Smelter shutdowns an international problem
Europeans take a more vocal approach to protest their loss of jobs
John Stucke - Staff writer
As the magnesium smelter in Addy, Wash., shuts down and lays off 325 employees, workers facing a similar ordeal at a French plant are battling to keep their jobs.
They have demonstrated, closed roads and even held managers hostage for a day, welding shut factory gates to grab media headlines and force a government hearing.
Workers even have threatened to disrupt a leg of the Tour de France, which courses through the region in late July, according to French media reports.
French aluminum giant Pechiney operates the only magnesium plant in western Europe -- a money-losing venture because of falling prices, rising costs and an international oversupply of the metal-strengthening alloy.
When it announced intentions to close the smelter, the news rattled the countryside and sent workers, families and supporters into protest.
The company, its workers, and the French government plan to meet about the plant's future.
Like Alcoa Inc.'s Northwest Alloys plant in Addy, the Pechiney smelter is in the rural countryside.
Tucked in the southwestern corner of France near Spain, the Marignac plant is near the Pyrenees. It is a major economic force and employer with 250 workers.
Closure would be a damaging hit to the local economy.
The two plants are the only magnesium smelters in the world using what's called the magnatherm process.
It's an outdated way to make magnesium that depends more on heat and raw materials instead of a massive dose of electricity.
Northwest Alloy's plant manager Jerry Turnbow has said the two companies have shared technology and expertise in the past to improve efficiencies.
But the process uses expensive raw materials that must be imported. Add to that the woes of operating in the United States and France with their higher labor costs and stricter regulations.
The result when put against crumbling trade barriers is a business scenario where profitability is elusive.
"Faced with an uninterrupted decline in magnesium sales prices (down 50 percent over the past five years), rising raw material and energy costs and aggressive competition, the activity's economic results have seriously deteriorated," Pechiney spokesman Stephan Giraud said.
The company spent about $7.65 million U.S. dollars to improve its 37-year-old plant and made significant production progress. But it can't stem the losses, Giraud said.
Instead, Pechiney's plant in Marignac lost $5.1 million last year. So far this year, the plant is losing more than $765,000 each month.
At Pechiney's urging, Europe put anti-dumping measures in place to discourage cut-rate magnesium imports, but it failed to stop world magnesium prices from sinking.
"New players, attracted to a fast-growing market, have commissioned larger, more competitive units," Giraud said. "Above all, China has become the world's leading magnesium producer thanks to particularly low labor costs."
China supplies about one-third of the world's magnesium needs. By the end of the year, Europe may not have a magnesium maker. The United States will have just one, Magnesium Corp. of America.
The Addy plant supplied all Alcoa operations. But it's now cheaper to buy magnesium, Turnbow said.