Multinationals and regional market participants alike prepare to secure pieces of an
expanding pie

November 2017 - New aluminum capacity—whether it’s smelting, rolling, casting, extruding, recycling or fabrication operations—is slated to come on line between now and 2020. Each company that announced a planned expansion, joint venture, acquisition or technology breakthrough this year emphasized that the decision is based on customer must-haves: the highest quality, the most efficient production, the greenest material and the fastest delivery.

Apparent consumption of aluminum in domestic markets was estimated at 14.3 billion pounds through July, up 5.2 percent from the same seven months of 2016, the Aluminum Association reported in October. Distributors’ shipments through August totaled 1.19 million tons, up 6.8 percent from last year, according to the Metals Service Center Institute’s tally.

NIO, a new Chinese automaker, has partnered with Novelis, which will supply its proprietary Advanz grade aluminum.

Modern Metals gathered intelligence on multiple project developments. Some large, well-known players are here: Toyota, Arconic, Novelis, Mitsubishi, Constellium, the U.S. Navy and Magna. But so are some regional specialists such as Southern Aluminum Finishing, Bonnell Aluminum, Elixir Extrusions, Fairfield Aluminum Casting Co. Inc., Gateway Extrusions and Metal Shark. Lastly, there are some surprise entries: Gränges, Braidy Industries and NIO.

Braidy Industries expects to break ground next quarter on a $1.3 billion rolling mill in Kentucky that would start up in 2020. The company is led by Craig T. Bouchard, who became well-known in the steel sector alongside his brother James P. Bouchard and other investors, when they formed Esmark Inc. in 2003, which acquired service centers and coil coating assets in the U.S.

Braidy wants to be a low-cost producer of auto body sheet, plate and ultra-high strength alloys for the aerospace industry. The mill will open with an annual capacity of 370,000 tons, producing grade series 5000, 6000, and 7000.

“By combining an advanced production capability with advanced metallurgical science, there is a great opportunity to reinvigorate metals manufacturing in the United States,” Christopher Schuh, MIT metallurgist and member of Braidy’s board of directors, stated last April.

Mitsubishi Aluminum Co., Ltd., Tokyo, signed a letter of intent in September with Gränges AB, a Stockholm-based rolling mill of aluminum sheet for heat exchangers, and will contemplate establishing a new manufacturing base for sheet materials of automotive heat exchangers in North America.

Gränges simultaneously announced a $110 million investment to expand its aluminum rolling mill in Huntingdon, Tennessee, to meet growing demand for light-gauge foil, automotive heat exchanger materials and HVAC applications. The project includes buildings, casters, cold rolling mills, annealing furnaces and slitters. When completed, Huntingdon’s annual capacity will rise 25 percent to nearly 200,000 metric tons. The work will likely take two years to complete.

Gränges holds the world’s top market share (20 percent) in sheet materials for automotive heat exchangers. The proposal to form a joint venture with Mitsubishi will be drafted next year.

Bodine Aluminum’s Jackson, Tennessee, plant is getting $14.5 million from parent Toyota Motor Manufacturing to accommodate production of hybrid transaxle cases and housings, and 2.5-liter engine blocks.

In April, Arconic brought its Very Thick Plate Stretcher on line to supply aerospace and industrial plate. The investment is backed by customer contracts, including one with Airbus valued at $1 billion. Installed in Davenport, Iowa, the project cost the company $150 million. The stretcher improves the machinability of heavy-gauge aluminum and aluminum-lithium plate in aerospace and industrial applications. Product coming off the stretcher, for example will allow airframe builders to make large wing ribs, fuselage frames and bulkheads in new sizes and thickness.

In addition, thicker plate can be used to build larger manufacturing chambers in the semiconductor industry, allowing customers to make larger and/or more chips in the same amount of time. Product shipments to aerospace and industrial customers have begun.

Electric & hybrid cars

In March, Atlanta-based Novelis signed an agreement with NIO, Shanghai, to supply its proprietary Advanz grade aluminum products for structural components and parts for the aluminum-intensive NIO electric SUV models to be launched over the next five years. Supply for NIO will come from Novelis’ Changzhou plant.

“This seminal relationship with NIO is pushing the limits of what is possible with electric vehicles from both a performance and design standpoint,” said Pierre Labat, vice president of sales and marketing for Novelis’ Global Automotive division.

