The Impact of Automakers Demands on the Steel Industry Assignment

The Impact of Automakers Demands on the Steel Industry - Assignment Example Ford’s River Rouge factory’s partnership with steel mill has gone for a long time with the partnership leading to the construction of highly popular vehicles in America, ranging from the Model A to F-150 pickup truck. However, in 2014, Ford announced its switch to the use of Aluminum in the construction of its F-150 trucks. This is not just a concern to Steel mill but all steelmakers within the US as most of the car makers have turned their attention towards the use of aluminum in the construction of cars. Being the second vital source of revenue for steelmakers, only after the construction industry, the automakers constitute about 20 percent steel sales for the steel makers within the US on an annual basis. As such, a shift towards aluminum as a replacement of steel would have a great impact on the revenue of the steel industry. The automakers are pushed towards adopting the lighter steel as a major component of their cars as a result of the push by both the administra tion and the consumers to develop fuel-efficient vehicles. The steel industry has effectively and rapidly responded to this shift in consumer demands by developing lighter, high-strength steel that would meet the needs of the consumers. For Steel Mill, this has led to the adoption of the lighter steel by Ford in building the frame of its F-150 trucks. This type of steel is sold at a lower price than the initial steel, which has reduced the cost for the consumers while at the same time increasing the sales for the steel-makers. Other companies within the steel industry have also been forced to merge with other companies that have proficiency in the development of lighter steel, as a strategic move aimed at holding onto their consumers.