The Canadian Press – MONTREAL – A rapidly aging population means the aluminum industry needs to look beyond the high demand for lightweight cars if it wants to grow long into the future, a Canadian demographer said Tuesday.
University of Toronto economics professor David Foot told an aluminum conference that spending patterns will shift as people age, potentially impacting the long-term demand for the metal.
“When we get into our 60s and 70s, we drive our automobiles a little less, we fly a little less, so some of the current uses of aluminum which are great, are not going to be long-term growth prospects,” he said in an interview.
The aluminum sector foresees “game changing” demand from planes, trains and automobiles, which are increasingly using the metal to lower the weight and improve fuel efficiency and environmental emissions.
For instance, automaker giant Ford already plans on reducing the weight of its F-150 pickup truck by increasing the amount of aluminum used to 315 kilograms from 45 kilograms on current models.
While Foot has no doubt about the short-term gains, he said companies operating in “older societies” like Canada need to focus on areas where spending will ultimately increase, such as pharmaceuticals.
By 2036, almost one in four Canadians are projected to be over 65, compared to 14 per cent in 2011, according to Statistics-Canada.
“I think businesses have become so short-term thinking in North America that demographics play no role,” said Foot, the author of Boom, Bust and Echo, which was first published in 1996.
Chris Bayliss, deputy secretary general of the International Aluminium Institute, agrees that the industry needs to be aware of changing demographics that will drive per capital consumption of aluminum.
While the focus in North America is on the use of aluminum in cars, China and other eastern countries are looking more on their use in mass transit to move millions of people and goods long distances using lighter trains, trucks and ships. Others are looking at its use in bridges and buildings as a durable product that will last for 50 to 100 years.
“We shouldn’t just be focusing on auto, although we are riding the crest of an auto wave in North America, but the opportunities are there for the industry much more broadly,” Bayliss said after addressing the conference.
Despite the current challenges of lower prices and high inventories, Bayliss said global aluminum production is expected to increase by 50 per cent by 2025 or 2030 to reach 75 million tonnes.
Canada’s abundant hydroelectricity should ensure it remains a key global supplier of aluminum and “value-added products” as long as prices remain competitive.
“If you look at the mature production centres, Quebec and Canada are one of the few areas where you might see growth into the future,” he said, noting that Europe and the U.S. will see declines.
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