Goldendale Aluminum Production May Be Cut
Published in the Herald-Republic on Wednesday, December 27, 2000
By MIKE BARENTI
YAKIMA HERALD-REPUBLIC
Two Columbia River aluminum plants want to drastically cut production and resell the federal Bonneville Power Administration electricity they now use to make aluminum.
Golden Northwest Aluminum, which owns the plants near Goldendale and The Dalles, Ore., announced Tuesday it plans to reduce its production to just 10 percent of capacity.
The electricity now bought from the BPA instead would be sold on the open market.
It's not clear if production cutbacks will lead to layoffs. A similar shift earlier this month at Kaiser Aluminum Co. in Spokane resulted in 400 layoffs, but those workers continue to receive weekly paychecks.
A similar arrangement could be in the works for Golden Northwest.
The company's proposal could stay in effect well into next year, when cheaper electric might be available.
But the BPA must still approve the plan.
"We don't have a deal yet," said BPA spokesman Mike Hansen. There is a verbal agreement but nothing in writing between the federal power marketing agency and the aluminum company, he said.
The company's contract with BPA allows it to sell electricity on the open market if economics force production cuts. The profits from the power sales, however, can't go to boost short-term profits, said Ed Mosey, another BPA spokesman. Bonneville wants to make sure workers, the community and ratepayers are protected, he said.
Bonneville wouldn't say how much electricity it sells to Golden Northwest, but plant managers indicated that the two smelter operations currently use 250 megawatts to 300 megawatts of electricity a year. Under the plan described Tuesday, that would drop to 50 megawatts. It takes 1,440 megawatts a year to light a city the size of Seattle.
Any power sold by the aluminum plants will stay in the Northwest, Mosey said. It won't go to California, where customers have been struggling with soaring rates and the possible rolling blackout in recent weeks, he said.
It's not clear if production cutbacks will lead to layoffs. The company will continue to use raw aluminum produced elsewhere and scrap aluminum to meet orders, said Mac Seyhanli, with Golden Northwest Aluminum.
"This is not a full plant closure," he said.
"Our interest is to work with the (United Steelworkers) union to carry people," Seyhanli said. "We're going to take care of our workers."
The exact details of any employee compensation for using the money from the power sales haven't been finalized, Seyhanli said. Money also would pay the plants' fixed costs and also go to developing wind power projects in Klickitat County and a natural-gas- fired generating facility in Goldendale, he said.
"We need power, reliable power we can depend on," Seyhanli said.
The company hopes production at the two plants will be 50 percent of capacity by October 2001 and 100 percent of capacity once the planned gas-fired facility in Goldendale is completed in about two years.
Golden Northwest cut production at the two Columbia River Gorge plants by 40 percent this fall because of rising electricity prices. That cost 158 workers their jobs, but the company accomplished that by offering early retirement and other incentives to leave, Seyhanli said. Only eight of the layoffs were forced, he said.
Operating at peak capacity, the Goldendale aluminum plant employs 700 workers and The Dalles plant another 525. The Goldendale plant is the largest employer in Klickitat County.
United Steelworkers representatives seem satisfied that their members will be taken care of by the company.
"Golden Northwest has done the right thing," said Jim Woodward, a union official from the Tacoma area. "Workers will be taken care of through this thing." Exactly how hasn't been finalized, he said.
Some 400 workers laid off from an aluminum plant near Spokane so the company can sell electricity are receiving weekly equivalent of a 40-hour shift, Woodward said. That lasts until Jan. 31; then the two sides will renegotiate the agreement, he said.
Some Golden Northwest workers will want retraining; others will still be needed at the plants, Woodward said. The way the company plans to use the money from the proposed electricity sale, such as investing in new generating capacity, will help the plant in the long run, he said.