What The U.S. Steel Industry Thinks Of Ford Motor's Aluminum F-150

| About: Ford Motor (F)

By Taras Berezowsky

If there's any reason at all to be anywhere near Detroit this time of year (believe me, I'm from the Metro D and can say such things with more than passing conviction), it's to attend or be involved in the North American International Auto Show.

If it's not sports, it's cars, and at least the city keeps the lights on at the Cobo Center, where the latest designs are unveiled, human models awkwardly complement the exhibitions, and concept cars are the main attraction. (It's where I've spent many hours of my youth, to be followed by a Ride to Nowhere on the Detroit People Mover and coney dogs at Lafayette.)

However, arguably the biggest story from the Auto Show this year, although quite a concept, was not exactly a concept car - it was Ford's all-aluminum F-150 truck.

How'd That Happen?

Apparently, after designing and building the new F-150, Ford "secretly" distributed the vehicles to a number of test subjects to see if their light-weighting efforts would hold up.

Writes Jerry Hirsch for the LA Times:

"The automaker was looking to test how lightweight aluminum alloys would hold up on the job, at a gold mine, an energy utility and a construction firm…What Ford learned from 300,000 total miles convinced the world's biggest seller of full-size pickups to make wholesale changes to the F-Series."

The new F-150 weighs 700 pounds less than the previous model, featuring an engine compartment, doors, hood, side panels, truck bed and tailgate all made of aluminum alloys. The way they're marketing the featured material is by calling it "military-grade aluminum."

Back to Car Wars: Aluminum vs. Steel

So how do advanced high-strength steel (AHSS) producers - and the steel industry in general - respond to Ford's move? Should the move be seen as a huge vote of confidence from a major OEM for a lightweight substitute? Based on that F-150 decision, what does the future look like for steel vs. aluminum from steel industry's perspective?

I posed those questions to Lawrence Kavanagh, the president of the Steel Market Development Institute (OTCQB:SMDI), a business unit of AISI, after a recent press conference on AHSS in Detroit.

Larry wrote me in an email:

"Ford is a great and valued customer of steel and we have been working with them for 26 years in the Auto Steel Partnership. We continue to develop new steel lightweighting solutions and showed an example today of steel matching an alternative material part in weight at 34% less cost, and this part is on the road today."

Indeed, according to the LA Times, Ford also upped the percentage of AHSS in its new F-150, from 23% to 77%. That's a good move to hedge their bets for a couple of reasons: 1) aluminum is harder to stamp and weld, requiring more heat and electricity; and 2) according to a recent study conducted by MindClick Global, 90% of consumers 'prefer' steel-made vehicles over other materials - but of course, the study was commissioned by SMDI, so take that with a grain of salt. But make no mistake, Ford's bold move is still a watershed moment for the aluminum industry.

According to Larry:

"Our goal remains to minimize, if not eliminate, any lightweighting advantage of alternative materials as the business case for such materials then falls apart. This is happening and the future therefore looks bright for steel."

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