Power pitfalls include hard luck
08/12/01
GAIL KINSEY HILL
Aluminum workers in Ferndale, Wash., lost their jobs but not their full paychecks.
Those in Troutdale lost both.
"We've been left out in the cold," says Robert York, who worked at the Troutdale plant for 28 years before getting the boot in November.
The contrast between the two groups of workers, both employed by Alcoa Inc., the world's largest aluminum producer, exposes a knotty consequence of the West's electricity shortage. When decisions come fast and furiously, so, too, can hard luck.
The rapid-fire decision-making began last summer when soaring electricity prices abruptly made aluminum production a money-losing proposition. One by one the Northwest's 10 smelters shut down. None is currently operating.
Some of the aluminum companies cut deals with the Bonneville Power Administration, which markets almost half the electricity in the Northwest. Under the arrangements, smelters shut down, resold the power and plugged the proceeds into workers' paychecks. The closures freed scarce supplies of electricity, while the cash gave employees the means to wait for a reopening or to retrain for other jobs.
All told, several thousand workers at five aluminum smelters in Washington, Oregon and Montana are receiving their paychecks in full, based on a 40-hour workweek. The 930 workers at Alcoa's Ferndale smelter are among the recipients. The 525 workers at the Troutdale smelter are not.
"It's pretty upsetting," says Tim Even, who in 1978, at age 19, began working for Reynolds Metals Co., the Troutdale smelter's former owner. His father, with the company for 25 years, retired just before Tim was hired.
Tim Even's job ended Sept. 30, a year and a day short of retirement. If he'd snagged a deal similar to those afforded his colleagues in Ferndale, he would have remained on the company payroll and on the pension time clock.
"Now, I've got to wait until I'm 65 to get my pension," says Even, now 42.
Alcoa's choices Alcoa, headquartered in Pittsburgh, bought the Troutdale smelter from Reynolds Metals in May 1999, about a year before electricity prices began their climb into record-setting territory. In late June 2000, Alcoa announced plans to close the plant. The smelter was old, unsafe and inefficient, company officials said.
Power costs, which account for roughly one-third of a smelter's operating expenses, were not the main consideration, they said.
The smelting process at Troutdale sucked up 400 megawatts on average annually. All of the electricity came from the BPA. After closing the Oregon plant, Alcoa shifted the electricity to its Washington smelters, in Wenatchee and Ferndale, which purchased power from both the BPA and from the increasingly expensive wholesale market.
The transfer allowed Alcoa to cut back on market purchases and, later, to sell back to the BPA the allotment of electricity that was transferred from the Troutdale smelter.
Alcoa announced its deal with the BPA in mid-May, eight months after the Troutdale smelter's closure. The agreement called for an immediate shutdown of the Ferndale smelter, called Alcoa Intalco. For the period from May 16 to Oct. 1, the BPA would pay Alcoa an undisclosed sum for 400 megawatts of electricity. Then, in an extended closure to last through September 2003, the BPA would pay the company $65 million annually, or the equivalent of about $20 a megawatt hour.
Alcoa agreed to use the $65 million to keep the Ferndale workers' paychecks intact during the closure.
Ferndale workers, members of the Machinists union, accepted the arrangement, although many, routinely working overtime, were taking significant cuts in take-home pay.
"You can always ask for the cherry on the cake, but with hindsight, I think we got the best deal we could," says Clarence Harper, a union leader with Machinists Local 160, which represents the Ferndale workers.
Troutdale's plight While Ferndale workers breathed sighs of relief, Troutdale workers fumed. Those 400 megawatts belonged to Troutdale, they argued; Troutdale workers, therefore, should be included in the BPA deals.
Alcoa "took the power and ran," says Bob Tackett, a 26-year veteran of the Troutdale smelter who now works at Mount Hood Community College helping laid-off workers sort through job and retraining possibilities.
Says a more acerbic York, "I feel betrayed."
