MetalMiner welcomes commentary from Heidi Brock, president and CEO of the Aluminum Association.
Like many industries in the global commodities sector, 2015 has been a bit of a roller-coaster for the North American aluminum industry. From highs, such as the release of the aluminum-intensive Ford F-150, to lows like the announced curtailment of some domestic production, this has unquestionably been a year of ups and downs.
However, some recent chatter and reporting suggesting a “collapse” of the US aluminum business, framing ours as an industry “fighting for its life,” are overblown, misjudged and simply incorrect.
It’s time to take a deep breath, tone down the rhetoric and look at the hard facts.
It is absolutely true that this is an extremely challenging time for parts of the domestic and global aluminum industry — particularly in the upstream segment of the business. The recently announced curtailments of US smelting capacity have real-world consequences on hardworking families and rural communities.
But, let’s keep a couple of things in mind. First, a curtailment is not a closure. In better market conditions, these curtailed smelters could be brought right back into production. Second, we’re working together as an industry to do everything we can — improving trade conditions, supporting transparency in the financial trading of aluminum, promoting common-sense regulations — to create an environment where these smelters can reopen.
Despite these obvious challenges, what’s also important to remember is that many parts of the domestic aluminum industry are as healthy — or healthier — than they’ve ever been. Let’s start with the fundamentals.
End User Demand
Aluminum is a product virtually every person in the US, and indeed most of the world, uses every single day. The metal is so ubiquitous that many of us don’t even realize how often it touches our lives.
The car you drive to work most likely has an aluminum hood and other lightweight parts to drive fuel efficiency and improve performance. Your house or office building likely uses aluminum windows and doors, or maybe even a cool roof to improve insulation and decrease heating and cooling bills. That airplane you fly in to visit family and friends over the holidays would literally not be possible without lightweight aluminum as a key component. Increasingly, even the high-tech gadgets you use to stay connected make major use of aluminum.
Shipments Are Up
The recent history of industry shipments bears out the strength of the metal. In 2014, demand for aluminum in the US and Canada totaled more than 25 billion pounds, approaching record levels last seen in the mid-2000s. This is more than five times the aluminum demand in 1960, despite the fact that the population has not even doubled during that time period. And that doesn’t even take into account global demand, which has seen half a decade of 5-to-8% year-over-year demand growth. Bullish projections five years ago had global aluminum demand doubling between 2010 and 2020. Midway through the decade, we’re on track to exceed that forecast.
The Bottom Line
People use more aluminum today than ever before and this shows no sign of abating.
What’s just as clear as our positive demand picture is that the industry is continuing to modernize and grow. While domestic primary production remains a critical part of the mix, production in the US is increasingly centered around recycled metal — or secondary production as it’s known in the industry. Domestic market players are also focusing more on the value-added end of the business.
Today, nearly 80% of aluminum industry jobs are either in making recycled aluminum or in downstream parts of the business like rolling mills and foundries. This value-added segment, in particular, has seen significant investment in recent years to meet projected demand growth in auto and aerospace. Indeed, since 2013, our member companies have announced investments north of $2.5 billion in domestic plant expansions. Just a few weeks ago, one of our members broke ground on a $240 million project in Kentucky that will add 200 jobs to an aluminum rolling facility there.
At the same time, the US industry increasingly makes recycled (secondary) metal. We make twice the amount of secondary aluminum today as we did in 1980 — about 8.5 billion pounds last year — and more recycled aluminum than any other country besides China. Since recycling aluminum requires 92% less energy to make than new aluminum, this has a major – and positive – impact on the industry’s environmental footprint.
No market stands still and we fully expect to see continued shifts in this dynamic yet growing sector of the manufacturing economy. Some of these changes may create challenges and we will work together as an industry to overcome them. But we also know the fundamentals — and the facts — support a continued vibrant aluminum business in the United States.
Heidi Brock is the President & CEO of the Aluminum Association, based in Arlington, Va. The Aluminum Association represents 111 US and foreign-based companies and their suppliers throughout the value chain, from primary production to value-added products to recycling. The aluminum industry helps manufacturers produce sustainable and innovative products, including more fuel-efficient vehicles, recyclable packaging, greener buildings and modern electronics. For more information visit www.Aluminum.org, on Twitter @AluminumNews or Facebook.com/AluminumAssociation.
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