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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Alcoa to idle Wenatchee plant

WENATCHEE – Alcoa will idle its Wenatchee Works plant as part of a companywide plan to shut down smelting operations that are losing money amid low world prices for aluminum, the company announced this week.

The company made the announcement by press release, saying it will idle operations at its Wenatchee Works and Ferndale smelters in Washington and at its Massena East smelter in New York. The stoppages are to begin this quarter and be completed by the end of March.

The Wenatchee Works employs 428 people. Employees were notified Monday afternoon.

The release marks only the New York facility, for permanent closure, leaving the chance that Wenatchee Works could be restarted in the future.

“Unfortunately, today’s pricing environment necessitates very difficult decisions,” Alcoa executive vice president Roy Harvey said in the release. “We recognize how deeply these decisions affect our Alcoa family and communities and are committed to working closely with our employees and unions and local stakeholders to support them through this transition.”

The shutdowns will reduce the company’s overall aluminum smelting capacity by 503,000 metric tons. The Intalco Works at Ferndale will also be idled, but its casthouse operation there, which produces shaped products, will continue to operate, the company said. A Texas refining facility will reduce its output by about 1.2 million metric tons.

The Wenatchee Works plant is powered by a long-term contract with the Chelan County PUD that supplies power at cost and obliges the aluminum maker to share in capital and maintenance expenses at PUD dams.

Alcoa last idled the Wenatchee plant entirely in 2001, when aluminum prices declined and the cost of power shot up. The company kept the plant idle for three years even after prices stabilized, demanding concessions in worker contracts. It operated at less than full capacity until 2011, when the third of its three potlines was restarted.

Following that curtailment, the PUD agreed to sell the plant’s allotment of electricity on the regional market as long as Alcoa agreed to use the proceeds to keep plant workers on staff at regular pay.

The agreement preserved the plant’s jobs until it restarted. The company negotiated a new 17-year power deal with the PUD that expanded production to a third pot line. The contract took effect in 2011, the same year the company fired up a third pot line at the plant.

“We are tremendously disappointed by this decision, given the level of effort the PUD has put into attempting to preserve jobs at Wenatchee Works over the years,” PUD General Manager Steve Wright said in a statement Monday. “We await more information, but our contract with Alcoa provides financial protection for PUD customer-owners against a temporary or long-term shutdown.”

The power contract requires Alcoa to use PUD electricity only at its Wenatchee Works plant. It may not sell the power itself and pocket the proceeds.

Plant shutdowns may also require Alcoa to make payments to the PUD, but the size of the payment depends on the conditions and duration of the shutdown.

“We have prepared for this moment, knowing it was always a possibility,” Wright said. “The contract was really quite thoughtful. It anticipated a lot of scenarios.”

Wright said he’d know more about impacts to the PUD after learning more about Alcoa’s plans.

Alcoa is calling the idling of Wenatchee Works a “curtailment,” not a closure. “A curtailment is not meant to be permanent. A closure is,” Alcoa spokeswoman Monica Orbe said in an email response to questions.

“There is no set timeline for the curtailment,” Orbe said. “We will continue to evaluate market conditions and Wenatchee’s ability to compete in a global market to determine if a restart is feasible.”