As Atlanta-based Novelis Inc. seeks to maintain its role as the dominant supplier of aluminum sheet for the global auto industry, it has brought in a president for North American operations whose exposure to the aluminum business started in fast-growing South American markets.
Born in Brazil, Marco Palmieri earned a master’s degree from McGill University in Montreal and has a long track record in the industry, mostly in his native country.
He arrived in Atlanta in May in the midst of a flurry of investments designed to move Novelis further up the value chain in developed markets. On Tuesday, the company said it would spend $205 million to build new finishing lines at plants in Oswego, N.Y., and Nachterstedt, Germany, which will be dedicated to the production of aluminum automotive sheet. That brings the company’s total investment in automotive capacity to $550 million in the past two years.
While the challenges of doing business in Brazil and the United States are distinctly different, Mr. Palmieri said he’s ready to bridge both cultural and operational gaps in his new role.
“There may be different regulations and customers and different ways of doing business,” he told Global Atlanta with a smile. “But business is business.”
Still, there has been a bit of a cultural learning curve.
“In Brazil, you do business face-to-face, never over the phone and never with voicemail,” he said. “You may leave a voicemail in Brazil but you would never expect anyone to answer it. Here, people call and leave a voicemail and expect you to answer and respond. I have to be mindful of that difference and work through it.”
The objectives of the North and South American business units also differ. In Brazil, the aluminum can sector is where the growth is; in the U.S. the can business is down. “Americans are drinking fewer soft drinks. It has been down for several years, so I’d say it’s a trend.”
And while the company’s continued entry into the car industry is certainly not insignificant in Brazil, it is where the future growth is viewed in the U.S.
With the new factories operational in 2014, Novelis’ global automotive sheet capacity will reach approximately 900,000 tons per year, a three-fold increase from 2012. Market research firm Ducker Worldwide predicts that global aluminum use in passenger vehicles will surge 65 percent to 28-30 billion pounds by 2020 from about 17 to 18 billion pounds in 2009. Novelis expects its revenues in the sector to grow by 30 percent annually through the end of the decade.
“We are helping the car industry in so many ways,” he says. “For one thing, we are helping keep jobs in the U.S.”
Novelis is doubling down on the auto industry partly because of coming changes in environmental regulations. Aluminum is becoming the sustainable choice for the latest generation of vehicles because of its light weight and recyclability, which enable reduced emissions over the product’s life cycle.
By roughly 2025, the U.S. Environmental Protection Agency will require auto makers to have fleets averaging 54.5 miles per gallon, and in Europe, CO2 emissions must shrink to 95 grams per km driven by 2020 from the current level of 142.
“That’s quite an improvement in fuel efficiency, and one way to make that happen is to have lighter cars, and aluminum plays a key role in reducing the weight of the car,” Mr. Palmieri said.
Already Novelis has more than half of global market share for automotive aluminum sheet. More than 180 models use Novelis’ products, from such major brands as Land Rover, Ford, General Motors, Renault, Bentley and Audi. In 2012, Jaguar Land Rover named Novelis its sole supplier of automotive sheet products in a multi-year agreement. The new Range Rover is the world’s first SUV with a lightweight all-aluminum body.
If the company is to achieve its top priority of gaining even more market share, it must accelerate innovation, Mr. Palmieri said.
Just a short distance from its Buckhead headquarters in Kennesaw is the company’s Global Research & Technology center, a 160,000-square-foot facility that serves as the company’s global R&D hub.
Inside, metallurgists, materials scientists, engineers and technologists work together to develop sustainable aluminum products for the automotive industry as well as specialty and can customers.
“This is a one-of-a-kind lab for the automotive industry,” Mr. Palmieri said.
The company hasn’t given up on the aluminum can business in the U.S., but the industry has to do a better job of promoting the use of cans outside the beverage industry, Mr. Palmieri said. Globally, Novelis expects is beverage can sector to have an annual growth of 4 to 5 percent, driven largely by substitution and increased consumption in emerging markets.
Those countries also tend to be heavy recyclers, driving that aspect of the business. In Brazil, for instance, 98 percent of all aluminum cans are recycled – the highest rate in the world. That’s key, considering that Novelis is aiming to produce 80 percent of its products from recycled materials, cutting the company’s own greenhouse gas emissions in half. For fiscal year 2013, the ratio was at 43 percent.
“A big goal,” Mr. Palmieri admits. “We want to be at 50 percent by 2015. I don’t have an answer on how we are going to achieve that. But I have some good ideas.”
With balancing his new duties, Mr. Palmieri is settling into his new position and hometown.
“I like Atlanta. It’s fantastic, and I like the spirit of our associates here. We recently had 300 of our employees – out to 550 – to build a house for Habitat for Humanity. Those are the values of our company and I want to get them out into the community more. Atlanta will be a fantastic place to make things happen.”
Mr. Palmieri joined Novelis in 2011 as senior vice president and president of Novelis South America. Prior to joining the company, he was the aluminum business director of Votorantim Metais Ltda., the entity holding the aluminum, nickel and zinc operations of the Votorantim Group, a large industrial conglomerate based in Sao Paulo, Brazil. He also spent more than 25 years with Rio Tinto Alcan in a series of international leadership positions in various areas including business development, primary metal and energy production.
Novelis operates in nine countries and has reported revenues of $9.8 billion for its 2013 fiscal year, more than one-third of which comes from North America.
Though based in Atlanta, the company is owned by Hindalco Ltd., a Mumbai-based subsidiary of India’s Aditya Birla Group.
Read more about how having an Indian parent company has helped Novelis boost global competitiveness.