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For a long time, most markets in North America have had, and still have, a production overcapacity for aluminum profiles products. At the same time the US market faced an increasing Asian low-cost competition. This confirms the accuracy of Sapa Profiles, Inc.’s strategy to increase the value-added content of its products, and work in close co-operation with customers. We do this by utilizing the Group’s full technical resources and cost-optimize the Group’s production resources.
Despite several structural transactions during recent years, the aluminum profile industry remains fragmented. Today there are only a few major suppliers and a large number of small and midsize players. As a result, there is still significant potential for more structural transactions in the US. From having been basically a local business, profile operations have become increasingly global as customers have grown and expanded geographically. The complexity of the products has also increased, and customers are now demanding that suppliers take part in the development process. These increased demands are driving change in the industry toward achieving synergy effects focused mainly on production, R&D and marketing. Aluminum profile producers fall into two basic groups. The first produce their own aluminum raw material (billet). The other group, which includes Sapa, is independent profile makers that buy raw material from outside sources, and bring value to it. Some larger players have integrated their business along this value chain.
Global Market
With an annual production capacity of 738.5 million Lbs, Sapa as a group is the world’s third largest manufacturer of aluminum profiles and the largest independent manufacturer. Alcoa of the US, with a production capacity of about 2.1 billion Lbs, is the largest manufacturer. Norsk Hydro is second with 1.5 Lbs followed by Alcan of Canada, which acquired a majority shareholding in Pechiney of France in 2003, increasing their combined production capacity to 727.5 Lbs. The total production capacity of the five largest manufacturers corresponded to slightly more than 60 per cent of consumption in Europe and North America in 2003. |
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