Why a Fire 3 Weeks Ago Is Sinking Ford Stock Today

Coming into Tuesday trading, Ford stock was up about 28% year to date. (Brandon Bell/Getty Images)

Key Points

• Ford Motor stock decreased by 6.1% on Tuesday, with investors reacting to a three-week-old fire at a supplier.
• The fire at Novelis’s Oswego plant, a key aluminum supplier, is expected to impact Ford’s production.
• Ford will update investors about the situation on its third-quarter earnings conference call on Oct. 23.

Ford Motor stock tanked early Tuesday with investors seemingly focused on something that happened weeks ago.

Shares of the auto maker lost 6.1%, closing at $11.92, while the S&P 500 and Dow Jones Industrial Average dropped 0.4% and 0.2%, respectively.

It’s a big move for Ford, and there isn’t any big news release from the company or a Wall Street ratings change to pin the move on. Instead, The Wall Street Journal reported Monday that a fire at Novelis, a supplier of aluminum sheet to the auto industry, was likely to pressure production at Ford and other auto makers.

Many parts and body panels on cars these days are made out of aluminum and not steel. Aluminum is lighter, which helps with fuel economy.

The fire, which took place at Novelis’ Oswego plant in New York, and will knock out some production until early 2026, happened three weeks ago, on Sept. 16, though. Novelis, which is owned by Hindalco Industries, updated investors about the fire on Sept. 30 and Oct. 6.

The stock market is usually on top of issues like this, but the Tuesday reaction indicates investors might have missed the implications. Ford is the biggest user of the plant, according to the Journal.

“Novelis is one of several aluminum suppliers to Ford,” said the company in an emailed statement. “Since the fire nearly three weeks ago, Ford has been working closely with Novelis, and a full team is dedicated to addressing the situation and exploring all possible alternatives to minimize any potential disruptions.”

Ford will update investors about the situation on its third-quarter earnings conference call on Oct. 23.

Investors are assuming the update won’t be good, with the fire possibly resulting in lost production and higher costs. Reduced production from a key supplier to many auto makers, however, can result in tighter inventory levels and higher prices, which can be an offset to any lost production.

The ultimate impact of the fire is tough to suss out. For now, investors have quickly shaved about $2.3 billion of Ford’s market value.

Coming into Tuesday trading, Ford stock was up 28% year to date. Investors have been relieved that new tariffs implemented by President Donald Trump haven’t hit prices, profits, or overall auto demand as much as initially feared.

Write to Al Root at allen.root@dowjones.com