BPA officials say they're sympathetic to Troutdale's plight but that there's little the agency can do. The BPA markets power to aluminum companies, not to particular smelters, explains Ed Mosey, a BPA spokesman.
"Alcoa moved that power, at its option, to Ferndale," Mosey said.
Other aluminum companies forging similar deals with the BPA were Golden Northwest, with smelters in Goldendale, Wash., and The Dalles; Longview Aluminum in Longview, Wash.; and Columbia Falls Aluminum in Columbia Falls, Mont.
Those -- other than Troutdale -- failing to come up with any BPA pact were Vanalco, a Vancouver, Wash., smelter that filed for bankruptcy protection in January, and Kaiser Aluminum, which continues to wrangle with the BPA over the buyback terms for electricity sales at a Mead, Wash., plant.
When operating at full capacity, the Northwest's 10 smelters employ about 6,000 workers. Now, with electricity prices so high and the future so unpredictable, energy experts question whether the industry will ever return to its prior strength.
Still, Alcoa officials say the closure of the Troutdale smelter, one of the most inefficient in the region, is temporary. In addition, said Sharon Kanareff, a company spokeswoman, Alcoa fully met the terms of the labor agreement in place at the time of the shutdown.
Under the labor contract, negotiated with the United Steelworkers of America, Alcoa agreed to some wage and benefit enhancements for employees at the Troutdale smelter. Workers with more than 10 years service received supplemental pay, in addition to unemployment, and extended medical coverage.
The enhancements pushed pay to 70 percent of base wages, or about $410 a week, for 18 months to 24 months, depending on years of service.
Also, most workers are eligible to enroll in retraining programs available through the North American Free Trade Agreement.
While Even was working, he grossed about $700 a week, spending the day relining the massive vats in which jolts of electricity turned powdery alumina into molten metal. Others, with a schedule of night shifts and ample overtime, made as much as $1,200 a week.
Now, they're making $410 at best and confronting a grim job market.
"It really hurts," Even says.
Ferndale's outlook Despite the shutdown at Intalco, workers there are still punching the clock. Instead of manning potlines, they're repairing equipment, cleaning up operations and pounding away at maintenance projects.
Harper, of the Machinists union, said the work may continue throughout the two-year closure, but Alcoa's Kanareff said the company hasn't decided the extent of operations after Oct. 1.
In the meantime, Alcoa has offered Ferndale employees early retirement and voluntary severance packages.
Alcoa also recently began negotiating with BC Hydro, the Canadian utility, to buy electricity supplies, an encouragement to employees and community leaders resigned to prospects of a prolonged shutdown.
"We are talking to (BC Hydro) about the potential of contracting for power to restart Intalco earlier than planned," Kanareff confirmed. "We are also looking at a variety of other short- and long-term supply strategies for that facility."
An unexpected drop in wholesale electricity prices and BC Hydro's desire to win support for a natural gas pipeline through Washington's Whatcom County reportedly seeded negotiations.
For now, Alcoa isn't talking about restarting the Troutdale smelter. Neither has it announced any modernization plans. In late May, the Steelworkers and Alcoa met to talk about the workers' predicament and about a new contract, but negotiations ended without agreement.
"Nothing came of it," Tackett says. "Alcoa's not in the frame of mind to think it owes us anything."
Workers wait Despite the Troutdale smelter's uncertain future, some workers are trying to wait out the closure.
"I do think maybe some day it could reopen," says Even, who lives in Southeast Portland with his wife and two children.
He has yet to jump into any retraining programs because "I haven't figured out what to do." And he hasn't found a job that pays anywhere near what he made at the smelter.
Other workers have moved on. Some became truck drivers. Others got into heating and air-conditioning repair.
"They're doing all kinds of things," Tackett says.
At 50, York is back in school wrapping up credits for a master's degree. He plans to teach high school students social studies or language arts.
He says he has given up on Alcoa.
"We've talked till we're blue in the face," York says. "No one's going to help us." You can reach Gail Kinsey Hill at 503-221-8590 or by e-mail at gailhill@news.oregonian.com.