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Alcoa Prepares to Shutter Washington Smelter by Staff Pittsburgh Business Journal, July 28, 2003

Alcoa Inc. said on Wednesday it is preparing to temporarily shut down its aluminum smelter in Ferndale, Wash.

Alcoa, which is based in Pittsburgh, had said in April it would suspend production at the Ferndale smelter because a rate increase the by local Bonneville Power Administration would sharply increase costs at the plant and make it uncompetitive.

Alcoa has a power supply contract with the BPA that expires Sept. 30. The price increases are scheduled to take effect at that time.

"Since there has been no indication that BPA will significantly lower power rates, we have to prepare for a curtailment," Bernt Reitan, an Alcoa vice president and president of Alcoa Primary Metals, said.

Alcoa said it has sent notices to all of the employees at the Ferndale smelter advising them that layoffs are possible after 60 days. Kevin Lowery, an Alcoa spokesman, said the plant currently employs 615.

Mr. Reitan added that "in fairness to our employees, our shareholders and the community, we felt we must proceed with the notification."

Alcoa said it has no plans to cancel the temporary shutdown unless the BPA significantly cuts rates or market conditions show substantial improvements.

The company said the closure will cut roughly $4 million in lost production and severance costs from its third quarter net income. Alcoa is running two full production lines at the plant with about 110,000 metric tons of production capacity a year.

Alcoa owns 61 percent of the Ferndale smelter. The remaining interest is held by a Japanese consortium.

When the production curtailment goes into effect, Alcoa will have about 615,000 metric tons per year of idle capacity, out of a total of 3.9 million metric tons per year, the company said.