Meanwhile, Toyota Motor Manufacturing Co. pledged to invest $373.8 million in five U.S. factories to support its first U.S.-built hybrid powertrain and to implement Toyota’s New Global Architecture at its Huntsville, Alabama, plant. Each of the projects is scheduled to begin this year and all should be operational by 2020.

The investments include raising production of 2.5-liter cylinder heads cast at Bodine Aluminum’s Troy, Missouri, plant ($17 million) and modifying Bodine’s Jackson, Tennessee, plant ($14.5 million) to accommodate production of hybrid transaxle cases and housings, and 2.5-liter engine blocks.

These investments “underscore Toyota’s confidence in the capability and global competitiveness of our North American manufacturing,” stated Jeff Moore, senior vice president for manufacturing.

Magna, along with Ford and the Energy Department, designed a multi-material lightweight frame  that drops 23.3 percent of the current Ford Fusion’s curb weight.

Aurora, Ontario-based Magna International Inc. is spending $60 million to install a high-pressure aluminum casting line at its Kamtek subsidiary in Birmingham, Alabama, to address demand for lightweight components. Conventional steel welded assemblies can require 12 or more separate stampings to produce one structural component. High-pressure aluminum casting allows production of full structures in one piece. The new line will initially make front shock towers.

In May, Constellium N.V. opened a 135,000-square-foot factory in White, Georgia, that makes automotive structural components and crash management systems for automakers in the Southeast.

Masters of extrusion

Shapes and profiles are finding ever more outlets and applications; in response, North American extruders are working to expand output.

Gateway Extrusions installed a vertical powder coat paint finishing line in Union, Missouri, enabling it to process longer profiles (up to 25 feet) more efficiently and faster than with its previous horizontal paint line. The investment in new plant and equipment was several million dollars.

SAF Midwest, part of Southern Aluminum Finishing Inc., opened a 40,000-square-foot fabrication shop in Indianapolis during August. It stocks aluminum sheet, extrusions and provides architectural metal fabrication services such as cutting, bending, welding and assembly.

“We see commercial construction growth potential in Indiana and surrounding states,” co-CEO Penn McClatchey says. Atlanta-based SAF has anodizing and painting facilities, a fabrication center and carries a wide range of product inventory.

Elixir Extrusions invested $8 million to erect a 70,000-square-foot addition to its Douglas-Coffee County, Georgia, plant. The addition will accommodate the integration of automated anodizing equipment.

Bonnell Aluminum started up an extrusion line at its AACOA division in Niles, Michigan, in June. This $18 million expansion project—which includes a 3,600-ton, 9-inch press, handling systems and ancillary equipment plus additional fabrication space—sells custom-finished extrusions to automotive and specialty markets.

Metal Shark engineered a new patrol boat for the U.S. Navy, and won a long-term contract to build the vessels.

M&A activity

A couple of notable marriages took place in the industry this year. Alcast Company Midwest Works LLC in Peoria, Illinois, bought Fairfield Aluminum Casting Co. (Falco) in Fairfield, Iowa.

Falco specializes in sand and permanent mold products with fast prototypes. Services include pattern making, assembly, machining, coating, inserting, heat treating, pressure testing, impregnating and other value-added casting operations.

Bonnell Aluminum purchased Futura Industries. The Clearfield, Utah, firm designs and manufactures extruded aluminum products for multiple end markets, including flooring trims, OEM components for truck grills, solar panels, fitness equipment and more.

Sailing forward

Down in Jeanerette, Louisiana, Metal Shark won a contract in early October to produce the U.S. Navy’s latest patrol boat, the PB(X). The Navy intends to replace about 100 to 160 of its existing 25-foot and 34-foot CRF patrol boats with the PB(X) platform over the next 15 years.

The Navy placed an initial, immediate order for 11 of the new vessels. Under the terms of the contract potentially worth above $90 million, Metal Shark will build up to 50 PB(X) vessels. The 40-foot-long, welded-aluminum pilothouse patrol boat was designed by Metal Shark’s in-house engineering team.

This was the second major Navy contract the company landed this year. Metal Shark was selected in June to build up to 13 Near Coastal Patrol Vessels, 85 feet long, at its Franklin, Louisiana, waterfront shipyard.

So whether it’s cars or ships, airplanes or building products, evidence for growing demand on the aluminum sector is clear and suppliers are putting their money and smarts into improved assets and technologies. MM