700 jobs at risk as Alcoa announces closure of smelter

Alcoa Corporation announced that the Pittsburgh-based company will shutter its Intalco Works smelter located in Ferndale, which employs approximately 700 people, most of whom will likely lose their jobs.

In an April 22 press release, Alcoa said it will “fully curtail” the smelter by the end of July “amid declining market conditions.” The release noted that since the beginning of the year, aluminum prices have fallen more than 20 percent, down 45 percent from highs in 2018. In the first quarter of 2020, the Intalco smelter lost $24 million.

“While our employees have worked diligently to improve the facility, the smelter is uncompetitive, and current market conditions have exacerbated the facility’s challenges,” Alcoa president and CEO Roy Harvey said in the release. “This is difficult because of the impact on our employees, and we will ensure appropriate support as we work to safely curtail the facility.”

The decision was also announced in the company’s April 22 news release on its first-quarter 2020 earnings, which noted that Intalco employs approximately 700 people, and that its workforce will be “significantly reduced” due to the curtailment.

The earnings release said, “The company will record estimated restructuring charges of approximately $25 million (pre- and after-tax), or $0.13 per share, in the second quarter of 2020 associated with the curtailment, for employee-related costs and contract termination costs, which are all cash-based charges expected be paid primarily in the third quarter of 2020.”

The plant will now work with its employees, the International Association of Machinists and Aerospace Workers (IAMAW) union and other stakeholders to manage the impact.

The facility, which was established in 1966, has 279,000 metric tons of smelting capacity. Previously 49,000 metric tons of production were curtailed, and 230,000 metric tons of uncompetitive capacity remained. This action will bring Alcoa’s total curtailed smelting capacity to 880,000 metric tons, or approximately 30 percent of its total global smelting capacity.

“Unfortunately, we cannot control the larger market dynamics,” plant manager Steve Emig said in the company’s announcement. “While this is a sad day, I remain proud of our Intalco team. We will work together during this difficult transition, focusing on safety and providing all available support to our employees.”

Mathew Nicolaas of Custer has spent more than five years at the facility, where he works as a baked anode processor. This role involves the baking of carbon blocks in large ovens. Nicolaas operates a crane that moves the blocks, which go into the aluminum the plant produces, in and out of ovens before they go on to the next production process.

Nicolaas, 32, said that IAMAW is currently working with the company to negotiate severance packages that could include a financial cushion as well as support for further schooling. “They are trying to negotiate some stuff to help us out, and they are still talking,” he said. He also said that he is willing to put signs out or sign petitions to help the facility stay open. “Most of us out there, we all want to get this place to stay around and keep going,” he said. “That’s 700 jobs that the county’s not going to be able to absorb on top of all the other businesses that are closing.”

Nicolaas, who has a wife and two children ages four and seven, said that he plans to take the situation one step at a time. He may get his commercial driver’s license, train for a new career in the medical field or search for another job. He is also selling some assets to help his family get through the crisis. “Everybody’s really worried and unsure about what’s going to happen,” he said.

Rachelle Parrish, 34, is a Blaine resident who has worked for the facility for five years and is 25 weeks pregnant. Parrish is a potline operator at the facility; this role involves watching over large pots that look like swimming pools and contain fine powder that is turned into molten metal using electricity.

She has been on light duty for a few months, and now her plans for maternity leave will be affected. “It’s going to really put me and my husband out of place,” she said. “I’m really trying not to dwell on the bad parts, because I don’t want it to affect my pregnancy, but it’s going to be a huge blow to both of us financially.”

History is repeating itself, said John Chapin Jr., a Blaine resident and nine-year employee of the facility. His father, John Chapin Sr., also works at the plant and went through a full curtailment in 2001. “I was a teenager back then, and we had just bought a house around 1999, and I remember him trying to make house payments and buy food and worry about other bills and take care of me,” said Chapin Jr. His father has worked for Intalco for more than 30 years and will turn 60 this year.

Chapin Jr. said that the facility is very family-oriented, with many second- and third-generation employees. “This place has basically raised me,” he said. “My father has no idea what he’s going to do after this. I’m young enough where I can hopefully find something else, but with 700-plus people looking for jobs in Whatcom County, that’s going to be a disaster, not to mention all the lost jobs that were indirectly created in the community” by the facility.