Alcoa is idling aluminum smelting operations at Intalco Works in Ferndale and at its Wenatchee plant, the company announced Monday, Nov. 2.
The announcement, first made in a news release, said the operations will be curtailed in the coming weeks to reduce costs and supply at a time when the price of aluminum is at six-year lows.
The Ferndale facility has 583 employees, said Josh Wilund, communications director for Alcoa.
Not all of Intalco will be idled. The company said it would keep the casthouse in operation. Details are still in the works, but the company expects to retain more than 100 employees at the Ferndale plant, Wilund said.
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Cutting back the other operations is expected to be completed by the end of March.
It is unclear how long the potlines and smelter facility will be idled. Wilund said they do not have a timeline at this point, and they will continue to evaluate market conditions and Intalco’s ability to compete in a global market to determine if a restart is feasible.
“The decision to restart the operations would include a series of factors, ranging from global market conditions, regulatory certainty, capital investments, energy pricing and alignment with Alcoa’s strategy to create a globally competitive commodity business,” Wilund said in an email.
Workers are preparing the facility for a potential restart, but they also will keep in mind the possibility that the potlines will not be restarted anytime soon, said Glenn Farmer, business representative for the union, which is International Association of Machinists Local 2379 District 160.
The union recently accepted a contract extension through March 2017. Wilund said the company is committed to supporting the employees through this transition and will be presenting a plan about what benefits and services will be available to those affected.
Impacted employees will not be paid while the facility is idled, which is different from the last major shutdown of the plant in 2001 during a time of high energy prices, Farmer said. Outreach services and severance packages are the most likely outcomes.
The state is also putting together a team to help the impacted workers, said Gary Smith, the regional manager for the Northwest Workforce Council.
The casthouse will be converted during this process, enabling the company to remelt cold metal to continue satisfying customer demand for billet and standard foundry ingot, Wilund said.
While the future doesn’t look promising because of the global market conditions, Farmer expressed optimism that if aluminum prices rise again, Intalco would be one of the first to be restarted. He said Intalco is a well-run plant because of the years of trying to keep it going and its capability of making specialty products that provide good growth opportunities for the company.
“For now we are going to be working closely with the company to help (the workers) through this process,” Farmer said.
If this announcement of idling the smelting operations is temporary, Farmer said time will be crucial. The longer it remains idled, the more likely employees will move on, either out of the area or into new careers. The problem is that there just aren’t many family-wage jobs left in this area, he said, so workers will have to decide quickly how long they can hang on and wait for news of a restart.
Ferndale Mayor Gary Jensen expressed frustration at the news but wasn’t too surprised given what’s happening in the global aluminum market. The price of aluminum has been hitting new lows in terms of prices as China continues to increase production.
“We went through this before (in 2001) and it drastically affected this community,” Jensen said, noting that many other businesses struggled because workers were not spending disposable income in the community. “This is not a good day for Ferndale.”
Intalco workers also are known for their volunteer work in the community. Peter Theisen, president and CEO of United Way, said the workers have donated about $200,000 over the past 10 years to support a variety of programs. They’ve also volunteered for various projects, particularly those focusing on education and the environment around the Ferndale area. Not only will this mean fewer contributions but a greater need to support the laid-off workers, Theisen said.
This is the second recent major announcement of the loss of family-wage jobs in Whatcom County. In September CH2M Hill announced it was closing its Bellingham office, affecting about 120 employees.
Reach Dave Gallagher at 360-715-2269 or email@example.com. Follow him on Twitter at @BhamHeraldBiz and on Facebook at BellinghamHeraldBusiness. Read his columns at bellinghamherald.com/retail-tip-sheet.
Timeline of major events at Alcoa Intalco Works
1966: The Ferndale-area facility begins operations as Intalco Aluminum Corp., owned by Alumax, Pechiney and Howmet.
June 1998: Alcoa Inc. and Alumax merge, creating Alcoa Intalco Works.
May 2000: Alcoa executives consider building their own power plant to fuel Intalco out of concern over rising energy rates.
May 2001: Not able to cope with high energy prices, Intalco decides to close the plant for two years, keep its employees and sell its power back to Bonneville Power Administration to aid in the energy crisis. BPA pays for the wages and benefits of nearly all the workers plus $1.75 million to cover Intalco’s tax burden.
May 2002: After being shut down for six months, the facility reopens two potlines.
October 2003: Alcoa shuts down a potline because of high energy costs, cutting 200 jobs and leaving only one of the three potlines in operation.
June 2006: Alcoa becomes full owner of the facility, buying out remaining partners.
August 2006: Alcoa signs a five-year contract with BPA ensuring continued work for its 450 employees.
February 2007: The Ferndale facility restarts its second potline, increasing employment to 575 employees.
October 2008: BPA proposes a long-term contract deal to supply power to Intalco.
October/November 2008: In response to the economic recession and less demand for aluminum, the Ferndale facility institutes a series of budget cuts, including cutting about 100 jobs.
July 2009: BPA and Intalco reach tentative power agreement for enough low-cost power to operate the plant at or near two-thirds capacity for seven years, guaranteeing at least 528 full-time jobs.
September 2009: After an August court ruling restricting BPA’s authority to share power with Intalco, the July proposal appears to be in jeopardy.
December 2009: BPA approves a two-phase power contract that guarantees enough power to keep 528 workers employed for 17 months. After that, BPA could offer five more years of power if courts approve and economic conditions permit.
October 2010: BPA agrees to a short extension of its power contract with Intalco, guaranteeing the smelter’s power supply through May 26, 2012.
January 2011: Alcoa announces the hiring of 60 more employees and an increase in production.
October 2011: Union workers at Alcoa Intalco Works vote to strike but stay on the job while negotiations continue. After two weeks workers vote to accept a revised contract offered by the company.
Dec. 7, 2012: Alcoa Intalco Works signs 10-year power deal with Bonneville Power Administration, guaranteeing access to relatively low-cost hydropower.
2013: Intalco plant is at 80 percent capacity, with 2 1/2 of three potlines operating, producing about 230,000 metric tons of aluminum per year.
Sept. 28, 2015: Alcoa announces it is splitting into two independent companies. Intalco Works is put into the one focusing on upstream products, including aluminum, considered the weaker of the two.
Oct. 15, 2015: Union workers at Intalco plant approve contract extension through March 2017.
Nov. 2, 2015: Alcoa announces it is idling smelter operations at Intalco Works in Ferndale and its Wenatchee plant. The Ferndale shutdown affects more than 400 workers.
Sources: Intalco website, The Bellingham Herald archives.