Supply Chain

How an Aluminum Manufacturer Encourages Sustainability

Aleris Corp. not only offers aluminum products but also ways to recycle them, its CFO explains.
Kathy HoffelderAugust 2, 2013

Metals manufacturers don’t often come to mind when you think of companies “going green.” But such industrial companies may be just as big supporters of corporate sustainability as their retail counterparts.  One such firm not only encourages customers to reuse and recycle, it actually picks up their waste.

Aleris Corp., a privately-held aluminum manufacturer based in Cleveland, has two global business units: selling aluminum plate, sheet and coated products and aluminum recycling. The manufacturer, created by the joining of two $1 billion companies, Commonwealth Industries and IMCO Recycling, that performed those tasks independently, has now grown into a $4.5 billion company with more than 40 production facilities in North America, Europe and Asia.

“Aluminum is a material that is infinitely recyclable. It can be used over and over again. The ability to provide recycled aluminum into a customer’s product is becoming increasingly more important,” says Sean Stack, executive vice president and CFO of Aleris.

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As more companies try to meet their sustainability goals, they are seeking out how to eliminate the waste that occurs from using aluminum products. Even small projects tend to produce a lot of scrap metal that can often be used in other industries, he notes.

“We sell material to the customer and the customer packages up 100 percent of their waste back to us. In a lot of cases, we deliver molten metal right back to the customer so they don’t have to re-molt it and incur an additional cost. That works for both automotive and other aluminum-sheet manufacturers,” says Stack. Aleris recycles 2 billion pounds of aluminum per year.

Recycling aluminum, he says, helps his firm as well as his clients. “It’s a huge cost saving for them. It’s a win-win being able to drive a better stewardship of sustainability. And we make money and they make money as a result of it.”

As Aleris looks to eventually go public (after its IPO was delayed last year due to the Spanish debt crisis), the firm plans to stay focused on its sustainability efforts while growing the company. CFO spoke with Stack about his plans to do just that. An edited and condensed version of the interview follows.

How do you work with customers on their aluminum sustainability efforts?
We work with our customers on developing better ways of sorting aluminum. You may not use the recycled aluminum in an aircraft carrier, but you can use it in an engine block for an automobile. So we find ways to utilize a multitude of streams of fallen scrap for various products.

Otherwise, where does the unused aluminum end up?
About 55 to 65 percent of used beverage cans are recycled. Otherwise it ends up in a landfill. For us, some of the recycled aluminum is utilized for our internal metal needs to replace higher-cost primary aluminum. But a significant amount of those recycled-aluminum pounds are processed externally. We buy the scrap, process it and then sell the material to customers.

You service a lot of sectors, from aerospace and automotive to building and construction to transportation. Is there one sector that is poised for using more aluminum over the next 6-9 months than any other?
Automotive. There’s a massive shift going on in the automobile industry in terms of ‘light-weighting’ vehicles. The larger automobiles have been substituting aluminum auto body sheet [which is applied to a car doors, hoods and bumpers] for steel. There are significant investments taking place within the industry.

What other industry looks ripe for more aluminum usage?
Aerospace. The backlog for aircraft globally between Boeing and Airbus is almost 10,000 planes. And that’s close to nine or 10 years of production. There’s a super cycle going on and it’s driven by two main areas: growth and travel, particularly in emerging markets, where there will be a significant amount of planes needed in Asia and India. As those economies continue to evolve, there is a massive amount of planes needed to be built for just China. Relative to that, two-and-a-half years ago, we made the decision to build an aluminum plate mill in China. We’re the first Western aluminum producer to move our technology to China. Today we have a wholly owned subsidiary. We will be producing aircraft plate by the middle part of 2014.

So how do you compete?
The larger players in the industry [such as Alcoa, Novelis and Aleris] are making significant investments in terms of capacity to be able to satisfy the amount of aluminum consumed by the automobile manufacturers. That’s a global need. We’re a significant supplier to Audi. We do that out of our European operations. We just expanded our double rolling mill to double our sheet capacity there. We are evaluating how we expand our China facility.