Last week I had the pleasure of speaking at the American Metal Market Galvanized and Coated Steel conference held in Detroit. The conference logically examined some of the underlying market dynamics of materials used in automotive production – hot dipped galvanized steel and aluminum.
And clearly the regulatory environment stemming from both new CAFE standards as well as safety requirements, not to mention mid-term commodity volatility (particularly for steel prices and aluminum prices) have driven and will continue to drive change throughout the automotive world.
CAFE requirements have become “the game changer for all metals,” according to Frank Goodwin, Director of Technology and Market Development, International Zinc Association. He noted, “lighter weight materials remain a huge challenge to steel and zinc-coated steel.”
According to Goodwin, Europe has implemented new coatings (such as a zinc/aluminum/magnesium) to help with “light-weighting,” the term used to describe the materials, production methods and technologies used to reduce the weight of a vehicle without negatively impacting attributes such as safety, cost, recyclability, etc., according to a research brief from Oak Ridge National Laboratory.
But this coating innovation will move to the construction industry first, before it hits the automotive world.
Shift from Steel to Aluminum?
The big question asked early on – given the big moves of the auto OEMs toward aluminum: what do steel producers like Severstal think will happen?
Thomas Marchak, Vice President of Commercial from Severstal said, “Ford is looking at aluminum as well…the only tact[ic] for the steel industry is to continue developing these types of steels cost competitively.” According to Goodwin, “vulnerabilities have been the doors and hoods – the bolt-on parts are ‘good pickings’ for aluminum. The body itself is really integrated and has been very successfully defended [for steel], but steel needs to go after the under-body and frame parts,” he added.
The “segmentation to smaller vehicles to reach fuel economy standards places a huge challenge to companies like Ford,” according to Geof Cooper, part of the technical team at Ford Motor Company. “The transition out of trucks and into cars obviously directly impacts revenue and profitability for Ford,” he said.
Cooper discussed the areas Ford has examined to obtain the weight savings necessary to meet fuel standards. He pointed to engine strategy (battery/electric, hybrid and GTDI technology), the need to reduce weight in powertrains (without sacrificing performance, which directly hits revenue), and perhaps most interesting — yet not the most surprising — the primary area of focus: body in white. Cooper pointed to a 55% yield strength improvement for front rails and roof structures through the use of advanced high-strength steels.
The pressure on OEMs remains high as CAFE standards continue to become more rigorous through 2025.
Next week, we’ll publish the latest results from Planning Perspectives on supplier/OEM relations within the automotive industry. The study assesses the quality of relations based upon 15 different categories of spend or manufacture within a car or truck. Ironically (or perhaps not so), the most contentious area involves body in white. The results of the 2011 study can be found here on MetalMiner and the second part here on Spend Matters.