Alcoa seeks to polish aluminum's image

AUBURN, Ind. - When Haynes-Apperson of Kokomo, Ind., built a car engine with an aluminum crankcase in 1898, the silver-colored metal was considered exotic.

For many automakers, it still is.

But Alcoa, the world's largest producer of aluminum, believes that with automakers under pressure to improve fuel economy and to build cars with more recyclable components, the time has come for aluminum to move into the automotive mainstream.

The company, with sales last year of $22.9 billion, has an aggressive plan to double its sales of aluminum to the auto industry within 10 years.

L. Richard Milner, Alcoa automotive president, made the case for aluminum just a few feet away from the old Haynes-Apperson car at the Auburn-Cord-Duesenberg Museum here, where many of the antique autos on display sported aluminum parts.

Aluminum has a reputation for being more expensive and less rigid than steel, but Alcoa is working on a more efficient way to improve it. The company says it can make aluminum parts as safe as steel components by applying what it has learned working with Ferrari S.p.A. and Audi AG. Alcoa engineers helped design the aluminum frame for the Ferrari 360 Modena sports car and the aluminum-intensive Audi A8 luxury sedan.

Milner said Alcoa has a four-step plan to double sales:

1. Lowering production costs

2. Changing consumers' perception of aluminum

3. Taking on design responsibilities for certain parts such as body panels and suspension assemblies

4. Delivering more ready-to-assemble components to automakers.

Goal: $10 billion, 10 years

Alcoa's automotive business posted sales of $3 billion last year. The biggest amount came from the Alcoa Fujikura Ltd. joint venture that produces copper and fiber optic wiring harnesses in Pennsylvania and South Carolina. Alcoa supplies aluminum to the Big 3 as well as to Audi, Volvo, Ferrari and Mercedes-Benz.

If the company's strategy is successful, sales could grow to $10 billion in 10 years, Milner said.

"The use of aluminum in the auto industry has doubled in the last decade," Milner said.

"My belief is that it will double again. We should be able to keep up with that."

There already is plenty of aluminum content in vehicles. The metal is used in side-impact door beams, engine cradles, suspension parts, radiators and on hoods. Automakers' use of aluminum has increased from an average of 191 pounds per car in 1991 to an estimated 260 in 2001, says Dick Schultze, an aluminum industry consultant the Ducker Research Co. of Bloomfield Hills, Mich.

Schultze estimates aluminum content in cars will reach about 345 pounds by 2009, far short of Alcoa's goals.

In addition to competing with the steel and plastic industries, Alcoa has several foreign and one domestic aluminum supplier with which to contend. In the last five years, the use of plastic in automobiles has grown quickly. Plastic has replaced metal in fuel tanks, intake manifolds and there even is a Chevrolet pickup with a plastic bed.

Meanwhile, the steel industry has proven flexible by reducing the weight of components without sacrificing strength.

Increasing aluminum content in autos likely will come slowly and one piece at a time, said auto industry analyst David Andrea, director of the forecasting group for the Center for Automotive Research in Ann Arbor, Mich.

Steel is king

"The auto industry's comfort zone is with steel," Andrea said. "Alcoa will have to make its case component by component."

That is something Alcoa is ready to do. At the Auburn-Cord-Duesenberg Museum, Alcoa showed a prototype minivan door made of aluminum and magnesium. It weighed half as much as a steel door and, at just 3 inches in width, was half as wide.

Alcoa officials wouldn't say how much it would cost to produce the door, only that it would be slightly more than steel.

But even in this era of cost-cutting, Alcoa thinks the door's benefits overcome the added cost. Another prototype part, a pickup tailgate, also weighed about half as much as its steel counterpart.

The tailgate has stamped aluminum skin wrapped around a plastic frame. Alcoa officials said the company could produce the part for about the same price as the steel tailgate.

Lowering costs

Alcoa is ready to apply what it has learned from its work with Audi and Ferrari and move to high-volume production of major parts such as doors and other body panels.

Alcoa worked with Audi and Ferrari to develop aluminum-intensive bodies for the A8 sedan and the 360 Modena sports car. Alcoa's engineers have determined how to reduce costs by making more one-piece castings and by designing energy-absorbing extrusions that improve safety in crashes. Alcoa also is working to lower the cost of producing aluminum by perfecting a more efficient way of refining it.

Alcoa's new method of smelting could shave about a dime per pound off the cost of aluminum, which is not enough to bring the cost down to that of steel.

Getting Alcoa engineers involved in new vehicle projects from the inception also is key to cutting development and production costs associated with using aluminum.

Most of the increase in aluminum content will be in suspension parts, bumper beams, trunks and hoods, Schultze said.

All-aluminum, mass-produced cars are unlikely, he said, because the amount of fuel saved, which is about 3 mpg, doesn't justify the production costs.

For many automotive applications, aluminum costs roughly twice as much as steel, but automakers use about half as much aluminum.

Improving aluminum's image

Aluminum has two big perception problems that Alcoa will try to change.

First, mention aluminum to consumers and they tend to think of easy-to-crush drink cans, a troubling image for today's safety-conscious buyers.

In expensive sports cars has given it a reputation of being costly and difficult to repair.

Alcoa, Milner said, will change its message about aluminum by stressing its benefits to the consumer.

Alcoa's message to consumers is: Aluminum body panels can make such things as pickup tailgates and minivan sliding doors easier to open and close, boost fuel economy and enhance safety.

It helps the environment because it is easily recycled.

Alcoa's message to automakers is: Use more aluminum and you can raise corporate average fuel economy, lower emissions and reduce manufacturing costs.

Alcoa says it is ready to deliver stamped aluminum body parts, such as the minivan door and pickup tailgate, to the factory for some vehicles.

The road ahead

But for these parts to gain acceptance in the market, Alcoa is going to have to create demand.

"I've always believed that consumers need to be educated and told what to do; that product is not enough," said Sergio Zyman, the former Coca-Cola Co. marketing guru who is credited with nearly doubling sales of the soft drink in the 1990s.

Alcoa hired Zyman to help the company better market its products.

There are three things keeping aluminum content from increasing: cost, manufacturing issues and repairs, said DaimlerChrysler spokes- man Bryan Zvibleman.

Said Schultze: "You can't forget the steel guys. They are making extreme progress taking weight out of doors, out of the body, out of everything.

"Every time they take a few pounds of weight out, that just makes the hurdle for aluminum and plastics that much higher."

You can reach Richard Truett at rtruett@crain.com

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