Constellium's incoming CEO discusses scrap bans, national security and growth plans

AMU spoke with Joerg about her experience and her vision for Constellium, which has operations in Europe, North America and Asia.

AMU: How did you first get involved in the metals industry and what has kept you here?

Joerg: I didn’t choose to work in the metals industry, but a company that I’m sure you’re familiar with, AMAG, is very close to where I was born. I was looking for an intern job, and this is how I started to work for AMAG. And, I liked it. I really enjoyed this business. There’s something new every day, and even after 30 years, you can still learn. The industry is evolving; the markets are growing. So, I think it’s a really exciting industry.

AMU: What are some of the trends that you have seen over that time?

One is the structure of the industry has changed. Another one, I would say, is markets have changed.

If we think about the structure of the industry when I was younger, most of the companies were fully integrated. You had Alcoa with 120,000 employees doing everything from mining, refining, smelting, rolling, extruding, building and construction, packaging, right? A lot of these big companies, they really covered all processes in the markets. In fact, most of them were created to create downstream usage of aluminum for the smelter business. So, the dynamics in the industry were different because we were fully integrated, and then we went through deconsolidation—a lot of spin-offs of the downstream versus the upstream.

We have now a more fragmented industry than what we used to be. I think that makes things very different, because we all are now more expert in what we do, and we have a much clearer focus than when you’re a large corporation where you cover so many different markets, processes, materials and so on.

From a market perspective—the whole lightweighting trend in automotive and, of course, in aerospace, and the can that is winning as sustainable packaging—we have a huge growth opportunity for aluminum that maybe wasn’t so clear 10-15 years ago.

The metal is still a young metal, and still a lot of new applications are being created with aluminum. That’s also something that maybe makes us a little bit different than other materials. We have a very good value proposition as a material, because we’re so versatile. I think sustainable packaging makes sense and lightweighting makes sense—whether you believe in greenhouse gas emissions or you think climate change doesn’t exist, it doesn’t really make a difference—but it’s clear we have so many attributes of the material that make it very interesting.

AMU: One of those attributes is that it can be endlessly recycled. How do you encourage more recycling, whether it’s consumers or other end users who are using the material?

Joerg: In Europe, we work a lot on recycling, particularly for packaging. So, on the can sheet recycling rates, the UBCs are very good. We are, I think, around 78%-75% now. And most of this has been achieved through deposit systems, and, of course, the creation of recycling infrastructure, and then further downstream, the investments by the midstream companies and upstream companies into recycling capacities and technologies. So, today in Europe, we are basically able to recycle any kind of material.

I would say the US is a little bit different, because the UBC recycling rate is around 45%. Government policy is not so conducive to forcing recycling more, but that’s definitely something we’re all working on, together, with our customers and with AA (the Aluminum Association), because we need to keep more metal in the loop than what we are doing today, particularly as we are going to get two new greenfield investments in the US who will also need scrap and our can sheet customers are standing clearly behind it.

We see a lot of new sorting technologies coming and cooperation across the industry to improve the way we recycle to get better yields. So, there are many, many activities trying to improve the recycling.

It’s also a question of national security, because, in defense, a lot of products from the planes to ammunition are using aluminum. So, it’s really important that we keep the metal in the loop, and we keep it in the respective countries.

And certainly, what we need to address in US and Europe is the scrap leakage that we’re having to Asia. What we see is a lot of the scrap flows go to Asia. There are better technologies today to sort so we can keep more and make it economically feasible to recycle it. But you also know that China has invested enormously in recycling capacity. You know there’s a cap for primary production that is going to be reached now. So they have invested a lot in recycling capacity, which is subsidized and is in competition with the recycling infrastructure that we have in other parts of the world. China has a utilization rate of around 50% so this is not economically viable, which is why China and Asia are very, very hungry for scrap coming from Europe and from the US.

AMU: There has been a lot of talk about limited scrap bands on UBC and some alloys. What are your thoughts on that? How do you rank the odds of those bans getting adopted?

