The impact of two fires this fall at the massive Novelis aluminum plant in Oswego County goes far beyond the physical damage and financial toll. Syracuse University Law School Dean Terrence Lau said it reveals a serious weakness in the supply chain, which threatens thousands of jobs.
Fires in September and November idled the plant’s hot mill where raw aluminum is turned into rolls of metal sheets. Novelis anticipates having it back on-line by month’s end.
“Recovery really isn't just about rebuilding that hot mill," Lau said. "It's also about rebuilding customer confidence."
He said 40 percent of the plant’s product goes to the auto industry, mainly Ford.
“The danger here is that a customer like Ford may say, 'we don't want to be as reliant on a single supplier anymore. We're going to try and find other suppliers'," Lau said. "I think car companies generally try to avoid single points of failure. They're always trying to diversify their supplier base. The reason Ford hasn't done it, frankly, is because the aluminum industry is a hard one to get into.”
He said the capital costs are very intensive, and it really relies on scale and knowledge that
that Novelis has acquired.
Lau, who spent his early law career working for Ford, said the fires at a single plant are now threatening production of American’s best selling vehicle…the F-150 truck. He called it less of a business problem and more an industrial policy failure.
“We've allowed critical supply chains to concentrate to the point where we have no resilience. It's done because of cost and because of the desire for just-in-time manufacturing," Lau said. "Oswego isn't just a plant. It's a single point of failure for a significant chunk of American manufacturing. That should alarm anyone thinking about economic security and industrial policy.”
He said the limited excess capacity in the domestic automotive aluminum market means Novelis has no choice but to rely on its overseas plants. But that comes at a steep price. There's a 50 percent tariff on imported aluminum.
“Here's the bitter irony. Novelis is paying 50 percent tariffs to air freight aluminum from their Swiss plant to keep Ford's American workers employed," Lau said. "So the tariffs that are meant to protect American manufacturing are now directly increasing costs for American manufacturers during a crisis. It's exactly backward.”
A Novelis spokesperson said there’s no update on the restart of the hot mill. Operation Oswego County, Oswego County’s economic development agency, declined repeated requests for an interview.
The plant in Scriba employs more than 1,100 workers, making it the largest manufacturer in Oswego County.
