A fire at a US aluminum plant will cost Ford $1billion.
On September 16, a three-alarm blaze ripped through the roof at Novelis’ hot mill in Oswego, New York.
Novelis, the world’s largest recycler of aluminum that produces 40 percent of American car making aluminum, said the plant will be out of commission until early 2026.
Ford is the factory’s biggest customer. The automaker buys thousands of tons of aluminum from the plant to build body panels for America’s best-selling vehicle, the F-150 pickup.
On Wednesday, analysts at Evercore predicted the fire will cost Ford $1billion in sales because of potential slowdowns in US factory production.
Ford’s stock fell about six percent yesterday after news of the fire. That slide wiped erased $3.6billion from Ford’s $60billion value.
The fire comes as American carmakers are already struggling to contain price spikes. Yesterday, the average price of a new vehicle leaving an American dealership was $49,952.
Car prices, which have risen more than 30 percent since 2019 because of parts shortages, were forcing new vehicle owners into an average monthly cost of $700 a month.
A three-alarm fire ripped through Novelis’ hot mill in mid-September, forcing the factory to shut down production until early 2026
Ford was the factory’s biggest buyer – analysts now expect the factory’s down time will cut $1billion from Ford’s profits
That has added $1.6trillion of debt to the US economy, good for America’s second-largest debt load, only after home mortgages.
Prices started rising during the pandemic while automakers couldn’t get their hands on enough processing chips to build electrical components like screens, key fobs, power seats, automatic windows.
A large-scale aluminum shortage could be even worse for car prices.
Novelis normally 350,000 metric tons of sheet aluminum out of six facilities in the US.
Aluminum production are becoming a flashpoint in the car pricing problem. In March, President Donald Trump added 25 percent tariffs to all foreign-made aluminum.
He doubled the tariff to 50 percent in May, making it even more expensive for companies in need of new suppliers to find aluminum sources.
To make up for lost production, Novelis said it would turn to factories in the UK, Germany, Italy, Brazil, Vietnam, Malaysia, and China.
‘We are urgently taking steps to minimize the impact of the recent fire at our Oswego facility on our customers,’ the aluminum maker told the Daily Mail.
Novelis told the Daily Mail it will continue to provide automakers with metal from factories in other countreis – Ford’s CEO, Jim Farley, recently worried about compounding tariffs on imported parts, like aluminum
The Ford F-150 has been America’s best-selling truck for 40 years – Ford builds the body panels out of aluminum
‘We have activated Novelis’ global network of plants and are also partnering with industry peers to source material in order to help mitigate the gap in supply.’
Ford declined to comment on Evercore’s analysis.
‘Novelis is one of several aluminum suppliers to Ford,’ the company told the Daily Mail on Tuesday.
‘Since the fire nearly three weeks ago, Ford has been working closely with Novelis, and a full team is dedicated to addressing the situation and exploring all possible alternatives to minimize any potential disruptions.’
The fire also comes a month after Ford’s CEO, Jim Farley, started sounding the alarm on the company’s $2billion expected tariff bill.
The legendary automaker builds 80 percent of its vehicles in America, but Farley said it ends up paying more in tariffs than Japanese rivals who make cars there and import them to the US.
To assemble cars in the US, Ford has to pay a 25 percent tariff on carpets and fasteners from most countries. Some wiring from Asian manufacturing hubs gets a separate 15 percent tariff. Aluminum gets another 50 percent tariff.
Meanwhile, Tokyo-based competitors like Toyota and Honda only pay one 15 percent tariff because of President Donald Trump’s trade agreement with Japan.
‘That’s not a fair fight,’ he said in an interview on The Verge’s Decoder podcast.
