Responding to R&D Challenges in a Changing Industry

Responding to RResponding to R

in a Changin

& D Challenges& D Challenges

ng Industry

Dr Tom Farleyy

Managing DirectorInnoval Technology LtdInnoval Technology Ltd

Presentation Overview

Innoval Technology - OvervInnoval Technology - Overv

Industry Changes - Impact ExpertiseExpertise

Technical Challenges

Responding to The ChallengResponding to The Challeng

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on R&D and Technical

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14th World Aluminium Conference 10-12 May 2009, Dubai






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Innoval Technology – Our Background

Innoval Technology is an independent compto the downstream aluminium industry

Formed in 2003 as a result of closure of

We are a group of 26 aluminium experts – ouknowledge

Rolling and extrusion process expertiseg p pMetallurgy product expertiseSurfaces expertise

Our engineers have an abundance of producMost have been supporting the industry fMany have held Senior Management posMany have held Senior Management pos

any providing a unique resource of expertise

one of Alcan’s Global Technical Centres

ur strength is the breadth of our aluminium

ct and process experiencefor over 20 yearssitions in global aluminium companiessitions in global aluminium companies.


Innoval Technology – What We Do

Product development to improve customer sbecome a preferred supplierincrease or protect market share

Process improvement to reduce operating coincrease asset utilisationreduce energy consumptionreduce energy consumption

Strategic SupportStrategic SupportTechnical Due Diligence on existing planPre-Feasibility Studies and Greenfield plPlant investment and upgrade support

atisfaction

osts

ntsant design







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Global Growth Rates (Pre-Downturn)

Lower Growth Rate Regions:

Where higher costs

• Focus on cost reduction and process efficiency

• Accelerated by recession• Accelerated by recession

• Increased focus on specialised and value-added products

East

BrazilGDP

Growth (’07)

Global Pool of Experienced Aluminium Consultants

Russia

China

t EU

MEENAIndia

Hi h G th R t R iHigher Growth Rate Regions:

Generally lower costs

• New capacityNew capacity

• Striving for world-class performance and quality


Merger, Acquisition, Divestments and Closu

Nove

Spin-off

Innoval

Alusuisse

p

Alcan

Alcanmerger

Alcan acquisition

2005200420032002

Pechiney

R & D Impact Closure of & Novelis N

p& Novelis N

res - Example

lis Aditya Birla / Hindalco

Acquisition

Rio Tinto

Hindalco

Rio Tinto AlcanRio Tinto

Rio Tinto acquisitionSpin - off / Sale ?

AlcanPackaging?

20072006

Eng. Products?

2008 2009

major corporate Centres at Banbury (UK) Neuhausen (Switzerland)

BHP?

Neuhausen (Switzerland)


Example: Rolling Plant Closures in United K

SSp

ingdom

Global Pool of Experienced Aluminium ConsultantsAluminium Consultants

i li t Lith hipecialist LithographicSpecialist Aerospace

Aluminium Rolling PlantAluminium Rolling Plant

Closure


Impact of Changes on R&D and Technical Ex

Loss of experienced staff with world-class prwestern industry

BUT R&D still required for critical industr

Creation of a pool of independent aluminiumGrowth of R&D outsourcing model

New industry in emerging regions needs R&Benefit from Knowledge Transfer to achiBenefit from Knowledge Transfer to achiWill develop own in-house R&D

– Requires good source of local engineerinhi ill k i– … this will take time

Need access to expertise to design new

xpertise

roduct and process knowledge from a mature

ry challenges

m industry consultants

Deve world class product standardseve world class product standards

g graduates

plants and support investments







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Key Aluminium Industry Challenges

More exacting customer requirements and ifi ti

Drivers

specifications

Cost reduction

Competition from other materials (substitution)

Increasing focus on sustainability

Achieving world class quality (gauge, flatness, t t f h ti t )

Examples

texture, surface, mech properties, etc.)

