Aluminium extrusion is a widely used process in the manufacturing industry, but it is not without its challenges. From raw material availability to rising energy costs, competition, environmental regulations, and labour costs, extruders face a variety of obstacles that can impact their bottom line. In this article, we will delve into these challenges and explore potential solutions for companies to remain competitive in the market.
Challenge #1: Raw Material Availability
The availability of aluminium billets can be a challenge for the extrusion industry. It is because factors like political tensions, tariffs, and market fluctuations can impact the supply of these raw materials, which in turn can impact production schedules. It means that companies need to be prepared to adapt quickly to changing market conditions to ensure a steady supply of raw materials.
India exports the highest amount of aluminium billets and other products to the world. It exported a whooping 277,000 shipments of aluminium to 1800 buyers in 2022. Many countries across the world charge 3-6% tariffs on the import of aluminium. Some may charge as high as 10%.
Challenge #2: Energy Costs
The extrusion process requires a lot of energy, which can be expensive. As energy costs continue to rise, it can be challenging for extruders to keep their production costs low while remaining competitive. It means that companies need to constantly look for ways to reduce their energy consumption, such as through process improvements or using more efficient equipment.
Aluminium extrusion uses 480 kWh of power per cycle. This figure inflates to a large sum for multiple cycles during a day. Therefore, stringent research must be done to reduce energy consumption and save thousands of dollars.
Challenge #3: Competition
The aluminium extrusion industry is highly competitive, with many players vying for market share. It means that companies must be innovative and find ways to differentiate themselves from their competitors to stay ahead. It can be challenging, especially for smaller companies that may not have the same resources as larger players in the market.
There are more than 100 aluminium extrusion companies in India alone. Each of them is innovating on a larger scale to give the best service to the market.
Challenge #4: Environmental Regulations
The extrusion process can produce emissions and generate waste, which can be a challenge for companies operating in areas with strict environmental regulations. Compliance with these regulations can increase costs and require significant investments in new technology and equipment. It means that companies should be proactive in their approach to environmental stewardship, comply with regulations and maintain their social license to operate.
The appliances used for aluminium extrusions release tons of emissions like carbon dioxide and perfluorocarbons in the air. The government has put strict regulations to prevent environmental damage.
Challenge #5: Labor Costs
Labour costs can be a significant factor in the overall cost of production for extruders. As labour costs continue to rise, companies may need to explore alternative solutions, such as automation to remain competitive. It means that companies need to be innovative in their approach to labour management and find ways to reduce costs while maintaining quality and efficiency.
However, even automation can come at a high price. Furthermore, it takes USD 350,000 to set up an aluminium extrusion factory from scratch. Therefore, governments and companies must work together to reach a common point in labour costs.
The aluminium extrusion industry faces various challenges, but companies can overcome them by being proactive and innovative in their approach to manufacturing. They must find ways to reduce costs while maintaining quality and efficiency. By doing so, they can remain competitive in the market and ensure a steady supply of raw materials. Governments and companies must work together to find common ground on issues like labour costs and environmental regulations. These challenges require a collaborative effort from all stakeholders to ensure the growth and sustainability of the aluminium extrusion industry.
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