• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Energy Costs Threaten Intalco: Future Again Hinges on an Uncertain BPA Contract

Posted on: Monday, 13 February 2006, 12:00 CST

By Dave Gallagher, The Bellingham Herald, Bellingham, Wash.

Feb. 12--Having an aluminum smelter facility in operation for 40 years is quite an accomplishment, but the past six years have been especially challenging for Alcoa Intalco Works.

The threat of higher energy prices have sent the Ferndale-area facility to the brink of permanent closure several times since 2000. At one point the facility was idled for six months while the community and local legislators rallied to keep it open.

A similar scenario could play out this year. Intalco's energy contract with the Bonneville Power Administration expires on Sept. 30 and negotiations are now under way. Intalco is hoping to sign a five-year deal and eventually a more long-term solution, said Mike Rousseau, plant manager.

"It is difficult to grow a business when there is so much uncertainty," Rousseau said. "We've made some capital improvements, and we would continue to make more improvements if we can come to an agreement."

Coming to an agreement may prove challenging. The region has grown and BPA has more customers sharing the once-abundant supply of cheap hydroelectric power from dams on the Columbia River.

If Intalco and BPA can't reach an agreement, the facility once again will be at a huge risk of closure.

"As a corporation, we desperately don't want this facility to go away," Rousseau said. "The sole factor in whether this facility stays open is whether we can get energy at a price we can afford."

Facing a future as cloudy as Intalco's, company officials have tried to find ways to survive. That's meant trying to make the facility as efficient as possible, according to Rousseau. One effort has been a program to purchase scrap metal and re-melt it, which takes less energy than creating new metal. The scrap metal project now represents about 30 percent of all the products that come from the facility.

All of the improved efficiencies won't matter, however, if they can't agree on a new contract with BPA, and employees are quite aware of it. Rousseau regularly hears from employees who are concerned about their jobs.

"In this kind of situation, where employees are worried because they have car payments and kids to feed, it's important for me to be honest with them. I certainly can't give them a false sense of security about the future," Rousseau said.

One thing working in Intalco's favor is that the price of aluminum has been strong recently, posting a 17-year high in January. About 90 percent of what Intalco does today involves making billet logs of metal, which are then shipped to plants to be shaped into a variety of products.

"Making aluminum is an old business, and it has become a global commodity," Rousseau said. "We need to demonstrate that we can continue to make it here. Those that can produce it at the lowest cost will survive."

The company has also had to adjust on how it gives back to the area. With production at the facility and the number of employees reduced in recent years, the facility has had to look ways to contribute to the community. In October the company donated about 320 hours of community service to organizations such as Habitat for Humanity. In a voluntary agreement with the Department of Ecology, Intalco removed more than 150,000 tons of waste material from old unlined landfills and placed it in lined landfills.

What it means to work at Intalco has also changed over the years. James Sires, who has worked at Intalco for seven years, said one of the main reasons he wanted to work at the facility is the job security it once offered. His father started working there in 1967.

"Intalco basically raised our family. It's a place I've always wanted to work because it was considered one of the best jobs to get in the county," said Sires, 38, who said it took nearly 10 years before he was hired. "Since the end of 2000, it's been stressful because you don't know how long it would last, but most of us have developed the attitude that we'll do the best we can to keep this place open and see what happens."

Reach Dave Gallagher at 715-2269 or dave.gallagher@bellinghamherald.com.

-----

Copyright (c) 2006, The Bellingham Herald, Bellingham, Wash.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

Source: The Bellingham Herald, Wash.

More News in this Category