BOWLING GREEN, Ky. -- A key Japanese supplier of aluminum suspension parts is mobilizing to take advantage of growing fuel economy concerns in the United States.
Kobe Steel Ltd., which claims an 80 percent share of Japan's market for aluminum vehicle suspension arms, is accelerating expansion of its fledgling U.S. operation here on the bet that automakers are planning a new round of weight-reduction programs.
Subsidiary Kobe Aluminum Automotive Products LLC, which last year produced just 360,000 suspension arms, will churn out 1.3 million by the end of this year. And, CEO Takumi Fuji says, output will reach 3 million pieces a year after 2007.
Aluminum suspension arms weigh as little as one-third as much as the traditional steel components used in North America. Fuji estimates that aluminum represents 6 to 10 percent of the U.S. market for suspension arms. He thinks aluminum eventually could account for 60 to 70 percent of that market.
"The market has been very small in the United States," Fuji says. "We believe that will change as the Big 3 and Japanese automakers begin looking for more fuel efficiency."
Aluminum and steel often battle for shares of the auto parts business.
A rule of thumb says aluminum offers half the weight of steel - but at twice the price. Aluminum suppliers are developing better processes to keep costs down, but raw aluminum prices peaked at $3,300 a ton on May 11, up nearly 50 percent since January. A year ago the price ranged from $2,200 to $2,400 a ton. It is now about $2,600 a ton, according to Alcoa Automotive.
Kobe's rapid expansion has already come in handy for General Motors. GM has shifted from steel to aluminum on its GMT900 truck family and buys suspension arms from Tier 1 supplier SMW Automotive of Warren, Mich. SMW is buying arms from Kobe and U.S. aluminum parts maker Kaiser Aluminum. SMW is performing the final machining.
But Kaiser's production was interrupted last month by problems with its presses. That prompted SMW to shift production to Kobe until Kaiser resolved the problem.
Kobe went from producing more than 20,000 GM arms a month to a temporary volume of 40,000 last month. Fuji said that change was temporary.
But more lasting, he said, is the move by Japanese automakers here to use local aluminum forgings. The Kobe plant already is supplying Nissan North America Inc. with aluminum arms for U.S.-made Altimas and Maximas. It soon will supply vehicles made by Honda of America Manufacturing Inc.
The plant uses 6,300-ton presses, which are capable of forming large suspension arms that are used on large SUVs. Presses of that size are uncommon in the U.S. aluminum business, which has been one of the factors limiting the industry from moving away from steel and iron.
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