Plant starts cutting back production
Alcoa reduces operations at the Washington smelter by about one third of its capacity and will sell back some power to the BPA
Thursday, February 15, 2001
By Erin Middlewood, Correspondent, The Oregonian
LONGVIEW, Wash. -- Alcoa has begun shutting down part of the Reynolds Metals aluminum smelter in Longview to prepare for its sale to Michigan Avenue Partners, a company spokeswoman said Wednesday.
Alcoa is not laying off any of the plant's 925 workers at this time but it is cutting back production by 70,000 metric tons per year -- about a third of the smelter's capacity, spokeswoman Joyce Saltzman said. Alcoa will sell 110 megawatts of power freed up by the curtailment back to the Bonneville Power Administration. Neither Saltzman nor a BPA spokesman would disclose the price.
Saltzman said shuttering the south plant of the Longview aluminum smelter is a condition of its sale to Michigan Avenue Partners, a Chicago investment firm. She said the deal is expected to close by the end of the month. A Michigan Avenue Partners spokesman declined to comment.
Ray Peirson, president of United Steelworkers of America Local 305 which represents most of the workers at the Longview smelter, said, "We're in a holding position. We don't have anything to go on."
Workers fear for their jobs, said Rob Andrew, 50, who has worked at the smelter for 29 years.
"We haven't been kept in the loop," the Toutle, Wash., resident said. "There's uncertainty everywhere."
The smelter's future has been in question since Alcoa, the world's biggest aluminum producer, acquired it in May as part of a $5.75 million merger with Reynolds Metals. Antitrust regulators in the United States and Europe required the Pittsburgh-based aluminum giant to sell a 25 percent interest in the Longview plant. Michigan Avenue Partners persuaded Alcoa to sell the entire Longview plant, which produces 204,000 metric tons of high purity aluminum a year.
The two companies announced an agreement in December, but did not disclose details or the purchase price.
Since then, BPA has been negotiating with Michigan Avenue Partners to buy back some or all of the 420 megawatts of electricity the smelter consumes. The smelter's contract with BPA, which expires Sept. 30, sets a rate of $22.50 per megawatt hour.
A Michigan Avenue Partners spokesman last month said the company would consider cutting back operations and perhaps layoffs to sell back power. BPA, however, insists that the company compensate employees put out of work by such a curtailment, agency spokesman Ed Mosey said.
Mosey said BPA has bought back almost 1,000 megawatts of the 2,000 megawatts it had agreed to sell to aluminum smelters.
BPA has been trying to persuade big power consumers to cut back because overall demand threatens to exceed the amount of electricity produced by a network of federal dams. BPA has had to turn to the open market where electricity is going for about $300 a megawatt hour.