Leaders of Novelis announced Tuesday that its aluminum plant outside Oswego is just a few weeks from restarting operations after two fires last year destroyed its hot mill. President and CEO Steve Fisher made the announcement at the beginning of the company’s quarterly earnings call with the investment community.
“We have already started commissioning the Oswego hot mill and we will have coils (of rolled aluminum) coming off the mill within the next few weeks, well ahead of our previous guidance of the end of June,” Fisher said.
The fires put a $1.7 billion dent in Novelis’s cash flow, which came at the same time as the company was spending billions to finish building a new plant in Alabama. The company expects to get about three quarters of the lost money back through insurance, though its insurance policy costs have gone up by $20 million.
Fisher said the company has learned a lot since the fires and is strengthening its safety systems, which he hopes will bring back down the cost of insurance and reassure investors that the Oswego fire was a one-off event and not a sign of broader management issues. “Importantly, we have incorporated insights from the Oswego disruption into our global operations, enhancing employee safety and asset reliability. Additionally, we are aggressively implementing a standard operating system at all of our manufacturing sites,” he said.
Investors may also have taken comfort in knowing that despite the disruption, Novelis said it has kept its customer base and has plenty of orders to fill. “We think that (the Oswego plant will) quickly ramp up to pre-fire levels. It's the same equipment that we put back in, right? It's just either new, same equipment or refurbished equipment. So, it is, in essence, the same mill that we had before,” Fisher told the investment analysts.
As for Ford, on its call with the investment community a few weeks ago, the company said it has also learned a lesson. Ford CEO Kuman Galhotra said, “In the event the relaunch doesn't go according to plan, we do have contingency plans in place. That means we have additional aluminum supply to ensure our plant production schedules aren't interrupted. The mill should be back online, and if we have any hiccups, we have contingency plans for the rest of the year.”