Joerg: Well, I think typically the US will move faster than Europe. I think that’s what we see in any kind of policy. I think the US already needs to work on the classification of scrap exports, so that we have a better understanding of which type of scrap goes where. That’s the first step to prepare this.

In Europe, we are working through EA, European Aluminum. We are also working with Brussels to see what can be done, either as a ban or a kind of tax. But I think the problem is fully understood by everyone. We have lost a lot of primary capacity. We have the sanctions against Russian metal imports, primary imports, they used to supply 25% of the European market, and that is basically gone today. With the high energy prices that we have, we must recycle more in Europe, and we must keep the scrap in-house to be able to satisfy the demand that we see that keeps growing.

AMU: You talked about the importance of national security and the role of aluminum in that. With more countries talking about security and Constellium’s role in defense and aerospace, how does that affect your market share as some of these countries look to bolster their own defense?

Joerg: Well, I think it’s positive news for us, because we have a quite good position, both in the US and Europe, on defense products. And these include everything for military jets, tanks, armored vehicles of all kinds of sorts, military bridges, ammunitions in part. So, we benefit from the fact that Europe wants to spend more money on defense. And the same is true for the US.

We can use recycled material in any of our alloys to a certain extent. The type of scrap we’re using for aerospace is very specific. It’s scrap that usually has a shape of chips, and this is material that doesn’t travel so well because it takes a lot of volume versus the weight. So, chips in aerospace are usually used locally, or they are downcycled. But we have a lot of capability to upcycle them and make them back into defense alloys again. We’re also working on end-of-life recycling for aerospace, which is really new for the industry.

AMU: As you step into this role as chief executive, what is your vision for the company going forward?

Joerg: I have been with the company for 10 years now, and in my most recent role as COO, where I have been overseeing the three business units. So I know our business, our markets, our customers, very well. And I’ve been, from the beginning, part of designing the strategy for the company, and part of the team that was working on the execution of that strategy. So, I think you shouldn’t expect too many changes. It’s more an evolution, not a revolution.

I would say, certainly, what I like customer connectivity. I like operational excellence. These are topics that are very, very dear to my heart, and why we have worked for many, many years on improving everywhere. I still see potential for us to grow. I’d also like to accelerate growth for the company. We are evaluating different opportunities that we have, but I think we have a very solid long-term plan. We’ve given guidance to 2028, and obviously, supporting this guidance is our strategic plan that we developed together and that we will focus on executing.

External factors change all the time in our industry, as you know very well, so we will continue to focus on what we can control and take the opportunities as they come. I think we have done a nice job in changing challenges into opportunities. And clearly, the tariffs in the US is an opportunity for us strategically, because domestically produced products are going to be even more popular.

AMU: In terms of the growth that the company is envisioning, do you see that as organic growth through the company’s own operations? Do you see that as M&A, or a combination of those things?

Joerg: Yes, above all. We’ve done some organic investments in the past, and we will take the benefits of these investments. We have an aerospace investment for aluminum-lithium technology, where we are a leader in the market. This investment is going to come on-stream soon. We have invested in a recycling center for UBCs in our French operations. That’s giving us 130,000 tons of recycling capacity. So we’ll take the full benefit of that investment. We also going to get a new cast house in our Muscle Shoals operations in Alabama for automotive recycling. So, there’s a lot of these big investments that we have already paid for, or have partially paid for, and where we will get the benefit in the next two to three years.

So, some of it is return-seeking projects through cost reductions, and some of it is growth, particularly if you think about aerospace, that is still hampered by supply chain challenges. Backlogs for aerospace OEMs are at record levels. And if they produce at current levels, it’s going to be a 10-year order book, which hopefully they will accelerate the ramp-up of their production and deliver faster. But I clearly believe that aerospace is a very, very nice growth for the next at least 6, 7, 8 years, and we are very well positioned with the assets that we have and the capability, the know-how, the patented alloys, and so on.

Defense is another one. And then I think lightweighting will continue. So it is organically. I see we have a lot of opportunities of how we can continue to improve. M&A is always something that we look at. But of course, M&A is an art, and you need to find the right company. It’s easy to buy something, but you also need to love it once you’ve bought it.