Alcoa and Novelis gears up for the next competition in aluminum auto race

Novelis Inc and Alcoa Inc have spent decades wooing the Detroit’s automakers to throw their heavy steel vehicle bodies and renovate their factories for mass production of lighter aluminium vehicles.

With the launch of Ford Motor Co’s F-150 Truck this year, the company is reaping the benefits of the long campaign finally after the once-a-generation shift in the demand for a struggling industry that was having a tough time with weak metal demand.

But the winning moment of the industry is being spoilt with a handful of upcoming rivals coming into this industry. After Ford unveiled the new design of their truck, Constellium NV has announced their plans to make a U.S body sheet plant while Wise Metals Group and Aleris Corp are planning a venture into burgeoning U.S sheet market. In order to ensure the market still exists for their metal, various companies are coordinating with the automakers but prefer not to disclose their identities.

"Novelis and Alcoa are clearly long-term strong players. We believe there is room for (more) players," Steven Demetriou, chief executive officer and chairman of Aleris said in an interview.

"We're one of the top players in Europe in automotive rolled products. We're looking to duplicate that in the United States."

Alcoa and Novelis say they are not at all worried about competition, given how much automotive sheet is needed. It will be several years before rivals start production, and demand may grow by 40 percent over the next decade.

But this rapid shift into this automotive sheet shows that a hard-fought innovation can really benefit a company in the competition as the industry is struggling with a weak margin and overcapacity in big beverage market.

"The next ten years could very well be the best for rolling mills in the industry's history," said independent analyst Lloyd O'Carroll.