entucky is already known for its horses and bourbon. Now there’s another industry that’s making waves in the Commonwealth: aluminum. As the demand for aluminum within the auto industry skyrockets, aluminum producers are ramping up operations and making investments in the Bluegrass State.
Kentucky is at the forefront of this booming industry. Last year, aluminum accounted for $2 billion in the state’s gross domestic product. The industry employs nearly 20,000 Kentuckians. In addition, according to the US Geological Survey, Kentucky has the greatest capacity of any state to produce aluminum.
Kentucky’s aluminum companies are growing to meet the demand. In the past year, a dozen companies have announced aluminum-related projects in the state, resulting in nearly $600 million in new investment, and more potential projects are in the works.
So what’s sparking these major investments in aluminum? It boils down to major changes in the auto industry. Tighter fuel efficiency requirements are causing auto manufacturers to expand their use of lightweight aluminum to include hoods, door panels and trunks. In fact, experts say the use of aluminum sheet for vehicle bodies is projected to increase from 200 million pounds in 2012 to 4 billion pounds by 2025.
Aleris recently announced a $350-million expansion of its rolling mill in Lewisport. “Aleris has been a provider of state-of-the-art lightweight aluminum solutions to the European auto industry for a number of years, and we expect our Lewisport investment will allow us to extend those capabilities to our automotive customers in North America,” says Steve Demetriou, Aleris chairman and CEO. “We believe the shift toward greater aluminum use in automotive manufacturing is one of the most significant opportunities in our industry’s history, and we are excited to establish our Lewisport facility as a strategically important site in this evolution.”
Kentucky Is Meeting Demand For Body-in-White
For automotive manufacturers, use of aluminum automotive bodies, known as Body-in-White, yields significant energy benefits compared to traditional steel bodies. Constellium is one aluminum company that is riding the wave of increased US demand for Body-in-White.
A longtime leading supplier to European carmakers, the Netherlands-based firm is partnering with Japanese aluminum company UACJ Corporation on a $150-million facility in Bowling Green to produce finished aluminum body sheets for cars and trucks. Constellium is the largest supplier of high-strength aluminum structural parts for Ford’s 2015 F-150 pickup truck, featuring an all-aluminum body that drops the truck’s overall heft by about 700 pounds.
Construction on Constellium’s 225,000-sq.-ft. plant, located in the 4,000-acre Kentucky Transpark, began last year. Local supplier Tri-Arrows Aluminum, a subsidiary of UACJ based in Russellville, will provide the aluminum coils for treatment and processing at the Bowling Green plant.
Constellium decided to dip into US waters two years ago. “We were driven by what we saw in the US market,” says Markus Wild, CEO of the Constellium and UACJ joint venture in Bowling Green. “Emissions targets were becoming more restrictive, so manufacturers needed to cut down on their fleet construction. Eco-boost engines were one way they were doing this, but lighter weight auto bodies helped achieve additional emissions reductions.”
With proximity to Tri-Arrows’ Logan County rolling mill a priority, the site selection team identified a radius that included Kentucky, Ohio and Tennessee. “Our site selection process involved a very complex calculus,” Wild says. “Bowling Green was the right location for a number of reasons, including geographic location, the spirit of entrepreneurship in the community and the partnering approach of state and local authorities.” He added that the metal industry expertise of the local workforce as well as the presence of Western Kentucky University offered a steady pipeline of skilled trade and sophisticated engineering talent.
Wild also credits the advanced site preparation undertaken by the county’s economic development authorities. “The fact that we had a shovel-ready site made a real difference because we are on a very aggressive time frame.”
The company intends to start production in 2016, ramping up to full capacity — 100,000 metric tons — by 2018.
Constellium envisions a long-term commitment to its Kentucky site, with plans to supply customers throughout North America and Mexico. The facility is designed to allow for future expansion as demand increases. Wild says, “We made sure to give ourselves room to grow.”
As nearly one in five vehicles are expected to have all-aluminum bodies within the next decade (compared to 1 percent now), experts don’t see this aluminum trend slowing down anytime soon. And Kentucky is expected to reap the benefits.