A fire at an aluminum plant in Oswego, New York could disrupt business for Ford (NYSE: F) and other automakers for months, The Wall Street Journal reported. While the fire occurred at the plant on September 16, its impact was not reported until two days ago.
While the plant’s hot mill, where aluminum sheet is made, is expected to be back in operation early in the first quarter of calendar year 2026, the impact will ripple through the industry for months. This Novelis plant supplies about 40% of the aluminum sheet used in the auto industry. Novelis is a unit of Hindalco Industries.
Novelis announced on Monday that it has turned to its overseas plants and is partnering with industry peers to source materials to help offset the supply gap. It is worth noting that U.S. aluminum imports are subject to a 50% tariff, so alternative supplies coming from overseas will lead to significant cost increases.
The impact is expected to be particularly significant for Ford. Ford is the largest user of the Novelis plant, and its F-150 pickup is one of the industry’s most significant users of aluminum. “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 automaker said in a statement. Ford will likely flag potential implications of the fire when it releases its financial results this month.
Novelis also supplies aluminum sheet to Toyota (TM), Hyundai, and Stellantis (STLA). A Toyota spokesperson said the company is working with alternative aluminum suppliers. “We’re in pretty good shape, but not completely out of the woods.”
Stellantis stated that it is working to mitigate the potential impact of the fire. Stellantis brands include Chrysler, Dodge, and Fiat.
Hyundai reported that there was no immediate impact on production. This is not a meaningful answer, because it could just mean they have enough inventory on hand to cover short-term production needs.
David Shillingford, a Venture Partner at Columbia Capital, is an expert in supply chain risk management. He notes that factory fires are one of the most common and hard-to-predict supply chain disruptions. This fire occurred 22 days ago. For companies that have mapped their supply chain beyond their span of control, this kind of event, which will negatively impact revenues, can still be an opportunity to gain market share.
Mapping includes answering the question of what occurred. Where? Which of our partners were responsible for this or impacted by this event? What product lines does this impact, and how much?
Robust Supply Chain Risk Management Solutions Exist
Sophisticated AI-powered supply chain risk management solutions from companies like Resilinc, Sphera, and Everstream Analytics uncover these kinds of events in real-time and notify their customers. Both companies have customers in the automotive industry. The automotive companies that were aware first were in the best position to secure alternative supplies.
Some large Automotive companies have had these solutions in place for years. Following the 2011 tsunami, which triggered the meltdown at the Fukushima Daiichi Nuclear Power Plant, General Motors (NYSE: GM) received a “wake-up” call. GM learned that their business continuity plans at the plants were too “tactical.” General Motors embraced a solution from Resilinc.
Following the tsunami, GM learned it is not enough to appoint the person who will call the fire department. You need to identify how an event will affect plants and respond quickly! Most business continuity plans fall short in their ability to support a quick response.
GM responded in a traditional way to the catastrophe, they circled the wagons and tried to figure out how to respond. But their response teams were not sufficiently cross-functional. Following this event, supply chain risk management became strategic for GM.
One of the tactics GM used to avert, or at least quickly mitigate significant risks, is to have Blind Spot Workshops. At these workshops executives across the company are asked “What keeps you up at night?” Based on these meetings, the 30 top risks are identified and each risk is assigned functional leaders. Every key functional area at GM – procurement, product development, etc. – has embedded risk officers. Each of these top risks has a mitigation plan. Most of these risks must contain detailed resumption planning in their contingency plans.
In 2011, 6 weeks after the disaster GM was still finding suppliers located within the affected area. In 2016, Japan had a magnitude 7.0 quake. Within 6 hours, GM understood the supplier impacts from that quake.
It is not just Auto OEMs that have these solutions in place. By the end of 2019, Autoliv (ALV) recognized that new technologies and supply chain risk management providers could offer a competitive advantage in its risk management program. Autoliv is the world’s largest supplier of safety systems to the automotive industry. Autoliv supplies airbags, seatbelts, and steering wheels to most of the Automotive OEMs.
Implementing the risk solution at Autolive was not trivial. It involved cleaning up master data and mapping their complete global supply chain. Risk management solutions scrape data from hundreds of thousands of online and social media sites; however, Autoliv also has access to paid sources of information. They wanted these diverse sources of information pulled together in one central, user-friendly location, which they call their “garage.”
To maximize the benefits of their solution, they developed and implemented a comprehensive supply chain risk management program that included an effective governance structure, practical contingency plans, and crisis response measures. The implementation involved changes to their processes and the tasks expected of their supply chain professionals. Professionals from procurement, compliance, logistics, sustainability, information security, and various other internal stakeholders all utilize the solution for different purposes.
For the automotive industry, the secret sauce behind its risk management programs is often kept private. Autoliv, for example, would not name its solution partner – although it is suspected it was RiskMethods, which was acquired by Sphera. It is unknown whether Ford Motor Company or other OEMs impacted by this event were using this type of solution. But if not, the impacts will be more severe.