Automakers have experienced significantly increased sales across the globe in the wake of the recession. Even as economic growth has sputtered, many carmakers have reported sales upticks, driving demand for products ranging from rare earth metals to rubber.Alcoa Inc. has benefited from soaring worldwide automobile sales, with the company reporting increased sales over the past year. Officials announced Thursday they plan to invest roughly $300 million as they expand an Iowa manufacturing plant.
Officials from the company have worked to overhaul their spend management and strategic sourcing initiatives over the past few years, as volatile commodity prices began to squeeze profit margins. However, one Alcoa vice president affirmed the increased manufacturing capacity was essential, given automakers' explosive demand for aluminum.
A shift among carmakers spurred the project to expand the company's Davenport, Iowa, production facility. A growing number of automobile manufacturers are transitioning from steel to aluminum products, according to experts, as the lighter metal helps engineers craft cars with increased fuel efficiency and improved safety, durability and performance.
The Davenport production plant is already one of the company's most technologically advanced, and is primarily responsible for constructing aerospace materials. The manufacturing hub hosts a 220-inch wide mill, the largest in the world. Company officials hope it will soon become one of the world's foremost producers for the automotive market.
Alcoa officials are confident aluminum demand will continue to climb over the coming years. Their hopes are corroborated by a number of studies projecting worldwide automobile sales to surge, especially in the so-called BRIC emerging economies of Brazil, Russia, India and China.
Construction crews will outfit the manufacturing plant with a host of new technologies aimed at improving efficiency. The significant investment will help achieve business cost reductions in the long-term, Alcoa officials affirmed.
"The automotive market is a tremendous growth opportunity for Alcoa over the next several years," Alcoa chairman Klaus Kleinfeld said in a statement. "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."
Upon completion, the manufacturing plant will employ 2,300 people. Officials expect construction will be completed by 2013. Shares of the company rose slightly in afternoon trading following the announcement, according to The Associated Press.
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