Fire at aluminum plant to hit Ford’s bottom line by up to $1 billion, analyst says

By Nora Eckert

DETROIT (Reuters) -A fire at a New York aluminum plant that is expected to affect production of Ford Motor’s F-150 truck for months will sap up to $1 billion from the automaker’s earnings, according to a Wednesday note from Evercore ISI analysts. 

The September 16 blaze at Novelis is expected to take much of the aluminum factory down until the first quarter of 2026, the company told Reuters, affecting the supply of the metal to Ford’s best-selling F-150 trucks through the end of the year. 

The Dearborn, Michigan, automaker’s stock fell about 6% yesterday after news of the fire. 

 “Novelis is one of several aluminum suppliers to Ford. 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,” a spokesperson for the automaker said in a statement. The company declined to comment on the Evercore note.

The supply-chain disruption is the latest challenge for the automaker as it weathers elevated steel and aluminum prices, a fast-changing trade environment and a battered supplier base that is emerging from work stoppages during the COVID-19 pandemic and 2023 union strike. 

While other automakers are likely to be affected by the fire, Ford is expected to see the largest fallout, analysts say. 

“We believe this is largely a Ford issue, at this time being, although we are continuing to check knock-on effects for [Stellantis] and Toyota as well,” Evercore’s Chris McNally wrote in the note, which outlined a $500 million to $1 billion hit to Ford’s EBIT. 

Ford began using a mainly aluminum body on its F-150 truck more than a decade ago in an effort to reduce the weight of the vehicle. 

The automaker is set to report third-quarter earnings later this month. 

(Reporting by Nora Eckert: Editing by Sharon Singleton)