percent, construction at almost 15 percent, electrical at 6.5 percent, machinery and equipment at 6.5 percent, consumer durables at 6 percent and other markets at 3 percent.

The short-term gyrations will likely be exacerbated by concerns about the U.S. economy. A recent report by the Institute for Supply Management notes that the index of U.S. manufacturing contracted in December 2007. This followed 10 consecutive months of expansion.

Despite these problems, there appear to be positive long-term indicators that could result in a far healthier aluminum market. Concerns about climate change, energy independence and high gas prices are resulting in a call for boosting the efficiencies of automobiles.

Lightweighting is one approach for improving the fuel economy of vehicles. While aluminum is a natural choice for lightening the total weight of a car, it isn’t a cakewalk. The steel industry has also responded to the desire for improved fuel economy by producing lightweight steels for automotive applications. Meanwhile, manufacturers have also introduced composites and other materials that can lower the weight of a vehicle while also promising safety.

In addition to competition from other materials, the increased use of aluminum in automobiles could result in a higher overall retail cost for the car. While many consumers are seeking better fuel economy from their new vehicles, some reports show that increasing the amount of aluminum used in a vehicle could result in a significantly higher cost to the consumer.

The aluminum industry has been championing the steady increase in the amount of aluminum that is included in automobiles on average. The Aluminum Association notes that the average U.S. automobile contains approximately 327 pounds of aluminum, which is quite an increase from the beginning of the decade, when aluminum passed plastics as the third most widely used material in the average automobile at 257 pounds per car. In 2006, aluminum surpassed iron, moving its way up to the second most-used material in automobiles.

The association says it expects the use of aluminum in domestic automobile production to steadily increase, reaching 375 pounds by 2015.

This promising growth the Aluminum Association forecasts could be enhanced by the recent signing of a bill that will require an increase in the fuel economy standards for U.S. cars. The new CAFE (Corporate Average Fuel Economy) standards call for a sharp increase in the miles per gallon achieved by U.S. automobiles. President George W. Bush signed the new standards into law late last year as part of the Clean Energy Act of 2007, and they are expected to accelerate the use of lighter weight materials in new car construction.

CAFE is the sales-weighted average fuel economy, expressed in miles per gallon, of a manufacturer’s fleet of passenger cars or light trucks with a gross vehicle weight rating of 8,500 pounds or less. CAFE’s goal is to reduce energy consumption by increasing the energy efficiency of

While the increase in CAFE standards may appear significant, U.S. automobiles still lag behind European autos in fuel efficiency. According to some reports, there is talk of hiking Europe’s fuel economy standard from the current 40 miles per gallon to 49 miles per gallon.

While the amount of aluminum that is being used in U.S. automobiles is increasing, Larry Rinek, a senior consulting analyst for Frost & Sullivan, a global growth consulting firm, says it is still far less than what is being used by automobile manufacturers in Europe. The differences will be hard to overcome, he says. The power that many U.S. consumers typically find in U.S. cars is often lacking in European models. Also, replicating the aesthetics that U.S. consumers are used to would be difficult with a sudden increase in the amount of aluminum used in manufacturing an automobile, he says.

Despite the differences, Rinek says the use of aluminum in automobiles is going to continue to increase during the next several years. "Detroit would love to use more aluminum, but is very cost conscious," he notes.

Supporters of increasing the use of aluminum in automobiles say that aluminum provides strength and durability while also achieving weight reductions, meaning there is no compromise in the area of vehicle safety. In support of that, a study by the Aluminum Association released in 2005 shows that in crashes involving sport utility vehicles, damage to the vehicles can be reduced by as much as 26 percent by using aluminum to increase the vehicles’ "crush zone" while reducing the weight of the SUVs by as much as 20 percent.

Indicative of the greater interest automakers are showing aluminum is the fact that they are including aluminum manufacturers much earlier in the design phase.

Buddy Stempel, with the aluminum producer Novelis, notes that car companies are bringing Novelis into the process at their preliminary design stages.

"There is increased pressure for car makers to lightweight their vehicles," Stemple says. "We can produce a lighter, larger car that also is safer."

Emphasizing the auto industry’s goal to increase its use of aluminum, in a report published during the North American International Auto Show, held in Detroit in January, Robert Lutz of General Motors notes that his company is looking to incorporate more aluminum and magnesium in its automobiles to make them lighter and more fuel efficient.

In addition to lightweighting vehicles with traditional combustion engines, the growth in the use of hybrids will add even more opportunities for aluminum producers, Stemple notes. He says he is receiving more calls from automobile manufacturers about helping to improve the efficiency of their automobiles. This includes hybrids, sales of which are growing at a rate far greater than traditional automobiles.

While an initial selling point for aluminum is its ability to reduce the overall weight of the vehicle, Stemple adds that the metal is also able to meet many of the safety requirements that auto designers are seeking. He says one pound of aluminum is stronger than one pound of steel.

Recent statistics show that lightweighting an automobile directly correlates to increased energy savings. According to several reports, a 10 percent weight reduction directly translates into an 8 percent increase in fuel efficiency.

With public interest in environment concerns growing, the aluminum industry also has been championing its ability to help reduce greenhouse gasses.

In fact, Alcoa has stated that its researchers have developed a sustainability model that indicates using more recycled material in the production of aluminum and more aluminum in the transportation sector could make aluminum greenhouse gas neutral by 2017.

Alcoa also has reported that research has found that by the year 2020 the emissions of the entire aluminum industry can be offset by the potential emission savings from the transport sector’s increased use of aluminum.

Long term the market for aluminum in the transportation industry looks promising. However, there are some hurdles to jump along the way. More automobiles contain aluminum; however, overall automobile sales are down, in some cases quite significantly. Along with automobiles, the housing sector is another large end market for aluminum. And, with the well publicized problems in this market, aluminum demand is likely to be challenged.

Eric Prouty, an analyst with Canaccord Adams, notes that it is likely that more aluminum, along with other lightweight material, will be used.

The report from Canaccord Adams says that aluminum recycling also provides a considerable environmental benefit. By using recycled content, manufacturers can reduce around 95 percent of the emissions that are produced when aluminum is manufactured from ore.

With the combination of stronger demand for aluminum in automobiles, as well as general increased demand for the material, Canaccord Adams forecasts that total worldwide aluminum consumption may increase by 59 percent by 2015 to 51 million tons.

While the domestic automobile and transportation industry will undoubtedly help increase the use of aluminum, the marked increase will be driven by the continued surge in demand from China, which will be using greater amounts of aluminum in automobiles as well as other applications.

The author is senior and Internet editor of Recycling Today and can be contacted at dsandoval@gie.net.