Increased Asset Utilisation (recovery, productivity)productivity)

Reduced Energy Consumption (smelting and rolling)

Aerospace – retain market share

Automotive – reduce Aluminium costs

Packaging – retain market share

Increase use of recycled aluminiumIncrease use of recycled aluminium

Reduced process energy and water consumption (smelting and rolling)

R d d i i (CO fReduced process emissions (CO2 from smelting)

Reduced landfill


Pierce Great Arrow, 1907Jagua(All Aluminiu

Exam(Cast Aluminium Body Pane(All Aluminiu

IncreasingIncreasing

Al i i iAluminium in

r XK, 2006um Construction)

mple:ls)um Construction)

p

the use ofthe use of

A t tin Automotive


Automotive

The history of the use of aluminium sheet anback many decades

Favourable strength-to-weight ratio vs steel hassociated reduction in weight and CO2 e

One of the major drawbacks to greater substcost of aluminium compared with steel

As a consequence much R&D is focused on One option is to increase use of recycled~75% of ~800 million tonnes of Aluminiu

– The challenge is to utilise this source

nd extrusions in automotive structures goes

has long been recognizedemissions

titution of steel with aluminium is the greater

reducing the cost differentiald Aluminumm produced since 1880 is stored in use


The Impact of Weight Reduction on Automot

300

250Pe

200

g/km

150CO

2g

100 Prius

Modus

Citroen C2

Focus

Citroen C1 Civic

50

VW Golf TDi Peugeot 308 HD

Audi 1.2 TDi

Ford P2000Insight

50500 1000 1

Curb We

tive CO2 Emissions

etrol Diesel

Lexus GS450hLexus RX400h

Lexus LS600h

Petrol HybridPrimeira 407

Primeira 607

Diesel HybridLRX concept

Di

y

1500 2000 2500

ight (kg)


Audi A2 1.2 TDi AIV (80g/km)

First 4 door “3 litre per km” car (2.99 litres/km)80 g/km CO2

Axle mounting frame, control arms and spring struts, brakthe rear are aluminiumLightweight forged aluminium wheelsWeighs 825 kg (135 kg lighter than 1.4 TDi)The three cylinder aluminium 1.2 litre TDi engines is one Produced at 20 cars/day (~29,000 produced)

ke calipers on the front disc brakes and the brake drums at

of the lightest passenger-car diesel engines at 100 kg


Automotive Example – A New Manufacturing

Benefits of Cladding AluminiumFunctional surface layerStrength or low cost core (e.g. recycled)No need to compromise properties

Recent new technology – Novelis Fusion™

g Technology

Functional Surface layery

Core


Automotive Example – A New Enabling Tech

Development of improved joining technologieaimed at reducing the cost of aluminium

Resistance spot welding (RSW) of aluminiumCompetes with cost of joining steelSuitable for high-volume robotic manufacImproved recycling (no rivets)Improved recycling (no rivets)

Technology breakthrough Electrode BuffinTechnology breakthrough – Electrode Buffin

hnology

esintensive automotive structures

m

cturing

gg


First AluminiumAirbus A

ExamExam

P t ti thProtecting the

of Aluminiun

m Aeroplane, 1909A380

mple:mple:

M k t ShMarket Share

in Aerospace


Aerospace

Material usage changes in 10 years (Boeing

80

7

60

70

80

40

50

% u

sage

Significant drop

10

20

30%

0

10

aluminium titanium

m

777 vs 787)

777 787

Significant rise

steel composites misc.

material


Aerospace

The new generation of wide body passengermore fuel efficient than today’s similar sized

8% from improved engine systems (RR /12% from the use of advanced materials

Boeing 787 ‘Dreamliner’~50% of the primary structure including50% of the primary structure, including fibre-reinforced plastic (CFRP). For the fuselage structure alone this will

50 000 fasteners– 50,000 fasteners.

Airbus 380Airbus 380Retains the ‘aluminium aircraft’ with apprfrom aluminium alloys.

r aircraft from Boeing and Airbus will be 20% aircraft./ GE)s

fuselage and wing manufactured from carbonfuselage and wing manufactured from carbon

replace ~1,500 aluminium sheets and 40,000

roximately 61% of the A380 structure made


Aerospace – Challenges

Aluminium must be competitive witCarbon Fibre Reinforced Plastics (Carbon Fibre Reinforced Plastics (Glass Fibre Reinforced Plastics (GTitaniumTitanium

Development of next generation of

Alcoa are leading development of nmaterial that is nearly immune to fay

Increases range of applications of G

th other advanced materialsCFRP)CFRP)FRP)

f Al-Li alloys

new Aluminium-GLARE composite atigue (CentrAl)g ( )GLARE to include wing structures


