Aluminium Industry, What Strategies for the Post-Covid-19 Scenario?
The US-China trade war, the critical issues of our country system and the opportunities for SMEs in the aluminium sector offered by the European Commission’s Green New Deal: Maurizio Sala, CEO of Foundry Ecocer, takes stock of his two terms of office at the helm of Amafond and outlines priorities for looking with optimism at the post-pandemic phase
We once again met Maurizio Sala, CEO of Foundry Ecocer and, since a few weeks ago, past president of Amafond, the Italian Foundry Suppliers Association; Maurizio Sala is an excellent connoisseur of the aluminium sector in its various facets and a keen observer of the Italian entrepreneurial system. We begin by talking about the Amafond Association, which he successfully led for two terms in challenging times, both because of the global economic-political situation with the strong tensions between the United States and China and the sanctions against Russia, and more recently with the critical phase of Covid-19, which has left deep scars everywhere, especially in our country condemned to lead the way in a difficult and completely new experience. “Leading Amafond for four years has been a privilege for me with invaluable experiences,” explains Maurizio Sala. “When it was founded in 1946, Amafond was little more than a project to be built, in the hands of a willing group of manufacturers and distributors of machinery and products for metallurgy, particularly foundries. Today it is known all over the world, it is the image of Italian companies operating in this important sector representing the best of technology for the foundry industry and beyond. With the support of national institutions, such as the Foreign Trade Institute and the Ministry of Economic Development, we have always worked for the development of the Italian metal foundry, not only in the domestic market, wherever there was an interest, we have been attentive and present, with initiatives and missions, leading members to discover new markets, starting from Europe and reaching China, Russia, Brazil, Mexico, India, Indonesia, the United States, Iran, Poland, Turkey, the Czech Republic, Argentina, South Africa, Korea and Japan. In synergy and close cooperation with the national industry associations, first and foremost those closest to us, such as Assofond and Assomet, we have committed to demonstrating our competence at the highest levels on international markets, trying to create a network and to achieve results in the advanced sectors of metal applications, from cast irons and steels to light alloys, in the automotive, mechanical engineering, electronics and construction sectors. All I did was to follow a well-traced path, aiming at consolidating technical and cultural partnership relations with associations and institutions representing important international markets, such as the agreements with the Russian Aluminium Association and India and the close relations with the Gulf States, in order to promote a country which wants to grow and which is able to do so using its best forces, looking beyond its borders. Amafond has a solid background, it is cohesive, well-structured, determined, fast and flexible in its decisions and choices; the new President Riccardo Ferrario is a leading figure in our sector and will make a great contribution, together with the Board, to the life of the Association in the coming years”.
On several occasions in recent years, in your important conferences or in Amafond institutional events, you have hosted personalities from the political and business world to open a debate on topics of relevant interest to your sector. Do you judge positively the results obtained by these meetings between industry, business and the political world?
“It must be said that the structure of manufacturing in the past few years has changed radically, it is clear that our segment of industry has to face, now more than ever, a situation of strong discontinuity compared to the recent past: global dynamics follow rapid and changing cycles, we have had the myth of globalization, today with all the disturbances of various kinds, from wars on duties to environmental problems to the very serious pandemic crisis, you can perceive a greater attention to the local level, and this for the business world means to revise objectives and strategies. Going down to the national level, we are well aware of the many structural issues that have never been settled for years and which have hindered the development of our country, from the highest energy cost in Europe, to the fiscal system which punishes those who pay, to the unacceptable bureaucracy, we have brought to our meetings government leaders and personalities from the world of business and culture in order to provide a concrete picture of our demands, the importance of our sector and the clout of our industrial segment in the country’s economic system. Above all, I would like to remember the strong support which a great entrepreneur like Alberto Bombassei has always provided us with, being close to our problems and a passionate supporter of innovation for the competitiveness of the foundry and the need for the government to give maximum support to technological development and investment in order to focus on Industry 4.0”.
How do you evaluate the general situation of our country system in the near future, from your observatory in such a strategic segment of industry?
“With regard to the current situation, there is no doubt about the objective difficulties we find ourselves in today, as forces of production, labour and society, not only because of the hindrance to world trade and our exports caused by protectionist wars, but also because wrong political decisions in Italy had frozen the recovery of private investment which, thanks to the Industry 4.0 plan and with exports, had formed the basis of the recovery in the period from 2015 to 2018. It remains a fact that at the end of 2019 we were the only major EU country still having to recover almost 4 points of GDP compared to 2008 levels, and that governments of all sorts in past years have favoured current spending and an infinite number of bonuses over public investment and structural reforms. For a manufacturing country like ours, efforts to avoid a recession can only succeed if we do not hide from ourselves the faults and mistakes we have all made in recent years. As companies, we are aware that we have to improve and we shall have to concentrate our efforts and resources on the known essential priorities, such as investments in innovation and research, human capital, environmental and social sustainability of our production, new organisational and contractual forms, international vision, extension of our presence and shares in strategic markets and innovative supply chains, but also a great recovery of the national market. We are asking governments and social stakeholders to take concrete decisions on a reform plan which we believe should provide the basis for proposals to access the overall transfers and credits which Europe makes available; we expect clarity in terms of taxes, tax leverage and tax wedge, not only in 2020 but also in the coming years, as well as precise answers on the automotive, steel and export supply chains, in particular to understand whether we can count on specific measures such as those put in place by other major European countries. Basically, we are ready and confident, we understand the objective difficulties, but we say that we need a competent Government to design a framework which we will then have to complete using all our entrepreneurial skills in the midst of so many difficulties, constraints and limitations, so as to allow the country to have a living and reactive industry”.
