ALCAN CHAIRMAN PREDICTS BRIGHT LONG-TERM FUTURE FOR ALUMINUM
NEW YORK, Dec. 16 /PRNewswire/ -- "Despite the current difficulties, longer term prospects for aluminum are as good as at any time in the history of the industry," said David Morton, chairman and chief executive officer of Alcan Aluminium Limited (NYSE: AL), at the company's tenth annual press briefing in New York.
As the aluminum industry concludes a very turbulent year, marked by record low prices, high inventories and an unprecedented level of Soviet exports to the West, the outlook is for much better times further ahead.
"Growth for aluminum promises to be stronger in the 1990s than over the past decade, driven mainly by the metal's inherent weight and recyclability advantages. That in turn, will serve to increase demand from existing and developing markets, notably in beverage can and automotive," Morton said.
Morton also affirmed earlier company forecasts demonstrating an annual average increase in world consumption of 3.7 percent for the remainder of the 1990s, compared to 3.3 percent for the 1980s. "Looking to the future, Morton added, we still believe that our international position continues to be a long-term source of strength. Others are investing today in an attempt to reach the position we have been working hard to achieve since inception, more than 60 years ago."
In order to deal with the short-term problems, Alcan set an objective in 1991 of improving costs by $200 million. "I'm pleased to say we're well over target and will achieve a $300 million cost improvement by year end. These cost improvements, mainly achieved by raising operating efficiency and productivity, are permanent and will benefit Alcan year after year," Morton noted.
Alcan has targeted an additional $200 million in permanent cost improvements for 1992, while capital spending will be in the range of $600 million, down from about $850 million this year, and $1.3 billion in 1990.
Aluminum in automobile
Looking further into the future, Morton turned to the "exciting, new market" for aluminum in automobiles. He said that "systematic, or organic growth" of aluminum in automobiles, by expanding such traditional applications as castings, will increase the average aluminum content from 160 lbs to 200 lbs per car. "However, a quantum leap in aluminum usage -- 200 to 300 lbs per unit -- is possible by adopting aluminum body structures and panels," Morton said.
The Acura NSX, for which Alcan is a supplier, uses 900 lbs of aluminum.
"If even half of the 10 million cars produced annually in the U.S. were to use all current aluminum applications, the additional aluminum needed would be well over one million metric tons."
Alcan set out in 1980 its Aluminum Structured Vehicle program to persuade the auto industry that aluminum offered a solution to the major fuel economy and emission reduction problems it faced. The program involved developing a number of new technologies and building aluminum prototypes of six different automobiles. "The case for aluminum has now largely been accepted, Alcan's efforts are now deployed to help a number of automobile companies around the world solve their application problems."
The company has established applied engineering centers for the auto industry in Europe, the U.S. and Japan to help individual automakers fulfill their own design and production objectives.
In summarizing his remarks, Morton said: "The medium- to long-term future is promising based on a solid foundation of expansion in the beverage can market, primarily outside of North America, and rapid growth in the automotive market."
Reporting on Alcan's objectives and vision for North America downstream fabricating businesses was E. Ian Rugeroni, president of Alcan Enterprises. He focused his remarks on the path his group has taken over the past 18 months toward achieving three primary objectives: a minimum return of 20 percent on capital employed, a doubling of sales and the attainment of world class manufacturing levels at most plants by the mid 1990s.
"Excellence in manufacturing remains at the core of our strategy to reach these ambitious, but achievable goals. It provides the foundation to building sales and profitable growth, especially in a business downturn." Rugeroni explained the cornerstones of Alcan Enterprises manufacturing excellence as: being on target with quality and delivery in comparison to competitors, being the lowest cost supplier, being quick to introduce new products, and being the best in safety and environmental management.
Reducing cyclicality is of primary importance. As an example, Rugeroni cited a planned shift by Alcan Building Products from new construction toward renovation, a $100 billion market in the U.S. and $10 billion in Canada, which are less impacted by what he described as "the brutal swings" in new housings starts.
"It's been a while since we have had to face such a tough business environment. But by wisely involving our employees' resources, and carefully, but creatively managing our fixed assets all in a safe and environmentally responsive way, we'll make a major contribution to Alcan's future success," concluded Rugeroni.
Alcan Aluminum Limited, a Canadian corporation headquartered in Montreal, is the parent organization of a multinational group of companies with revenues of $8.9 billion and operations in more than 20 countries on six continents.
/CONTACT: Jacques Dubuc of Alcan, 514-848-8114/
(AL) CO: Alcan Aluminium Limited ST: New York IN: MNG SU: FC -- NY092 -- 2734 12/16/91 18:08 EST