As Automakers and the U.S. Economy Respond to Escalating Fuel Prices, Steel Offers a Green Solution: Coates' Column

By George Coates, President, The Phoenix Group

As we watch the political and economic landscapes change with every $0.10 change in North American fuel prices, we’re learning something that Europeans and Asians have known for years – we must adjust our driving habits. Either we look for opportunities to car pool, downsize our vehicles, drive less, or shop for bicycles or scooters. And at $4.00 per gallon for regular unleaded gasoline, we’ve arrived at that very point.

With this decision, the winner is once again the environment, as reduced driving cycles and more economic transportation results in fewer CO2 emissions – a Win-Win for us all.

Europe has long led the way, with an environment and culture that embraces small cars and low emissions due to heavily populated urban areas, roadways and $7.00 per gallon gasoline. Let’s see how fuel prices directly impact North Americans. The table below illustrates the relationship between fuel prices and annual family fuel expenditures, based on driving distance (miles per year). A two car family that may have budgeted $2,800 in early 2007 now spends ~$4,500 annually. In fact, those who drive a large SUV sparingly must budget over $4,000 annually for this one vehicle.

How does this affect the U.S. economy? We’re taking a hit here, as truck and SUV sales have all but stopped, while small cars and vehicles with alternative powertrains (diesels, hybrids) are selling at premium prices. And the volume of vehicles going out the door are lower than the last 10 years – we don’t have cars available (the “green” consumer isn’t interested in a gas-guzzling truck), our disposable income is going into our fuel tanks, and our confidence has eroded due to fuel prices and mortgage collapses, so we’re holding onto our money.

How did we get here? The “Big 3” continued to develop large SUV’s and Trucks, because that’s where their earnings were derived from, and their product offerings in smaller vehicles are now slim. In contrast, the Asians and European car companies expanded into the Truck and SUV markets, while continuing to develop and expand their small car lineups. With consumer interests hurriedly changing this year, American car companies have little to offer, and Honda Civics are once again the top selling vehicle in NA. So, overall vehicle sales in the U.S. have slowed considerably, while sales in Europe and Asia show significant growth, fueled by exploding auto markets in Russia and China.

Help is on the way, however, as Ford and GM are expanding production capabilities of small to mid-size cars and SUV’s, and focusing as many resources as possible on small car development. Within five short years, the North American automotive mix could replicate that of Europe.

GM, Ford and Chrysler aren’t the only companies hurting. Toyota just announced a 3-month shutdown of their Tundra large truck plant in San Antonio, while they consider product allocation changes to align with new consumer interests. And Honda is increasing their production volumes for small cars and SUVs.

What is Steel’s role in all of this?
The WorldAutoSteel website is filled with applications examples, showcasing new steel products and their performance advantages. With a receding auto industry in North America, cost reduction is the number one requirement of engineering effort, and close behind is improved fuel economy and reduced emissions.

Steel is the only automotive material that bridges the performance – cost gap. There are other automotive materials that are considered for light weighting purposes, but steel comes with no cost penalty, while all others are pricey solutions. From a functional perspective, steel provides a strong, safe body structure that has given families confidence in driver and passenger security. This safety tradition continues as new, lighter-weight advanced high strength steels are being used to optimize auto body designs for improved crashworthiness and reduced weight.

With today’s advanced high-strength steel grades, weight savings of 25% are typically achieved and this corresponds to a total reduction in vehicle weight of 9%. When applied to a typical five-passenger family car, the overall weight of the vehicle has been reduced by 117kg, which corresponds to a lifetime savings of 2.2 tonnes of CO2 equivalents per vehicle, based on a life cycle assessment. Based on the predicted 71 million vehicles produced in 2008, resulting in total lifetime emissions savings of 156 million tonnes CO2 equivalents.

Since these lighter-weight steel body structures result in improved fuel economy and fewer emissions during the driving life of the vehicle, steel is good for our environment. But, steel is also fully recyclable, and it consumes the lowest energy during its production compared to other automotive materials candidates. Life Cycle Assessment, a tool which measures materials’ environmental contributions from production through end-of-life use, shows that steel is the lowest contributor of Green House gases during its life.

Guess there is only one automotive structure and body material that is both LEAN and GREEN.

George Coates is President of The Phoenix Group, and provides engineering and consulting services in supplier metal conversion programs, manufacturing cost savings audits, production troubleshooting and die optimization, development of metal formability and reference panel systems, new vehicle launch manufacturing support, and Tool and Die training programs. Prior to his role at Phoenix, he spent ten years with AK Steel in research and automotive applications.