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Novelis, the world’s largest aluminum recycler, showed Ford how it could afford the switch to higher-priced aluminum (adding about $750 per truck) by using recycled scrap instead of buying virgin aluminum mined from bauxite. Together they created an innovative supply chain that allows Ford to recover a big chunk of its aluminum costs by selling the scrap back to its suppliers and reusing it.

Phil Martens, a former Ford executive who is now chief executive of Atlanta-based Novelis, says the virtuous circle is a clever example of risk management. “Give us your scrap and that will turn into your product.”

The rest of the industry is watching closely. Tough new fuel-economy laws require automakers to virtually double their fleetwide average to 54.5 miles per gallon by 2025. Mileage ratings for the new F-150 have yet to be released, but the feds say Ford must achieve 30.2 miles per gallon by 2025, up from about 19mpg today.

Ford declined to talk to FORBES about its manufacturing process, but the closed-loop recycling system is similar to one Novelis already uses in Europe for Jaguar and Land Rover, Ford’s former luxury brands. The major difference is the scale.

Here’s how it works: When a vehicle body panel is stamped, about 40% of the metal winds up as scrap. Instead of gathering up all the various metal scraps from its stamping plants in Dearborn, Mich. and Buffalo, N.Y., Ford installed $60 million worth of elaborate pneumatic scrap-handling equipment that will separate the aluminum alloy scraps on conveyors and deposit them in dedicated containers to avoid contamination by other grades of metal. Novelis contracted a fleet of 150 trailers to ship the scrap, in pristine condition, back to its Oswego plant for reprocessing. Scrap from Alcoa AA -0.24%, another supplier, goes back to its plant in Davenport, Iowa.

The loose, shredded scrap is received in bulk dump trucks at the Novelis plant and is then dried to remove any moisture or oil. The pieces are then melted in a 2,000-degree furnace, with extra ingredients added to rebalance the specialized alloys. Once the molten metal is ready, remaining impurities are removed and it is cast into massive 30,000-pound ingots for subsequent processing. It’s then ready to be rolled into sheets one-sixteenth of an inch thick and shipped in giant coils back to Ford’s stamping plants, where the process begins anew.




There's been a lot of speculation on how much the move to aluminum would cost and how it was feasible. I think this pretty much answers those questions. Seems like a clever way to do it.
 

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FYI - you need to post the link.

Anyway, very interesting, though I had already assumed all manufacturers would have already been doing that even with regular steel. Though perhaps with regular metals it just gets sold as scrap vs. sold back to the company.
 

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FYI - you need to post the link.

Anyway, very interesting, though I had already assumed all manufacturers would have already been doing that even with regular steel. Though perhaps with regular metals it just gets sold as scrap vs. sold back to the company.
The software isn't letting him edit the post, so here's the link:

Forbes
 

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Discussion Starter · #4 · (Edited)
The software isn't letting him edit the post, so here's the link:

Forbes
Thanks Envoy!!

The $750/per truck seems like a lot less than what people were estimating and explains why others, including Reuss and Marchionne, didn't see how it was feasible.
 
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