WCA January 2015

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54 Wire & Cable ASIA – January/February 2015
From the Americas
The projected falling-off from that point is based on an
expectation that – even though aluminium-sheet deliveries
to automakers could reach 2.68 billion pounds in 2018,
compared to 504 million pounds in 2014 – most of it will go
into “closures”. These are hanging parts like doors, hoods,
and trunk lids, as distinguished from vehicle body structures
or frames.
In the meantime, according to analysts consulted by
GreenCarReports, new high-strength steels currently under
development are becoming ever more effective in cutting
pounds from the car body, which accounts for most of the
weight. (“Steel Vs Aluminum: Which Wins For Fuel Efficiency
AND Cost?” 14th October)
These new materials will be available for the next round of
car redesigns, giving engineers a lower-cost alternative to
aluminium that will still keep weight down.
 In fact, wrote Mr Edelstein: “Researchers claim use of
new but less expensive high-strength steel could lighten
future car structures enough that aluminium closure
parts won’t be needed.”
This would, he said, potentially reduce the cost of cars
and relieve the minds of buyers who may be concerned
about aluminium’s durability and ease of repair.
With the jury still out on its tilt toward
aluminium, Ford will extend its use to
the workhorse Super Duty pickup
“While Ford and General Motors trumpet their growth in
China, neither would be profitable without the resurgent
US market and, more specifically, Americans’ insatiable
appetite for pickups.”
Having identified the principal factor in the remarkable
success record of pickups from Ford Motor Co, business
writer Alisa Priddle reported in the Detroit Free Press that
the company is tinkering with a second winner. Ford has
announced that it will use aluminium on the next generation
of its hard-working and greatly prized Super Duty pickup.
(“Ford Doubling Down on Aluminum Trucks with Super
Duty,” 4 th October)
Results from Ford’s earlier foray into aluminium, with the
even more popular F-150 light-duty pickup, have been
modestly encouraging. But the 2015 redesign of the F-150
will likely displace more steel with aluminium, and Wall
Street expects slimmer profit margins than on its steel-body
predecessor.
Five-year aluminium prices have averaged about $2,200
per ton, while steel ranges between about $300 per ton for
sheet metal and $500 for shredded auto scrap.
On 8th October, a Morgan Stanley analyst suggested that
the new F-150 would drain short-term profitability. Adam
Jonas wrote in a report to clients: “In short, we believe it’s a
great product that may be far less profitable than the market
anticipates.”
Mr Jonas estimated that more than 90 per cent of Ford’s
global auto profits come from the F-150 and its larger
heavy-duty derivatives. Hence his warning: “Ford’s F-150
truck changeover is unlikely to go as smooth as investors
anticipate.”
Moreover, as noted by Ms Priddle, new technologies and
the addition of ever-more sophisticated features in the
F-Series and other Ford models will entail higher warranty
costs and greater danger of recalls.
 But switching the Super Duty pickup to aluminium
will add an estimated 350,000 heavy-duty pickups to
750,000 aluminium-intensive light-duty Ford pickups
annually, promising economies of scale that will help
offset the higher cost of aluminium.
However it weighed the various factors, Ford is
committed to aluminium for its Super Duty workhorse
pickup.
“Those on the outside would say it’s a big risk,” Matt
O’Leary, vehicle line director for Ford North America
trucks, told the Free Press . “We don’t say it’s a big
risk. We did all our homework and it was a calculated
decision.”
The US economy
Under a more effective president than his
detractors concede, the budget shortfall
has narrowed for five successive years
After rising to more than a trillion dollars a year at the height
of the recent recession, the US federal budget deficit has
fallen to pre-recession levels and is now lower than the
annual average of the past 40 years.
Final figures for fiscal year 2014, ended 30th September,
showed a shortfall of $483 billion. That is $197 billion less
than in 2013 and $165 billion less than President Barack
Obama had projected in his annual budget request.
The improvement reflects the effects of economic growth,
higher tax revenue, and lower-than-expected health care
costs realised from the much-derided Affordable Care Act,
or “Obamacare.”
But, as noted by Jackie Calmes, national correspondent
for the New York Times (15 th October), more significant than
the dollar figures, to economists, has been the drop in the
size of annual deficits as measured against the economy’s
total output or GDP (gross domestic product).
The 2014 deficit was equal to 2.8 per cent of GDP, below
the three per cent level that many economists consider the
acceptable limit in a growing economy. The budget shortfall
has now declined for five consecutive years, from a high of
9.8 per cent in the 2009 fiscal year, and is the lowest it has
been since 2007.
Declining deficits have all but ended the budget fights that
preoccupied Mr Obama and his opponents in Congress
from 2011 through 2013. Indeed, Ms Calmes wrote: “The
improved picture partly reflects the spending cuts that