For nearly a century, Ford’s River Rouge factory and its neighboring steel mill have worked in close harmony to produce some of America’s most popular vehicles, from the Model A to the F-150 pickup truck.
But ever since Ford announced last month that it would make the body of its new F-150 mostly out of aluminum, that steel maker, which was spun off by Ford in 1989, has faced the unsettling prospect that its longtime partner is drifting away.
Carmakers’ shift to aluminum has raised apprehension among steel makers, which have been fighting an increasingly uphill battle simply to maintain their business. Now, they are trying to respond, making lighter, stronger steel in a bid to retain one of their most important customers, the automakers.
Steel makers, which have been riding a wave of prosperity as the economy has recovered, have a lot to lose. Automakers account for about 20 percent of annual sales overall for American steel makers, the second most important source of revenue after the construction business, according to the Steel Marketing Development Institute.
The shift to aluminum is gaining momentum. Automakers are under increasing pressure to meet strict new fuel-economy standards by 2025, and their use of lighter aluminum is expected to double between 2008 and 2025, according to Ducker Worldwide, a research firm in Troy, Mich.
As a result, Severstal sees little choice but to move toward making advanced — and lighter — high-strength steel.
This year, it plans to make half a million tons more in its Dearborn facility than last year’s run of 2.1 million tons. Part of that demand will come from the F-150, whose frame has increased its use of high-strength steel from 23 percent to 77 percent, a change that will save up to 60 pounds, according to Ford.
“The F-150 is a big turning point,” said Andrew Lane, a metals analyst with Morningstar. “It’s a bold effort by Ford.”
Other steel makers are changing their ways, too. United States Steel has invested $400 million in a joint venture with Kobe Steel of Japan to make advanced high-strength steel in a Leipsic, Ohio, factory expected to produce 500,000 tons annually.
The consideration by carmakers of using more aluminum is actually opening up opportunities for producers of advanced steel, according to Jody Shaw, manager of automotive technical marketing at U.S. Steel.
“It’s those little changes that they’re willing to accept that’s creating an opportunity,” Mr. Shaw said.
Inside Severstal’s steel mill on a cold January day, hissing heavy machinery removed oxides from steel sheets, reducing their thickness to the equivalent of five human hairs.
“We’re sold as a raw commodity, but we’re built to specifications,” said Jim Mortensen, Severstal’s director of technical business development. “These are parts that are customized within one-hundredth of a millimeter.”
Steel makers argue that they still have advantages in price — aluminum can cost as much as three times more — and flexibility, both for the manufacturer and the mechanic who will be fixing the car.
“When you build a mass-produced vehicle, you really need to think about the consequences of the supply chain and repair and insurance costs,” Mr. Dey said.
But despite their confidence in some of their advantages, steel makers face an uncertain future, analysts say.
Automakers are scrambling to meet demanding new federal fuel-efficiency standards that will require a fleetwide average of 54.5 miles per gallon by 2025, a significant boost from the roughly 25 m.p.g. that vehicles average today.
When four major steel companies had quarterly earnings calls with analysts last month, “they all said as a constant refrain, ‘Steel remains the material of choice for now,’” Mr. Lane said.
“Looking out over the next five years, that could be a different story,” Mr. Lane said, adding, “Aluminum is so much lighter, there’s only so much the steel guys can do.”
Until now, automakers largely have tried to meet the fuel-economy mandates with smaller cars as well as slow-selling hybrid and electric vehicles. The challenge lies in continuing to provide the larger, and more profitable, vehicles that buyers want.
