Sapa boosts its presence in the United States
May 2012 - Strategic investments have brought economic opportunities to Sapa Extrusions North America, Rosemont, Ill. With a recent $34 million expenditure and cast house expansion at its Cressona, Pa., facility, Sapa is ready to meet continued demand from the U.S. automotive and energy markets.
Sapa, with roots in Sweden since 1963, expressed interest in securing a position in the North American market well before this year. In 2000, Sapa acquired a facility in Portland, Ore. In 2007, it entered into a joint venture with Alcoa, New York City, which established the company as the largest extruder in North America. In 2009, Sapa bought assets of Indalex, Lincolnshire, Ill. This acquisition, a marriage of the two largest extruders in North America, created a range of capabilities “never seen before in the aluminum extrusion industry,” says Jeff Henderson, director of marketing for Sapa Extrusions.
The company’s investments in plants and facilities around the United States are strategic, ongoing and focus on two things. The first is productivity measures aimed at making Sapa more competitive. The second is directed at specific market opportunities, bringing new aluminum options to merging and growing markets.
According to Henderson, growing market demand in North America exists because of nationwide initiatives to reduce energy consumption and build lighter-weight vehicles—projects that require aluminum and aluminum extrusions. Also, he foresees aluminum replacing materials like steel and copper in several applications.
Aluminum can replace steel in many projects in the energy-consumption industry, says Charlie Straface, general manager of Sapa Extrusions Industrial. “Two recently released studies commissioned by the Aluminum Extruders Council confirm that aluminum framing systems in large-scale utility solar projects are the most economical solution in operation and installation regardless of the spot price of aluminum at any time in history,” he says. “While the majority of projects are using steel, if aluminum is used, operators and installers are able to deliver a more durable product, a lower total cost of entry, and, over time, a more effective product. In this way, aluminum extrusions can enhance the viability of solar power as a competitive energy source over time.”
In the automotive sector, the push for lighter vehicles has increased the demand for aluminum extrusions, and the Department of Energy forecasts this trend will be prevalent through 2017.
“A major focus for the auto industry is designing vehicles that meet safety requirements and remove unnecessary weight from their product, in order to improve fuel economy,” says Straface. “Consequently, [our products] are the answer to many of the challenges the auto industry is facing.
“I have no doubt that within five years, you will see aluminum accepted as the metal of choice in the manufacturing of automobiles and other transportation products,” Straface continues. “The same can be said for manufacturers in the solar industry.” He also notes aluminum extrusions are an attractive choice for designers and manufacturers who are focused on creating recyclable, sustainable, long-lasting products.
Sapa is confident in the future of these industries and their potential demand for aluminum extrusions. “When you look at the demand projections for our industry, we could be looking at adding a billion pounds of new demand to our industry in 10 years. For Sapa, this is exciting, and, as you can see, we believe in it so strongly that we are investing tens of millions of dollars each year to make it possible,” says Straface.
Actions speak louder than words
To keep up with increased demand and competition, Sapa has made changes to grow and modernize in the United States.
The most recent investment is aimed at installing a state-of-the-art, 14-inch indirect press for rod and bar production at the company’s Cressona plant. It will result in an upgrade of Sapa North America’s industrial extrusion capabilities, according to a company press release. The press is scheduled to be running in June 2013.
Currently, Sapa is the only North American soft alloy extruder with indirect press technology, according to the company’s website. The addition of a new indirect press will increase production speed per unit by up to 50 percent, resulting in better grain structure and overall quality of product. It also will recover more scrap material than was previously possible at the Cressona plant, resulting in a lower operating cost to produce current rod and bar offerings. Combined, these improvements will create greater efficiency and increased control capabilities for the plant’s largest market.
Another focus of Sapa’s modernization effort involved the company’s casting facility, also located in Cressona. The $10 million project, completed in December 2011, will add 100 million pounds of annual capacity to Sapa’s total casting operations, including Cressona; Spanish Fork, Utah; Delhi, La.; Yankton, S.D.; and Toronto.
“This investment is to help ensure that we always have the highest of quality starting material for our extrusion presses. This added capacity will also help support increasing demand over the next cycle of economic growth,” says Straface.
Considering the future
When the U.S. economy was struggling in 2008, more companies considered downsizing rather than expanding. However, while many didn’t have the option to grow, an economic downturn often proves to be one of the best times to augment business. Sapa saw the downturn as an opportunity to take a chance on investing in the future.
When Sapa set out to grow, its long-term vision brought the company to the United States, says Straface. The company analyzed the U.S. market in 2008 and still considered it to be the leading market in the world for extrusions. “They believe in the long-term view of the industry,” says Straface.
“The North American market has been undercapitalized for quite some time,” Henderson adds. “In a quickly evolving global marketplace, the right investments are necessary to support these changes in manufacturing needs and competitiveness,” he says.
But one of the challenges the company faces is extending awareness of the benefits of using aluminum extrusions. To establish a baseline to educate current and future consumers, Sapa has introduced a new marketing campaign, Aluminology, “to provide examples where the usage of aluminum extrusions has allowed our customers to deliver superior products and high value to their customers,” says Henderson.
With the future considered, Sapa’s leadership is confident in the choices it has made regarding the well being of the company.
“Five years from now, I see Sapa in at least as strong of a position as it is today—a leader in the marketplace,” says Straface. “The investments that Sapa has made over the past four years have continued to steadily raise the bar in performance and keep our leading position. With a dedicated and very experienced workforce, and a consistent goal of modernization, Sapa has positioned itself to be a strong competitor now and in the future of the industry.” MM