Steel Industry Faces Weighty Ultimatum

Sept. 8, 2011
Steelmakers battle new competitors in the race to produce lighter-weight products for the auto industry.

U.S. steel producers know if they fail to make lighter materials for auto manufacturers, another industry will.

Whether it's aluminum, plastics or magnesium, research and development teams are working to find lighter-weight replacement materials for steel in auto manufacturing. This means U.S. steelmakers can add this industry to a list of significant business pressures that includes foreign competition and increasing environmental regulations.

Still, the steel industry is conceding nothing in the race to provide lighter-weight materials for auto production. Major steelmakers have launched several initiatives to develop steel with less mass yet still strong enough to meet or exceed safety requirements.

Driving this move to "lightweighting," as it's known in the auto industry, are increasingly stringent fuel-economy standards set by the federal government. By 2016, cars and light trucks must average 35.5 miles per gallon. In July, automakers and the Obama administration agreed to raise the standard to 54.5 miles per gallon by the 2025 model year. One of the primary ways auto manufacturers plan to reduce vehicle fuel consumption is through the use of lighter components.

Pictured above is Severstal North America's pickle line and tandem cold-rolling mill in Dearborn, Mich. The facility began producing advanced high-strength steel grades in August after receiving a Department of Energy loan for facility upgrades. Photo: Severstal North America
The steel industry's role in lightweighting is critical because steel comprises approximately 58% of a typical vehicle's total mass, reports Ducker Worldwide. In addition, the auto market represents 25% to 30% of shipments for American Iron and Steel Institute members, according to a transcript of United States Steel Corp. President John Surma's speech during the Great Designs in Steel conference on May 18.

These advanced high-strength steels, or AHSS, can reduce a vehicle's structural weight by as much as 25%, according to AISI, a steel organization that comprises 26 North American member companies. The industry's ability to provide more lighter-weight steel to the auto industry continues to progress. Ten years ago AHSS was almost nonexistent in vehicles. Today it accounts for approximately 17% of a vehicle's structure, says Ron Krupitzer, vice president of automotive applications for AISI.

"It's a growing part of all suppliers (to the auto industry) in the U.S.," Krupitzer says. "We supply most of the steel to every carmaker in the country, so our steel companies have had to modernize."

Market Opportunity

In the United States, demand for AHSS has risen significantly and led to new developments for many domestic- and foreign-based steelmakers. Charlotte-based Nucor Corp. has seen its production volumes of AHSS more than double each year since the company began producing the steel grades five years ago, Nucor COO John Ferriola told IndustryWeek. AHSS now represents 15% of Nucor's supply to auto OEMs.

"Every new model launched by our automotive customers increases the percentage of AHSS from the previous model," Ferriola says. "Our automotive customers are constantly looking for ways to take weight out of their vehicles, while at the same time increasing their safety standards and crashworthiness."

Luxembourg-based ArcelorMittal has seen the demand for AHSS in automotive applications increase from nearly nothing seven to eight years ago to a steady, predictable growth rate, says Blake Zuidema, director of automotive product applications for ArcelorMittal's global research and development center in East Chicago, Ind. For instance, the company expects by 2014 that 40% of total production at its hot-dip galvanizing line in Cleveland will comprise AHSS. Currently AHSS accounts for 5% of the product mix at the Cleveland facility, says a company spokesperson.

Severstal North America, the U.S.-based arm of Russian steelmaker OAO Severstal, began production Aug. 18 at a new cold-rolling complex in Dearborn, Mich., where the company plans to make AHSS for the auto industry. The company received a $730 million conditional loan from the Department of Energy to support the modernization activities.

John Ferriola, COO, Nucor Corp.: "Our automotive customers are constantly looking for ways to take weight out of their vehicles while at the same time increasing their safety standards and crashworthiness." Photo: Nucor Corp.
The development of AHSS is a significant part of Severstal's North American market strategy, says Jim Mortensen, general manager, automotive, Severstal North America. "To continue supplying the automotive supply base here in North America, one of the base requirements will be that we are able to produce advanced high-strength-steel beyond what is currently envisioned by auto manufacturers and engineers," Mortensen says.

Many of the lightweight steels currently utilized by U.S. automakers are imports. So the development of AHSS capacity in the United States provides Severstal with an opportunity to replace some of the imports in a market where demand for AHSS is increasing, Mortensen says. The company's AHSS activities in the United States will serve the domestic auto market, says Christopher Kristock, vice president of advanced engineering for Severstal North America.

An AHSS development program called Future Steel Vehicle (see "Advanced High-Strength Steel Through the Years") calls for auto bodies that comprise 95% AHSS, Kristock says. "So it's not inconceivable that there is an incredible shortage of capacity for producing these types of steel in the world," he says. "As far as exports, we don't see the need for it because there is a huge domestic market, and the people currently importing to the United States will be able to supply their local markets."

The Technology

Indeed, as of press time Nucor was in the process of operating two separate trials on a product that would replace a dual-phase AHSS product that is currently being supplied by a Japanese steelmaker for Japanese automotive applications, Ferriola says. Nucor's ability to replace foreign competitors' AHSS products has become a source of pride for the company, Ferriola notes. "We take known problems our competition has with specific grades, 'Nucorize' them and bring them into a market where they can be used immediately," he says.

The technology behind such AHSS developments varies depending on the application. AHSS has the potential to be a leading replacement for traditional steel because it can be rolled thinner than previous grades while retaining strength and formability. Traditional high-strength steels become less ductile as they became stronger. AHSS comes in various forms, including dual phase, transformation-induced plasticity (TRIP), complex phase and martensitic.

Dual phase is one of the most commonly used AHSS grades. It provides crash energy absorption capacity and fatigue strength that are suitable for the front and rear sections of the vehicle, known as the "crumple zone." TRIP steels are also used in crash zones and complex parts because of their high level of formability and energy absorption. Complex-phase and martensitic steels are more rigid and commonly used in the middle section of the vehicle to provide crash resistance.

The color-coded sections of this 2011 Chevy Volt structure on display at the Great Designs in Steel seminar in May show different grades of advanced high-strength steel used in the car. AHSS can reduce a vehicle's structural weight by as much as 25%, according to the American Iron and Steel Institute. Photo: Steel Market Development Institute
Such advancements are critical for steel producers in an increasingly competitive landscape for automotive materials. Aluminum poses the greatest competitive challenge to steel in automotive applications because it's lighter, says Jay Baron, chairman of the Center for Automotive Research. But steel still holds advantages over aluminum. Steel is about three times cheaper than aluminum, it's magnetic (a plus for plants with magnetic handling equipment) and auto plants are equipped to handle steel, Baron says.

"The steel industry has done a remarkable job of keeping steel the product of choice for automobiles today and tomorrow," Ferriola says. "Lightweighting because of increased CAFE standards in the U.S. has led automotive OEMs to look at alternative materials."

Programs, such as Future Steel Vehicle, demonstrate how far the steel industry has come in the development of materials that can be integrated into tomorrow's vehicles, Ferriola says.

See Also:
Advanced High-Strength Steel through the Years

About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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