Let’s move on to a broader picture and talk about aluminium on the global market: you have rightly touched on a very hot topic these days, that of the relaunch of industry in the EU in terms of green and sustainable economy. It is a topic which closely concerns our metal and the backbone of manufacturing, which is that of small and medium sized companies. How can you comment on the Green Deal of the New European Commission in this respect? Do you think that this project of industrial renaissance could have a good impact on our sector in our country?
“There is no doubt that the EU is looking very carefully at the aluminium segment as a champion material of the circular economy, a strategic sector therefore as a model of industrial sustainability, in many ways:
-from an economic standpoint as the basis of our manufacturing sector to provide it with competitiveness and the ability to create jobs;
-from an ecological standpoint as a champion in terms of recyclability, commitment to safeguarding the environment and energy resources;
-from a sustainability and social value standpoint in the sense of representing an excellent compromise between general property/performance, employment latitude, durability, availability on the market, cost, ability to develop the circular economy.
In this perspective, the ambitious Green Deal programme launched by the new Commission wants to enhance the virtuous aluminium and the small and medium sized European manufacturing companies, which, I would add, are mostly Italian”.
Our country is second in Europe for the use of aluminium in all its forms, in absolute terms and as per capita consumption, but just like and more than other countries, we are highly lacking in primary metal. This raises the problem of the supply of raw material, because despite the efficiency of recovery and recycling of scrap metal, particularly in Italy, it will be impossible to cover our needs with secondary metal production in the coming decades. Don’t you think that the time has finally come in the EU to liberalise the import of raw metal, eliminating an extra cost for downstream which studies by the LUISS University of Rome quantify at around 1 billion euros per year?
“No doubt, never before has the EU Commission paid so much attention to the aluminium value chain, both for the great qualities of light metal from the recycling standpoint and for the wide range of applications. As I have always said, it is first and foremost necessary to reward recycling companies, but also to think of processors such as rolling mills, extrusion companies, foundries, surface treatments, manufacturers of machined parts and components or finished products in light alloys, also considering the impetus to be given to environmental sustainability aspects. How can we fail to take into account that with an EU import duty on a metal of which we have a shortage, therefore a truly incomprehensible measure, we have been creating an unreasonable extra cost to our downstream for years? There is an urgent need for action at the source of the issue, in particular the elimination of the EU import duty on raw materials, which represents, as you pointed out, a cost of over one billion euros per year for the downstream industry.
Do we realise how much research and development (R&D) on plants, alloys, technologies and products could be carried out by small and medium sized companies, sparing us this unreasonable duty imposed on a raw material such as primary aluminium, a raw material of which we are in deficit for about 70% of our requirements?”
Let us go back to Green Aluminium and the initiatives which are multiplying to differentiate primary aluminium according to the CO2 footprint characterizing its environmental “cleanliness”, which in turn depends on the technical characteristics of the production plant and the type of electricity used (from fossil fuels, gas, hydroelectric, nuclear). What is your opinion about this possible differentiation of the metal according to its CO2 footprint, also in terms of its listing on the stock exchange and perhaps also as a customs code?
“I believe we are at a major turning point, a first step towards the decarbonisation of industrial processes to curb global pollution. In the case of aluminium, there is every desire to highlight that not all types of primary aluminium are the same, the CO2 footprint of a Chinese primary metal is up to 3-4 times higher than that of a primary metal produced for example by Rusal, the Russian producer that is proposing the LME quotation of low-carbon aluminium, but also that of other producers such as Norway and Canada, with production from hydroelectric power, or from the Gulf countries with production from gas power. It is in everyone’s interest to promote the most virtuous technologies and products, perhaps with a more rational and intelligent use of customs tariffs, rewarding in Europe, which has a serious production shortage of electrolytic aluminium, the influx of virtuous metal with a low footprint and penalising that originated with overall polluting techniques, at the same time enhancing domestic production of recycled aluminium”.
On these positive considerations and interesting prospects for the future of our light metal, we would like to thank Maurizio Sala for this exchange of ideas, wishing him success for his Foundry Ecocer and, of course, for the Amafond association.