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Alcoa to keep NY plant open; Ferndale smelter still to be idled

AP

Alcoa has backed off a plan to close its smelting operations in northern New York after the state agreed to a series of incentives, Gov. Andrew Cuomo told a crowd of cheering workers Tuesday.

Under the agreement, the plant will remain open for at least 3 1/2 years. The state will offer up to $30 million in electricity savings and $38 million for upgrades and improvements at the facility in Massena, near the Canadian border.

Cuomo and U.S. Sen. Charles Schumer negotiated the deal after Pittsburgh-based Alcoa announced the plant’s closure earlier this month. The two Democrats said the move will preserve nearly 600 jobs.

“We have really, really great news for you today,” Cuomo told workers who assembled for the announcement Tuesday at the plant. “The Alcoa jobs are safe and they’re going to stay right here in Massena.”

Alcoa jobs aren’t safe in Washington state, where Alcoa smelters in Ferndale and Wenatchee are slated to be idled in the first quarter of 2016. The focus of discussions with the state is to provide services to those people slated to be laid off, according to a statement from the company. A recent layoff notice submitted to the state indicates 465 workers will be let go in Ferndale and 415 in Wenatchee.

The casthouse at Ferndale’s Intalco facility is expected to remain in operation, employing around 100 people.

“We are not actively seeking funding from the state (of Washington) or other sources,” said Josh Wilund, a spokesman for Alcoa, when asked about the Wenatchee and Ferndale plants.

Washington state currently offers tax credits that were extended by the legislature in this past session. In the past, Washington state also has advocated for power contracts with the federal government that are fair to the company and other Bonneville Power Administration customers, said Jaime Smith, a spokeswoman for Washington Gov. Jay Inslee.

While much of the discussions have been around Washington’s affected employees, Smith said the conversation also has been about making sure the smelters can be restarted quickly if or when Alcoa decides to do so. She also pointed out that some of the tools the state of New York could use, such as providing money for infrastructure improvements, are not allowed under Washington state law.

According to a Reuters article, at full capacity the Massena plant can produce 130,000 metric tons of aluminum a year. In its original Nov. 2 announcement, Alcoa said it wanted to reduce aluminum smelting capacity by 503,000 tons in order to reduce the global oversupply of the metal.

Intalco and the Wenatchee plant both are capable of producing more than Massena at full capacity: 279,000 tons at Intalco and 184,000 tons at Wenatchee, according to Reuters.

In New York, Alcoa will face up to $40 million in penalties if it violates the terms of the deal.

Aluminum prices have plunged in recent months as economic growth in China and elsewhere has slowed, putting pressure on commodities producers like Alcoa to cut costs.

Schumer said state leaders will return to the negotiating table in three years to ensure the plant’s continued operations if necessary — though he said market forces could make it moot.

“If the price of aluminum is up, which we hope it will be, it will take care of itself,” he said. “If the price of aluminum is down, we’ll be back here.”

Earlier this month, Cuomo and Schumer announced a deal with Kraft-Heinz to keep three upstate plants open, a move that will save nearly 1,000 jobs.

Bellingham Herald Business Editor Dave Gallagher contributed to this story: 360-715-2269, @BhamHeraldBiz

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