Alcoa to idle smelter at Massena's Alcoa West, will not modernize east plant in spite of deal with state
Updated 2:33 p.m. Nov. 3 to include number of jobs to be lost
MASSENA -- Alcoa announced today it will idle the Massena West smelter and will not moderize its closed east plant. The casthouses, forgings and extrusions facilities at Massena's west plant will remain open, according to the company."In its aluminum business, Alcoa will idle the Intalco and Wenatchee primary aluminum smelters in Washington State, and the Massena West smelter in New York," Alcoa said in a prepared statement released Monday evening.
"The company will not modernize the New York Massena East smelter and will permanently close the facility; potlines at Massena East have been closed since March 2014. The casthouses at Intalco and Massena West, which produce value-add shaped products, will continue to operate. The Alcoa Forgings and Extrusions facility in Massena is unaffected."
The move means 487 people will lose their jobs, according to Alcoa coporate spokesperson Monica Orbe.
Alcoa had struck a deal with the state to get cut-rate New York Power Authority electricity in exchange for maintaining jobs in Massena.
According to a March 2014 news release from the governor's office, the company will maintain 750 jobs at the west plant and provide training for the east plant's future workforce, once the modernized Alcoa East pot line in installed. The existing pot line will be decommissioned and torn down.
In summer 2013, Gov. Andrew Cuomo was quoted as saying 1,000 jobs would be guaranteed.
The release added that the New York Power Authority will reduce the amount of power they supply to Alcoa and waive two utility charges on Alcoa's monthly bills until the new line is operational.
Once the curtailment announced Monday is complete, it will mean they have eliminated 45 percent of their total smelting capacity since 2007.
The company says they will reduce aluminum smelting capacity by 503,000 metric tons and alumina refining capacity by 1.2 million metric tons. Alcoa will begin the curtailments in the fourth quarter of 2015 and will complete them by the end of the first quarter of 2016, their statement said.
The reductions, which Alcoa says are aimed at maintaning competitiveness, include a 30 percent drop in the Midwest transaction aluminum price year-to-date.
“Alcoa has consistently taken decisive actions to create a commodity business that is positioned to succeed throughout the cycle,” said Klaus Kleinfeld, Alcoa chairman and CEO. “We have closed or curtailed unprofitable capacity, repowered key assets at lower energy prices, built-up a profitable value-add casthouse network, established the foundation for a strong commercial bauxite business, and made substantial productivity improvements. In the face of continued adverse market forces, we are once again not standing still. These difficult, but necessary measures will further strengthen our Upstream portfolio, reducing our cost position and driving greater resilience as we prepare to launch this business as a strong standalone company in the second half of 2016.”
Once these actions are implemented, Alcoa will have curtailed or closed 673,000 metric tons of uncompetitive smelting capacity and 2.5 million metric tons of uncompetitive refining capacity since its announced review of 500,000 metric tons of smelting capacity and 2.8 million metric tons of refining capacity in March.
Total restructuring-related charges in the fourth quarter of 2015 associated with today’s announcement are expected to be between $160 million and $180 million after-tax, or $0.12 to $0.14 per share, of which approximately 30 percent would be non-cash, Alcoa said.