Interview: Post-pandemic emphasis on domestic manufacturing to benefit US aluminum: JW Aluminum

As companies respond to supply chain disruptions caused by the coronavirus pandemic, the US aluminum industry should benefit from a growing emphasis on domestically based manufacturing, according to JW Aluminum CEO Lee McCarter.

"The COVID environment is shining a light on that," McCarter told S&P Global Platts in an interview Monday. "Whether it was the PPE [personal protective equipment] or some of the hospital equipment, it clearly designated that we are so dependent on foreign supply, and those supply chains got crushed during this pandemic, so it's highlighted the need for domestic manufacturing."

McCarter said pharmaceuticals serve as an example of an industry expected to relocate more infrastructure to the US and Western Europe to diversify its supply chain and reduce risk against potential pandemic events in the future.

"That will easily see a trickle-down effect into the aluminum space," he said, referencing the role of aluminum in pharmaceutical packaging.

Demand from the construction industry, an important end-market for aluminum, will also rise as manufacturing returns to the US, McCarter added.

"Once we get through to the other side of the current situation, we still continue to see a healthy demand across the building and construction space," he said.

McCarter's comments echo sentiments voiced in other industries, such as the battery metals industry, stressing the importance of geographically diverse operations over a reliance on single regions.

"The disruption to global supply chains from the spread of the coronavirus has reinforced the importance of not being reliant on a single region to meet supplier needs," Livent CEO Paul Graves told investors during a call Monday. "China and greater Asia represent a significant portion of the energy storage supply chain today, so the impact on the lithium industry has been more visible from the onset of the pandemic."

JW expansion nears completion

McCarter said many industries took decades to migrate away from the US, and a similar timeframe would be required for those industries to return. However, JW is well positioned to meet that long-term growth in domestic demand as the company nears completion of a 175 million lb capacity expansion at its Goose Creek, South Carolina, sheet mill, he added.

"We're looking forward to that plant starting up and being able to contribute to the supply of flat-rolled aluminum here in North America," McCarter said. "We believe the signs we are getting from the marketplace in terms of requests from our customers for domestic supply are encouraging signs."

JW's $200 million mill expansion is scheduled to be completed in July, with new furnaces at the site beginning to melt aluminum scrap as early as this month. The project will be followed by a $170 million phase-two expansion to further build out capability in anticipation of growing domestic demand, McCarter said.

"This mill here that we are building is the first investment in continuous cast in decades, so you get back to the COVID environment here where the US finds it needs domestic supply because of interruptions in supply chains, and this is a good reminder of why we should be investing in American manufacturing," McCarter said.

McCarter said the Goose Creek mill will utilize only scrap as input for its aluminum production once the expansion and technology updates are complete.

"This will allow us to become even a better corporate citizen to our country in terms of providing that greener footprint," he said. "We see strong demand in building and construction, and marrying that with the great technology is going to put us in a position to keep winning for the next 40 years and beyond."