Inc. will look to meet automotive demand by making its existing
plants more flexible and adding automotive finishing capacity
before it considers boosting hot mill capacity, a company
The model for such
future investments will be the Atlanta-based aluminum
companys operations in Oswego, N.Y., which will
officially unveil two new automotive heat-treatment lines Oct.
24, Marco Palmieri, Novelis senior vice president and president
of Novelis North America, said recently in an interview with
"What we look for in
North America, any investment that we make, will be similar to
the lines we are commissioning (in Oswego)," he said.
The two lines in
Oswego are expected to add 240,000 tonnes of automotive
finishing capacity and complement the existing automotive
finishing capacity of about 50,000 tonnes at the companys
plant in Kingston, Ontario, Palmieri said.
That capacity is
already committed to automotive customers, including
Britains Jaguar Land Rover Ltd., German automakers
Mercedes-Benz and BMW AG, and Detroit-area automakers Ford
Motor Co., General Motors Co. and Chrysler Group LLC, he
Palmieri declined to
comment on any specific vehicle platform or provide a specific
timetable for any future investments.
While the new lines at
Oswego are dedicated to automotive sheet, the upstream side of
the complex will retain capability to make can sheet and other
products, he said. And that model could be applied to other
"You take the most
value from them, use the capacity available and then you think
about new investments," he said.
"explosive" demand growth from the automotive sector due to
stricter emissions standards, additional heat-treatment
capacity and "sooner or later some hot mill capacity" will be
required in North America, Palmieri said.
A large hot mill
investmentPalmieri estimated the cost at more than $1
billionlikely wont be needed for "a few years" and
also depends on market trends in the automotive sector and in
the can and specialty markets, he said.
The specialty market,
which includes everything from electronics to building and
construction materials, is on aggregate growing at roughly the
same rate as gross domestic product in North America, Palmieri
said. But the North American can market "is in decline a bit,"
Changes in demand
trends in any of the markets could alter the calculus of when
new automotive capacity might be necessary, he added.
Novelis also sees its
success in the automotive arena tied to its ability to
segregate scrap used in automotive products, Palmieri said. If
6000-series scrap, for example, is mixed with other grades,
"you basically cannot use the mix," he said.
closed-loop system of recovering scrap should help, Palmieri
"You need to work with
all of the supply chainthe stampers, the logistical
system, our receiving docksand make sure we keep it
segregated. Its not a new technology, but its a lot
of work to make sure that segregation is there all the time,"
systems alone wont be enough if Novelis is to achieve its
stated goal of having 80 percent recycled products by 2020,
Palmieri said. As part of that effort, Novelis is already using
scrap other than used beverage cans at its recycling centers in
Greensboro, Ga., and Berea, Ky., he said.
For now, Novelis will
focus on getting the best automotive scrap it can recover from
existing operations, Palmieri said, brushing aside the notion
that it might make an investment in recycling in North America
on par with its undertakings in Germany (
amm.com, June 7).
"But going forward, we
have to look at that possibility," he said.