Automotive Sheet Aluminium Producers Fighting to Meet Increasing Demand: Boney
09 August 2016 by Staff
According to Tom Boney, the general manager of automotive for Novelis North America, sheet aluminium suppliers to the automotive industry have a major problem – they are struggling to fill the ever-increasing volume of orders they are receiving from automakers.
Boney revealed this state of affairs to an audience at the Center for Automotive Research’s Management Briefing Seminars in Traverse City, Michigan last week. Although sheet aluminium suppliers are investing in increased capacity, the capacity under construction is already spoken for, as it is needed to meet existing orders. He went on to explain that suppliers in North America are running at close to full capacity at present, with no let-up in demand in sight.
“The industry is very close to capacity, and more capacity will be required,” he explained. “We’re proud to say we have a solid order book.”
Boney echoes the sentiment expressed by Marco Palmieri, president of Novelis North America, in April. “We still have some open capacity that we can provide. But for any meaningful volume, new investment will be required,” he told Automotive News.
His firm, a subsidiary of India’s Aditya Birla Group, supplies sheet aluminum for the Ford F-150, Cadillac CT6, and other domestic models. Boney explained that his firm spent US$400 million to upgrade its plant in upstate New York, including upgrading finishing lines and adding aluminium recycling capacity. However, that capacity, as well as the output of a new plant in Ontario, is already committed, Boney explained.
Aluminium sheet producers will be called on for more and more output over the next several years. According to automotive experts, the average vehicle will contain 500 lbs. of aluminium by the year 2025, an increase of seventy-seven pounds per vehicle over units made in 2014. The move to aluminium is prompted largely due to the push to improve gas mileage via lightweighting.
As for Novelis, Boney says that they are already negotiating supply contracts for 2019.
“We are clearly talking with all of our customers about what they want to do,” he explained.
Correction: An earlier version of this post stated that Marco Palmieri’s comments were made in June. It should have read April.