Alcoa to Lay Off 300 Workers at Texas Smelter

By MIKE OBEL, AP business writer

NEW YORK – Alcoa Inc. will lay off about 300 workers at a Texas smelter and is suing the plant’s power supplier, claiming it caused power disruptions that forced the firings, the aluminum maker said Friday.

Meanwhile, power supplier Luminant denied Alcoa’s accusations in a strongly worded statement that laid responsibility for the 300 or so layoffs on Alcoa’s shoulders.

In June, Alcoa shut down three of the plant’s six operating potlines, representing about 120,000 metric tons per year of production, because of ongoing interruptions of power supply from Luminant’s onsite power generating unit, Alcoa said.

Those interruptions exposed the plant to local market energy costs between $2,000 to $4,000 per megawatt hour during peak hours, which is about 100 times the normal level, Alcoa said.

Talks with Luminant failed to resolve the supply issue to the satisfaction of Alcoa, which has sued Luminant for damages and other relief. Luminant is a privately held, Dallas-based unit of Energy Future Holdings Corp., formerly TXU Corp., which is owned by Kohlberg Kravis Roberts & Co., and TPG.

Layoffs for about 100 Alcoa employees will be effective Aug. 31; layoffs for another 60 will be effective Sept. 7; and a further 140 employees will be notified in the fourth quarter.

“Unfortunately, the power plant that Luminant operates has not been reliable over the past year,” John Thuestad, president of Alcoa’s U.S. Primary Products Division, said in a statement. “The cost of power resulting from Luminant’s inability to consistently operate.. has forced us to make this decision,” to lay off workers

He said Alcoa was continuing to speak with Luminant to see if it could secure competitive power but added, “We have been forced to seek damages and other relief from them through ongoing litigation.”

Luminant vigorously denied responsibility for the layoffs.

“For the past two months, Luminant has offered Alcoa additional price protections along with a stable, predictable and economically viable power supply,” Luminant spokesman Tom Kleckner said in a statement. “Alcoa has refused, taking an inflexible stance, seeking power at unrealistically advantageous terms and demanding a price far below the prevailing commercial market price.

“While we continue to offer solutions, these layoffs are Alcoa’s business decision and they alone are responsible – not anyone else.”

Shares of Alcoa rose 8 cents to $32.22 in afternoon trading.

(c) 2008 Evansville Courier & Press. Provided by ProQuest LLC. All rights Reserved.

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