Expansion Includes New, Patented Bonding Technology That Will Be Licensed Across Automotive Industry.
Alcoa (NYSE:AA) will expand its Davenport, Iowa rolled products plant to meet rising demand from the automotive market. More and more automotive original equipment manufacturers (OEMs) are switching from steel to aluminum products from Alcoa as they seek to increase the fuel efficiency, safety, durability and performance of the cars they produce.
The expansion, which will entail an investment of approximately $300 million, will take the world's foremost aerospace materials facility -- known across the globe for its 220-inch wide mill, the largest in the world and will create an additional pillar of world-class production dedicated to the automotive market. The growth project will create an additional 150 full time jobs in Davenport once completed, bringing total employment to more than 2,300 high-value jobs. In addition, during construction, an incremental 150 jobs will be created at the plant. The expansion is expected to be completed by the end of 2013.
The automotive market is a tremendous growth opportunity for Alcoa over the next several years, said Klaus Kleinfeld, Alcoa Chairman and Chief Executive Officer. Our leading-edge technology solutions and our world-class manufacturing capabilities, combined with our dedicated and highly-engaged workforce, put us in an enviable position in the market and bodes well for future growth.
Consumers want cars that are more fuel efficient and deliver the same, if not better, performance as they are accustomed to today, said Helmut Wieser, Alcoa Executive Vice President and Group President of Alcoa Global Rolled Products. Practically every OEM in the world has come to us to discuss how our leading technology solutions can help them make their cars stronger, lighter and more fuel efficient.
The automotive market has long lead times and much of this expansion we are announcing today is for business already secured. However, we see huge opportunity beyond this for our leading technology solutions in this market, including our patented Alcoa 951 technology, which we expect to license throughout the industry, said Wieser.
Alcoa 951 is used to improve adhesive bonding for vehicle assemblies. The product has been proven to be incrementally superior in performance to other products available in the automotive industry. The process is used as a pretreatment for aluminum alloy sheet, extrusions and castings to improve bonding performance. In customer trials, tests have shown it as being four to nine times stronger than titanium zirconium applications used in the automotive industry.
A study of automakers by Ducker Worldwide, released earlier this month, showed automakers will increase their use of aluminum from 327 pounds in 2009 to 550 pounds in 2025. For 2012 model cars, the use of aluminum has reached an all-time high of 343 pounds per vehicle, a five percent increase. According to OEMs surveyed in the study, aluminum use as a percent of the overall automotive materials mix is expected to double by 2025 to 16 percent
An economic development incentive package from the Iowa Department of Economic Development (IDED) helped secure the selection of Davenport for the expansion. The incentive package includes tax, financing and R&D credits as well as training grants for the Davenport workforce and new employees.
Alcoa has been a great Iowa partner, and we are excited to see this expansion in Bettendorf, said Iowa Gov. Terry Branstad. Their commitment to creating jobs in our state is appreciated, and coincides with my administration's commitment to economic growth in Iowa.
Alcoa Davenport Works, which earlier this year hosted President Obama, produces aluminum sheet and plate for a variety of industries. Materials produced at the plant are used in aerospace and defense, passenger vehicles (cars and light trucks), commercial truck and rail transportation and the industrial market. Davenport Works opened in 1948 and is one of the largest aluminum fabricating facilities in the world. The plant has more than 130 acres under roof and generates nearly $1 million a day into the local economy.
Alcoa is the world's leading producer of primary and fabricated aluminum, as well as the world's largest miner of bauxite and refiner of alumina. In addition to inventing the modern-day aluminum industry, Alcoa innovation has been behind major milestones in the aerospace, automotive, packaging, building and construction, commercial transportation, consumer electronics and industrial markets over the past 120 years. Among the solutions Alcoa markets are flat-rolled products, hard alloy extrusions, and forgings, as well as Alcoa wheels, fastening systems, precision and investment castings, and building systems in addition to its expertise in other light metals such as titanium and nickel-based super alloys. Sustainability is an integral part of Alcoa's operating practices and the product design and engineering it provides to customers. Alcoa employs approximately 59,000 people in 31 countries across the world. More information can be found at www.alcoa.com.