Bluegrass poised to produce most aluminum in U.S.

With more than 20,000 Kentuckians working in it, the state aluminum business is booming, according to the Kentucky Cabinet for Economic Development.

Earlier this year, Europe-based Constellium N.V. and UACJ Corporation, of Japan, announced plans to open a joint $150 million aluminum facility in Bowling Green. The announcement marks one of the largest investments in Southcentral Kentucky in the past decade.

“We are really thrilled to mark the official start of the Bowling Green plant’s construction,” said Constellium’s CEO Pierre Vareille. “This project is highly strategic, and it is the first milestone of an ambitious strategy to become a major player in the U.S. aluminum body sheet market.”

This is part of a growing trend in the Commonwealth. In the past year, a half dozen companies have announced aluminum-related projects in the state, resulting in nearly 400 projected jobs and $250 million in new investments, and more potential projects are in the works.

Last year, the aluminum industry accounted for $2 billion in Kentucky gross domestic product. The industry employs nearly 20,000 Kentuckians, paying average yearly wages exceeding $86,000.

So what’s sparking such 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.

Demand for aluminum is booming, and Kentucky is at the forefront. According to the U.S. Geological Survey, the Bluegrass state has the greatest capacity of any state to produce aluminum.

Much of this success can be tied to Kentucky’s strong presence within the automotive industry. The Commonwealth has more than 460 auto suppliers and manufacturers and is the third largest producer of automobiles in the country.

Another key advantage is Kentucky’s centralized location. At the center of a 34-state distribution area in the eastern U.S., Kentucky’s location allows companies to ship goods and materials to a massive industrial and consumer market.

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.