Recycling Twist Cuts Ford Truck Costs

Wall Street Journal

By Mike Ramsey and John W. Miller

Ford Motor Co.’s decision to build a lighter-weight pickup truck using aluminum body-panels has been billed largely as a way to achieve better fuel economy. The company’s boss says it is also a recycling play.

The 2015 F-150, perhaps the most important vehicle to hit Ford dealerships in decades, goes on sale this month. By the time a new truck exits the factory and heads for the showroom, it will have left behind $300 worth of scrap aluminum on the plant floor.

That scrap is collected, cleaned, and sent back to the aluminum plant on the same trucks that delivered it fresh—creating what Chief Executive Mark Fields calls a “closed loop” that helps offset the expense of building its best-selling vehicle with a material that is far pricier than steel.

“Every single scrap of aluminum is reused,” Mr. Fields said in an interview. “The more you can reuse or recycle, it makes it a more compelling business case.”

Every day, about 50 semi tractor-trailers drive out of Ford’s F-150 plant in Dearborn, Mich., with thousands of pounds of shredded aluminum, scrap that was stamped out of six-foot-wide aluminum rolls used to make F-150 body panels. Only 60% to 65% of a roll is actually used in the stamping process because many body panels have big holes, such as windows.

Because aluminum can be recycled almost endlessly without degradation, recycling has long played a major role in the production of everything from beer cans to jumbo jets. The twist is that Ford installed systems to separate the six different aluminum alloys it uses and return them to mills in Iowa or New York, to be turned back into aluminum sheet for delivery to its Dearborn stamping plant.

Derek Pritchett, head of global recycling for Atlanta-based Novelis, said making closed-loop deals like Ford’s is a big part of his company’s strategy. “You’re seeing auto makers invest in technology to clean and separate the scrap, because the price provides an incentive for them to do that.”

In October, Signature Group Holdings Inc. paid $525 million to Aleris Corp. for its aluminum recycling business. Signature’s Chief Executive Craig Bouchard said the promise of getting more auto plants to separate their scrap is reason for optimism.

“We’re trying to take advantage of a megatrend, I call it the F-150 syndrome,” Mr. Bouchard said. The syndrome may soon spread to Ford’s heavier-duty F-250s and F-350s in coming years. Ford also is converting another aluminum F-150 plant in Missouri in 2015 to handle aluminum.

Since it first made its debut in 1948, the F-150–like most other mass-market vehicles–has been built from steel sheets. Ford’s decision to move to aluminum adds $1,000 to the cost of each truck it makes, according to Dick Schultz, a metals expert. That equates to at least $600 million when spread over the rough amount of F-150s built annually.

Scrap steel is far less valuable, and less than $100 worth of steel could be salvaged on the outgoing F-150 model. Ford’s aluminum recycling system, installed as part of a $359 million overhaul of the Dearborn factory, allows the company to recoup up to $300 a truck, helping offset about 20% of its higher production costs.


‘Alcoa’s supply agreement with Ford stipulates the auto maker use a ‘fully closed loop’ recycling system.’

— Klaus Kleinfeld, Alcoa CEO


Ford now has separation and shredding machinery from Ohio-based Compass Systems and Sales LLC, that separates the alloys, ensures it is free of dirt and oils that might contaminate the recycling process. Its machinery shreds the scrap and sucks it into large tubes that empty into the returning trucks.

Aluminum companies pay 50% more per pound for separated alloys, which can be worth as much as 90% of the price of the original metal. Ducker’s Mr. Schultz says other auto makers are installing similar machinery that allows for a closed loop.

As auto executives buy into aluminum, suppliers are ramping up. Alcoa Inc., Novelis Inc. and Constellium NV have been investing in new sheet capability, including the use of recycled aluminum, hopeful that Detroit’s use of increasingly large quantities of new aluminum scrap will lower costs and reduce carbon footprints. Aluminum companies are rewarding customers willing to commit to recycling. At an investor day last month, for instance, Alcoa Chief Executive Klaus Kleinfeld said part of its supply agreement with Ford stipulates using a “fully closed loop.”

Novelis, a unit of Hindalco Industries Ltd. , is investing $500 million to lift recycling capacity 75% to 2.1 million tons a year, and considering new recycling plants. Novelis, run by a former Ford executive, relies on scrap as the raw material for around half of its automotive aluminum sheet, up from less than 10% two years ago. By 2020, that number for automotive is expected to grow to 70%.

Novelis ships coils from its roll mill in Oswego, N.Y., to Ford’s Dearborn factory with trucks that return to Oswego full of scrap. A round-trip journey takes a day or two, and, within two months, that scrap has become fresh aluminum ready to be stamped again.

Write to Mike Ramsey at and John W. Miller at