Novelis goes into expansion mode
Aluminum product maker scales up operations in Korea, China and Vietnam
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Shashi Maudgal, CEO of Novelis Asia Korea Times photo by Shim Hyun-chul
By Lee Hyo-sik
Novelis Inc., a global producer of rolled aluminum and recycler of beverage aluminum cans, is expanding its Korean operations to meet growing industrial demand for a variety of aluminum sheets. Using its success here as a springboard, it has made inroads into China and Southeast Asia to become an industry leader in rapidly growing areas.
Novelis, which is based in Atlanta, is one of few multinational companies that operates its Asia-Pacific headquarters out of Korea. The company entered Asia’s fourth-largest economy more than 20 years ago and currently runs two plants in the southeastern part of the country, employing nearly 1,400 workers.
Novelis’ rolled aluminum plant in the Southeastern industrial city of Ulsan. / Courtesy of Novelis Korea
Novelis’ aluminum can recycle plant in Yeongju, North Gyeongsang Province.
In an interview with The Korea Times, Novelis Asia CEO Shashi Maudgal says the aluminum products maker will continue to invest in plants in Korea, its key base for the Asia-Pacific region.
“We have been in Korea for over two decades operating an aluminum rolling plant in Ulsan and an aluminum can recycling plant in Yeongju,” Maudgal said. “The nation is a key market for us with a significant portion of our products consumed in the domestic market. For the past three years, we invested a total of $700 million in Korea to increase our presence and hire new workers.”
In 1999, Taihan Electric Wire, Korea’s largest electric cable maker, and Alcan, a Canadian mining and aluminum manufacturer, established a joint venture which became the predecessor of Novelis.
In 2005, Alcan acquired stakes in the firm from Taihan and spun it off. In 2007, two years after it was incorporated as Novelis, the firm was sold to the Aditya Birla Group, an Indian conglomerate based in Mumbai, for $6 billion.
The company is the world’s largest producer of rolled aluminum sheets, with operations spanning 11 countries and nearly 11,000 employees. It serves customers in sectors including beverage cans, automotive, consumer electronics, construction, foil and packaging.
Novelis divides its operations into four regions; North America, Europe, Asia and South America. The regional headquarters are in Atlanta, Zurich, Seoul and Sao Paulo, respectively.
“More than 40 percent of what Novelis Asia produces is consumed in Korea, with the remaining 60 percent going to China and Southeast Asia. Korea is a great place for us to do business thanks to its geographical advantages, excellent infrastructure and high-skilled, dedicated human resources,” the CEO said. “The Korean government’s support for sustainable business is a big plus. All in all, the nation offers a good business environment to execute our growth strategy in Asia.”
Novelis is building a $100 million automotive aluminum sheet manufacturing plant in Changzhou, China, which will open in 2014.
It is also constructing an aluminum can collection and processing facility in Vietnam. It currently operates a can recycling plant in Malaysia. Novelis recycles about 40 billion cans each year worldwide.
“Asia is the largest and fastest growing market for us. To meet the growing demands for our products and to support our customers’ growth in the region, we are expanding our business with a focus on premium products and sustainability,” he said. “Our growing presence in China and Vietnam will strengthen Korea operations.”
Maudgal said the planned Vietnam plant will provide scraps needed by the Yeongju recycling center. “The China facility will process aluminum coils produced by the Ulsan plant to churn out value-added automotive sheets. So, both operations will strengthen our Korean business and generate more jobs here.”
Exemplary labor-management relations
The CEO says its constructive and cooperative labor-management relation plays a key role in the company.
“A stable labor relation is one of the critical conditions of a sustainable business for both local and foreign companies in Korea. Novelis Korea has endeavored to pursue industrial peace and mutual development between the company and labor unions while showing respect for each other,” he said.
Quite a number of foreign companies doing business here face a difficulty in dealing with labor unions, with some deciding to leave the country due to militant unionized workers.
Maudgal said it has labor unions at both the Yeongju and Ulsan plants, which have played a significant role in enhancing the relationship between management and union members. “In response to Novelis’ sustainable strategies and consistent investment, our labor unions have showed their strong commitment to developing a mutual relationship with management. As a result, Novelis received a presidential award for its labor-management relationship in 2008.”
He said Novelis labor and management will continue to maintain a close partnership to move the business forward while improving employee welfare.
Corporate sustainability and CSR
The Novelis CEO says the company plans to become a low-carbon producer in the industry by reducing greenhouse gas emission across the life cycle of its products. “Recycling is an integral part of our business model. Globally, we have an ambitious target of increasing recycled content in our products to 80 percent by 2020.”
A number of initiatives are underway to achieve this goal. The company is expanding its recycling capacity around the world, which includes expansion at Asia’s largest beverage can recycling center in Yeongju.
Novelis also has a strong commitment to improve the local communities where it operates. Under its corporate responsibility program “Novelis Neighbor,” the firm seeks to achieve three goals.
“First, we are extending our core value of ‘safety first’ beyond our facilities, by supporting organizations that make communities safer through education, the well-being of individuals and families, and physical improvements of housing and recreation,” the CEO said.
The company also promotes the fields of math and science by addressing the need for more scientists and engineers on a global basis through building relationships with universities, providing scholarships and supporting math and science education at all levels.
“We try to use as many recycled materials as possible to protect the environment. We also offer a wide range of educational programs on recycling for schools and communities,” Maudgal said. “We invest our resources in various initiatives and activities to promote the above mentioned causes not only in Korea, but also in other parts of the world.