Alcoa announced today that it will suspend aluminum smelting operations at its Intalco Works facility west of Ferndale at Cherry Point.
The cuts are an attempt to stay competitive in the face of lower aluminum prices. The price of aluminum has fallen to six-year lows, partly because of increased production in China, according to a Wall Street Journal report.
Alcoa Intalco Works currently has 583 employees. The company expects to retain more than 100 once smelting and refining is curtailed, said Josh Wilund, director, Alcoa GPP-U.S. communications. Wilund said benefits and services will be made available to the affected employees.
Intalco Works will continue to operate cast houses, the facilities where molten metal becomes ingot or billet—blocks or logs of aluminum that get shipped from Intalco Works to other manufacturers.
The plant will begin reductions between now and the end of the year and complete them by the end of March 2016, according to a press release. Whether smelting and refining operations will restart depends on a series of factors, including “global market conditions, regulatory uncertainty, capital investments, energy pricing and alignment with Alcoa’s strategy to create a globally competitive commodity business,” Wilund said.
“We will continue to evaluate market conditions and the plants’ ability to compete in a global market to determine if a restart is feasible,” he said.
Alcoa announced in September that it would split it’s parts-making and raw aluminum manufacturing divisions into separate companies early next year.
The company is reducing smelting and refining across its operations, including at the only other smelting facility in the state, Wenatchee Works outside Wenatchee. Alcoa will idle refining and smelting at a facility in New York called Massena West. That facility’s cast houses will continue to operate. Another New York facility, Massena East, will permanently close. Portions of that plant were closed in March 2014.
“Across the globe, we have been taking measures to curtail smelting and refining capacity that is not competitive to improve our cost profile,” said Roy Harvey, executive vice president of Alcoa, in a statement.
When the announced cuts are complete, Alcoa will have closed, sold or curtailed 45 percent of its total smelting operating capacity since 2007, according to the press release.
“Employment at Cherry Point,” a 2014 study by Hart Hodges of Western Washington University and Bill Beyers of the University of Washington, found that industry at Cherry Point, of which Alcoa Intalco Works is a significant part, directly and indirectly supports about 11 percent of Whatcom County jobs.
In 2013 Intalco Works’ employees earned an average of $105,000, Wilund said.
The Cherry Point industrial area has about 2,200 jobs total, the study found. Alcoa Intalco Works, is the second largest employer at Cherry Point. Other large Cherry Point employers are BP Cherry Point with 900 employees and Phillips 66 Refinery with 425 employees at the time of the study.
Intalco Works was the second largest emitter of greenhouse gases in 2013, according to data from the U.S. Environmental Protection Agency.
Alcoa Intalco Works has idled production temporarily before. The facility cut production in 2007 and 2008, laying off about 170 full-time employees, the Bellingham Business Journal reported in January 2008. In 2011, Intalco Works increased production and added 60 jobs.