Novelis president acts swiftly to turn manufacturer around

Talk about flying under the radar.

Bet you can’t name the Atlanta company — with $9 billion in revenue — that says it’s the biggest buyer of aluminum in the world. No, it’s not Coke or CCE, but it does make the aluminum sheets used to produce their beverage cans.

Phil Martens

Phil Martens

It’s Novelis, the spinoff from Alcan that chose Atlanta as its headquarters five years ago. In case you’re one of the millions of metro Atlantans who don’t know it, Novelis buys 2.75 million tons of aluminum a year and then fabricates it into flat-rolled products used by the beverage, auto, electronics, construction and other industries around the world.

I sat down with Phil Martens, the president and top exec (the company doesn’t use the CEO title), to see how the turnaround is going.

For its fiscal year that ended March 31, 2009, Novelis lost $1.9 billion. Then two weeks later, Martens, an auto industry veteran, was hired to stanch the flow of red ink. By this March, the company had posted a profit of $405 million for its fiscal year.

Recently, Moody’s upgraded Novelis’ junk-bond rating by three notches. The rating on its secured bonds is just one level below investment grade. I’m sure the owners who bought Novelis three years ago and took it private, Aditya Birla of India, were happy to hear that.

What did Martens do?

First, he said, he acted quickly. Many CEOs I’ve talked with said they take a measured approach when changing direction after they’re hired.

But Martens, 50, didn’t think he had the time, partially because the company was facing several pressures, including the recession and falling liquidity. What’s more, his experience with inertia in the auto industry taught him the value of speedy decision-making.

“It’s better to act and adjust, than wait,” Martens said. “There comes a point where you have to just go.”

For him, that point came 30 days after taking charge, when he centralized a very decentralized company. From his point of view, “it made no sense” for Novelis, which has a homogeneous manufacturing system and global customers, to operate by dividing the world into four “regional fiefdoms.”

He launched “One Novelis” to streamline and coordinate strategic decision-making.

But that was just the beginning. He cut costs, which included closing a plant in the United Kingdom and laying off about 8 percent of the global workforce. The company operates 31 plants in 11 countries with a total of 11,600 employees. Nearly 200 work in the corporate office in Buckhead.

Martens was lucky with his timing. The last of several fixed-cost contracts saddling Novelis with all the risk of rising aluminum prices expired at the end of last year. That allowed Martens to negotiate new contracts to spread the risk between Novelis and its customers.

Also, the company entered into a joint venture with its chief rival, Alcoa, to buy used cans for recycling, which cut the cost for both companies.

To capitalize abroad, Martens expanded operations in Brazil and has his eye on Asia.

Finally, he religiously keeps on top of the numbers.

“It’s tedious, but you know where you’re at every month,” he said.

Martens doesn’t like surprises.

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2 comments Add your comment

TnGelding

September 21st, 2010
6:59 am

He was probably surprised to see how lucky you thought he was. Good to read a success story.

tandra88

September 23rd, 2010
9:00 am

Geeze I did a job up there at their corporate office and you would not believe the money they spent moveing to that new building.Glass everywhere,they have a bar on the Executives floor,weight room,fooseball table,Very diverse workforce,people from all over the world. I was impressed.However speaking to some of the employees they didn’t seem to spend money on employees as they did the building. Hmmmm…..