Intalco idle till '03; workers stay paid
PHILIP A. DWYER HERALD PHOTO
DECENT COMPROMISE: Clarence Harper, business representative for the International Association of Machinists and Aerospace Workers, speaks on Wednesday outside the union's Ferndale lodge office. Harper said Wednesday's agreement between Alcoa Intalco Works and Bonneville Power Administration was sufficient, though he liked the aluminum industry's rate plan better.
INDUSTRY: BPA to pay employees in full; less than 100 might be laid off, manager says.John Stark, The Bellingham Herald
Frederick
Alcoa Intalco Works will stop making aluminum for the first time in 35 years, but most of its 930 workers will stay on the job and draw their pay -- and Intalco General Manager Jim Frederick is already talking about a restart in 28 months.
After many weeks of gloom about the smelter's future, terms of Alcoa Inc.'s two-year shutdown deal with the Bonneville Power Administration, announced Wednesday, may have provided mostly good news for the company, its workers, Whatcom County's economy and local public agencies that rely on Intalco's tax revenue.
BPA will pay the company enough money to cover wages and benefits for most of its workers and also will pay the company $1.75 million per year for distribution to Ferndale School District, Whatcom County and other taxing districts that get a share of Intalco's property-tax revenue. Terms of that distribution remain to be worked out.
"Not much more than a handful" of workers will be laid off as a result of the deal, Frederick said. The number of layoffs will "most certainly" be less than 100, he added, but he declined to be more specific. Everyone else can expect full pay and benefits and a full work schedule, Frederick said.
Keeping in shape
During the production shutdown that begins immediately, the workers' first job will be to clean out the pots where molten aluminum is refined from ore, Frederick said. The cleanout will reduce the cost of an eventual restart when and if affordable power becomes available.
After that, he said, there will be a regular schedule of "exercise" for all of the smelter equipment: fans, motors, pumps, cranes and so forth. The idea is to keep everything at the plant in shape for a possible restart.
Employees also can expect a lot of what Frederick called "all the cleanup, paint-up, fix-up stuff. ... We're going to get it all done."
Some workers on the Intalco payroll might be loaned to other Alcoa plants in need of temporary help, he said. And if people run out of things to do, they might be sent out into the community to do everything from tutoring school kids to building wheelchair ramps, Frederick said.
Work schedules will be drawn in cooperation with International Association of Machinists and Aerospace Workers officials, Frederick said.
"We have a partnership arrangement with the union," he said. "They've been in all our meetings all day long."
Agreement first of kind
Before now, Alcoa officials had said the two-year shutdown that BPA was proposing would likely mean permanent closure of the Intalco smelter. Frederick said the payments from BPA will reduce the likelihood of a permanent shutdown by providing the company with the cash it needs to keep its skilled workers.
"Now that we can keep this work force together, the chances of a restart are much, much better," Frederick said. "Without that work force, this is just a pile of steel and concrete."
From the time acting BPA Administrator Stephen Wright first suggested on April 9 the shutdown of all Northwest aluminum plants, the federal power agency has stated repeatedly that worker compensation would be part of any shutdown deal.
BPA spokesman Ed Mosey said the deal with Alcoa is unique.
"We're very pleased," Mosey said. "We think it's the best possible outcome in a terrible situation."
Until now, Alcoa and other Northwest aluminum companies had rejected any shutdown deal. Instead, they wanted to get 75 percent of their contracted power supply at traditionally low BPA rates. But that idea met furious opposition from public utilities, which argued that their own BPA power bills would shoot up if the region's aluminum smelters got cheap power.
As they waged their public-relations campaign against BPA's shutdown proposal, the aluminum companies and their allies blamed BPA for signing contracts to supply more power than the federal system can produce. Mosey argued that the aluminum companies, not BPA, were responsible the problem.
"There's been a lot of flak thrown up about this thing that really hides the facts," he said.
Saving BPA millions
BPA has always been legally required to meet the power demands of the Northwest's public utilities. Last year, when BPA was hammering out power-supply contracts with the aluminum companies and the utilities, the utilities were demanding more BPA power because they could no longer afford to buy power on the wholesale market, Mosey said.
The BPA's legal obligation to provide the aluminum companies with power had been set to expire Oct. 1, but the aluminum companies lobbied the Clinton administration and succeeded in getting an order from former Energy Secretary Bill Richardson directing BPA to contract with the aluminum companies for another five years, Mosey said.
Once the contracting was done, BPA found itself with a legal obligation to provide 11,000 megawatts of power from a system capable of producing only 8,000 megawatts, Mosey said. Meeting the 3,000-megawatt gap with power purchased on wholesale markets would have meant massive rate increases for everyone. Instead, BPA boss Wright proposed cutting 1,500 megawatts from BPA's load by turning off the juice to the smelters for two years.
At the end of that time, BPA officials hope power prices will have come down enough to get aluminum smelters back into production.
In a press release, Wright said Wednesday's Alcoa deal saved BPA an estimated $600 million in market power purchases that would have been required to meet Intalco's demands in the next two years. The BPA said the agreement, which will be evaluated every six months, gives it a "big slice" of the megawatts it needs to buy back.
He said BPA is continuing to negotiate with the rest of the region's aluminum companies.
The 10 aluminum smelters in Washington state, Oregon and Montana buy their power from BPA. Seven of those plants are in Washington and provide 7,500 jobs.
On Wednesday, Alcoa stock rose to a 52-week high of $44.51 a share.