Example: More Exacting Customer Requirem

Coca-Cola’s First All Aluminium Can, 1967,(weight 21g)

ments and Specification

Coca-Cola Aluminium Can, 2009,(weight 12g)


Can Body Stock - Thickness Reduction and T

Extremely tight specification for aluminium shthickness

Correct thickness tolerance can only beCorrect thickness tolerance can only be achieved with state of the art thickness control systems ...… AND the know-how to get the most fro… AND the know how to get the most frothese systemsUnlikely to be achieved at start-up

Failure to meet specification will lead to canFailure to meet specification will lead to can jams and can strength issues

Profile(crown)

Al strip~0.5%

Strip wid

Tighter Control

heet

omom

plant il l thplant coil length

~10,000 m

250 +/- 5 microns

dth ~ 1.8 m


Can Body Stock – The Challenge of “Earing”

“Earing”Anisotropic mechanical properties causeAnisotropic mechanical properties causecrystallographic texture

Sheet with “earing” that is out of specificationRisk jamming and stoppage of the can plineResult in volume of can being too small

W t i h “ i ” dWestern companies have “earing” under con

It remains a challenge for new industry inIt remains a challenge for new industry in emerging regions

”

ed by

Ears

ed by

n willlant

t lntrol

can after re-draw and wall ironingwith severe earing


Sustainability Challenges

Examples of Alcoa Targets (

fIncreasing the use of recycled Alu50% recycled Al content in fa

Reducing energy consumptionReduce energy intensity by 1Reduce energy intensity by 1

Reducing process water consump60% d ti i60% reduction in process wa

Reducing emissions incl. greenho25% reduction in greenhous

Reducing landfill wasteReducing landfill waste75% reduction in landfill was

(2020 framework)

uminiumabricated products by 2020

10% by 2010 (vs 2000)10% by 2010 (vs 2000)

ptiont b 2009 ( 2000)ater by 2009 (vs 2000)

ouse gasese gas emissions by 2010 (vs 1990)

ste by 2010 (vs 2000)







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Responding to the Challenges

The aluminium industry must continue to commaterials and maintain aluminium’s sustaina

d l d i d ll fdevelop new and improved alloys for spedevelop new and improved process tech

The aluminium industry has driven new prodAutomotive, Aerospace, Packaging, etc.the emerging industry must join this chalthe pool of expertise can be used to help

Best results can be obtained through develowith suppliers and customers

– Technology suppliersa global response between manufacture

mbat the threat from other competitive able credentials

ifi li tiecific applicationshnologies

duct development and developed new markets

lengep with these challenges

pment strategic partnerships

rs – to combat common threats


Responding to the Challenges

Different regions need different types of R&Destablished western industry needs support toemerging regions need support in achieving wboth need R&D to maximise returns

The Aluminium Industry in emerging regionsresource in place

highly trained and experienced workforce capefficiently

– Source of good graduates– Focussed University departments

a dynamic R&D programme – responding to t

BUT in-house R&D is expensivePerhaps up to 0.8% of Sales

Do reduce costs and in new product innovationworld-class product and process performance

s needs to have an effective technology

pable of producing high-tech products and processes

the challenges


Responding to the Challenges - The Outsour

Utilise the pool of independent expertise that

Specialist independent R&D companies haverange of skills needed and can supplement i

Innoval’s approach …

We work as part of your in-house team to

Our cost can be switched “on” and “off”Our cost can be switched on and off

IP developed is owned by the client

We adopt the same model for any speciacost saving to our client

rce R&D Model

t now exists

e extensive industry expertise and the broad n-house capability

o supplement your capabilities

alised services that we need and pass on that


Summary

Aluminium Industry ChangesGrowth of aluminium in emerging regionsCost reduction within mature western industryAcquisitions, mergers, divestments and closuReducing Western R&D .. but creating a pool g g p

R&D Challenges are driven byg yMore exacting customer requirements and spCost reductionCompetition from other materialsCompetition from other materialsIncreasing focus on sustainability

Responding to the ChallengesNeed to develop R&D capability in emerging rknowledgeknowledgeNeed to work jointly on threats to the aluminiuAn Outsourced Model of R&D can help to sup

yresof independent expertisep p

pecifications

regions to build on past achievements and to create

um industrypport the industry


Thank you for yThank you for yyour attentionyour attention …

Innoval TechInnoval Tech

An independesupplier to the Alu

hnology Ltdhnology Ltd

ent technology uminium industry