By John D. Stoll And Jeff Bennett
TRAVERSE CITY, Mich.--Steel thought it would be the auto
industry's best friend forever. But after more than a century, the
relationship appears to need some mending as new emissions
regulations are forcing car companies to rethink how vehicles are
made.
At a well-attended auto industry conference here, executives
from AK Steel Holding Corp., ArcelorMittal SA, Nucor Corp., and
U.S. Steel Corp. walked the halls talking to anyone who would
listen about the flexibility and lightness of their metal.
Their message: Steel--rather than aluminum or plastics--should
be the material of choice when it comes to affordably reducing
weight on cars and trucks, which need to get lighter to meet 2025
emissions standards.
Those standards, known as corporate average fuel economy, or
CAFE, were locked in during the summer of 2011 and have become the
driving force behind most future product strategies. AcelorMittal's
director of automotive products, Blake Zuidema, says the Obama
administration's announcement of dramatically tighter standards was
"the proverbial shot across the bow," pushing steel companies into
action.
Since then, steel advocates have been hitting auto shows and
other venues, including industry conferences, often wearing bright
green shirts, in an effort to stay in front of an auto industry
that has long provided a big revenue stream for the steel
industry.
"We knew our story so well and assumed our customers also knew
it so well," Jody Hall, vice president of the Steel Market
Development Institute, said. Steel will always have a role in the
production of automobiles, but trends show auto makers are spending
more time and dollars looking for areas to reduce or even replace
steel with aluminum or other composite materials such as plastics
and carbon fiber.
The biggest hit came when Ford Motor Co. transitioned the body
panels of the best-selling F-150 pickup to aluminum. Before that,
aluminum had been used for niche vehicles aimed at well-heeled
buyers, such as Audi AG's A8 sedan--but Ford's move to aluminum,
soon to include heavier-duty trucks, represents one million
vehicles worth of production.
Makers of composites also are pressuring steel. BMW AG, for
instance, is beginning to use more carbon fiber in the production
of its 7-Series luxury sedans. Audi has developed a new sports-car
platform for its R8 and Lamborghini models. The platform uses
carbon fiber in the hood and the rear seat cavity.
Steel traditionally makes up about 60% of a vehicle's content,
Ms. Hall said. Aluminum, however can offer a significant weight
savings, helping Ford shave 700 pounds from the F-150's curb
weight; Audi estimates aluminum to be 30% lighter--but steel is a
third of the price of aluminum, giving it a huge edge in weak
economies and developing markets.
Steel executives are encouraging auto makers to stay close. They
have doubled the number of grades of steel now on the market,
promise to work in tandem with any auto maker on any new vehicle
and point to that fact that steel is still the best option when it
comes to cost. The savings is around $275 a pound over aluminum. It
can stand the test of time, which has now become a significant
piece of the car-purchasing process. The average age of vehicles on
the road is more than 11 years.
Aluminum executives also were on hand at the conference here,
with Alcoa Inc.'s global automotive vice president, J. Michael
Murphy, saying several more future vehicles--yet to be announced,
will be on the market by 2021. He cites a Ducker Worldwide study on
the emergence of aluminum as the primary body style as reason for
optimism.
"The industry's history is 100 years of buying steel," Mr.
Murphy said. But that dominance is getting dented. He says that 50%
of hoods in the industry, for example, are now aluminum.
"We have been preparing for this [shift to aluminum] for
decades," he said.
This isn't the first time steel has confronted the threat from
outsiders. Decades ago, General Motors Co. launched plastic-paneled
vehicles, including the Pontiac Fiero, minivans and Saturn small
cars. But that practice fizzled. "There has always been a push by
the auto industry into these new materials, and they have always
returned to steel," AcelorMittal's Mr. Zuidema said.
That will be put to the test as auto makers are already locking
in specific product plans for meeting new emissions standards that
are a decade away, David Mason, vice president of global automotive
at Troy, Mich., based Altair Engineering Inc., said. Altair
provides software and engineering solutions to auto makers and
other industries looking to take weight out of products.
Mr. Mason said there has been a flood of suppliers of plastics
and aluminum looking for ways to boost sales to auto makers, and
this has steel companies on the defensive. The amount of plastics
now in a car has jumped to more than 350 pounds from 85 pounds in
the 1970s. "The metal guys will come [to us] and say 'will you help
us fight back,"' Mr. Mason said.
Write to John D. Stoll at john.stoll@wsj.com and Jeff Bennett at
jeff.bennett@wsj.com
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