Alcan and Ford Sign Multi-Year Supply Agreement for Aluminum
25 January 2000
Alcan and Ford Sign Multi-Year Supply Agreement for Automotive Aluminum; Strategic Partnership Supports the Development of More Fuel-Efficient Vehicles
MONTREAL--Jan. 24, 2000--Alcan Aluminium Limited and Ford Motor Company jointly announced today that they have signed a significant multi-year aluminum supply agreement that will support the expanded use of aluminum in the production of safe, more fuel-efficient cars and trucks."This deal is another major step for Alcan in the realization of our automotive strategy to be the leading aluminum supplier and strategic partner to the global automotive industry," said Jacques Bougie, president and chief executive officer of Alcan. "Our partnership with Ford is taking aluminum use to the next level in the automotive industry and will help Ford to provide consumers with more fuel-efficient, environmentally-friendly vehicles."
The aluminum supply agreement will allow Ford to predict the cost of its expanding aluminum needs. Alcan will provide metal in various forms, including foundry ingot for cast products and flat-rolled autobody sheet for use in Ford's stamping plants. Alcan will also provide design and technology support services. Ford will purchase minimum monthly volumes of metal, with options for additional amounts as required. Details and financial terms of the contract were not disclosed.
"This aluminum supply arrangement is a breakthrough," said Andrew Hinkly, Ford's director, raw materials, global purchasing, "in not only cost and quality, but it will enable Ford to remain focused on innovative applications for aluminum. With its flexibility of product forms, this agreement with Alcan will help us to continue growing our aluminum usage and our leadership in this area."
At minimum levels, the supply agreement will fill at least 50 percent of Ford's aluminum body sheet requirements and 25 percent of its wheel alloy needs and will support a wide range of other applications. This agreement is in addition to existing contracts for the supply of Alcan aluminum finstock used by Ford in its automotive heating, air conditioning and engine cooling systems.
The supply agreement strengthens a decade-long partnership between the two companies in the advancement of technologies and applications for the increased use of automotive aluminum. Alcan continues to be Ford's strategic partner in the development of aluminum-intensive vehicles, including the innovative hybrid-electric Prodigy unveiled earlier this month at the North American International Auto Show in Detroit. Through the application of numerous leading-edge technologies, the Prodigy achieves a fuel economy of nearly 80 miles per gallon without sacrificing performance or functionality.
Richard B. Evans, president of Alcan Global Fabrication Group, said the supply agreement capitalizes on Alcan's 20 years of research and development into aluminum technology for vehicle applications and further reflects its ongoing "partnership for progress" with Ford.
Evans added, "This agreement represents a significant amount of metal and an important sign of continued commitment by Ford to both aluminum and Alcan," he said. "It provides a further opportunity to demonstrate the value of aluminum as a cost-effective automotive material that can respond to the industry's environmental challenges while performing to the highest levels of driver expectations."
Alcan is a multinational, market-driven, low-cost producer of aluminum products. With operations in over 30 countries, Alcan is one of the most international aluminum companies in the world. It is a leading producer of primary metal and a global producer and marketer of rolled aluminum products. In the automotive industry, the fastest growing aluminum market, the company will be a leader in serving customers in both North America and Europe.
With combined 1998 pro forma revenues of US$21.6 billion and operations in close to 60 countries, the merger of Alcan, Pechiney and algroup will create one of the world's largest aluminium companies and the global leader in both flexible and specialty packaging. The Alcan, Pechiney, algroup combination will be a world leader in aluminium, with complementary operations and technologies, a sustainable low-cost position in primary aluminium, superior aluminum fabricating positions globally and exceptional positioning for future low-cost growth and expansion. The combined company will also create one of the world's foremost flexible and specialty packaging businesses with leading positions in attractive growth areas such as pharmaceutical, personal care, food and cosmetics packaging.
(Please see the attached backgrounder on automotive aluminum.)
Backgrounder: The Advantages of Automotive Aluminum
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In many automotive applications, aluminum can replace twice its weight in heavier materials, thereby significantly reducing fuel consumption and exhaust emissions. A 10% reduction in mass yields a 6-8% improvement in fuel economy. The benefit to air quality is equally significant -- every ton of aluminum that goes into cars and trucks reduces greenhouse gas emissions by about 20 tons over the life of the vehicle. The fuel savings and reduced CO2 emissions will be even greater for heavier vehicles such as pickups and sport utility vehicles.
The weight reduction from the use of aluminum in structures also supports the downsizing of other components and systems, thereby further reducing fuel consumption and emissions. Aluminum is a leading material for vehicle body structures designed to meet the 80 mpg goal of the Program for a New Generation of Vehicles (PNGV) -- a joint project of the United States government and the North American auto industry. Ford's P2000 and Prodigy concept cars use Alcan aluminum sheet and technology in the construction of their light-weight structures.
Aluminum is 100% recyclable. An estimated 85-90% of automotive aluminum scrap is currently being captured for recycling -- a higher recycling rate than for even aluminum beverage cans. Life cycle studies show an energy savings of 94% is achieved by using recycled aluminum in automotive applications. And recycling eliminates more than 90% of the CO2 emissions resulting from the production of primary metal. Aluminum's unmatched recyclability sets it apart from other materials and is an important aspect in the cost-effective use of aluminum in automobiles.
In addition to its environmental benefits, aluminum's high strength-to-weight ratio allows for enhanced vehicle acceleration and handling while reducing noise, vibration and harshness. And, aluminum is a safe and crashworthy material for automotive applications. Aluminum vehicle structures provide at least equivalent energy absorption and crashworthiness to today's steel structured vehicles -- at about half the weight. Through the increased use of aluminum, automakers can aid the environment while maintaining, or even enhancing, the driving experience.