Hydro Considers Plan to Cut Aluminum Production

Norske Hydro has announced that it is considering making further production cuts in its extruded aluminum automotive components and systems due to General Motors and Chrysler suspending vehicle production at most of their assembly plants in North America. Hydro is the major supplier of aluminum bumper beams and precision tubing for the automotive industry. It supplies its products from four North American plants. GM recently announced that it would idle 13 of its assembly plants in the United States and Mexico for up to nine additional weeks this summer, starting in May. Chrysler, which has filed for bankruptcy protection, said that it would suspend production indefinitely at all its U.S. and Canada-based plants, beginning May 4. The announced closures will, first and foremost, impact the automakers' Tier 1 suppliers. In the precision tubing business, Hydro is a Tier 2 supplier. The company has three precision tubing plants in North America - two in the US and one in Mexico. Hydro's automotive structures plant in Michigan is a Tier 1 supplier, delivering aluminum bumper beams for assembly in vehicles manufactured by General Motors. Consequently, GM's decision to stop production will have a direct impact on the Holland plant, which has about one-third of its business with the company. The plant does not deliver parts to Chrysler. "The production volumes at our plants in North America are already reduced, but we cannot rule out further reductions as result of these stoppages," said Salvador Biosca, who is responsible for Hydro's automotive business. Hydro announced on April 1 that it would be closing its Adrian, Mich., precision tubing plant by the end of this year. Hydro has already begun the process of moving the production from the Adrian plant to sister sites in Rockledge, Fla., and Reynosa, Mexico.