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Ferndale's Three Major Manufacturers Staying Busy During Recession by Dave Gallagher The Bellingham Herald, July 18, 2010

FERNDALE - While much of the economy has had its ups and downs this year, three major Whatcom County manufacturers have been steadily plugging along, providing a significant amount of work for their employees as well as for local contractors. Cherry Point's "big three" manufacturers - BP Cherry Point, Alcoa Intalco Works and ConocoPhillips - have 1,610 employees, combined, more than 20 percent of the county's entire manufacturing workforce, and about 1.6 percent of all the jobs in the county. The two oil refineries and the aluminum smelter also employ hundreds of contract workers for a variety of construction and maintenance work.

While BP is busy with several projects at Cherry Point and dealing with the oil spill in the Gulf of Mexico, it's been a relatively quiet summer at Intalco and at the ConocoPhillips refinery. Here are some details about each facility:

INTALCO - STILL WAITING ON A LONGER-TERM POWER DEAL

With two pot lines in operation and a recent good earnings report from Alcoa, Intalco's 530 employees have had a chance to feel a little more secure after years of uncertainty. Once again, however, plant manager Mike Rousseau and many of the workers are mindful of one more looming contract deadline: May 26, 2011, when the current power deal with Bonneville Power Administration expires.

A deal was signed in December under which BPA would provide up to 320 megawatts of power for 17 months. At the time, BPA was ready to offer the smelter five more years of low-cost power, but it needs to be approved by federal courts as other regional power users mount legal challenges to the deal.

Rousseau said he's already starting to get questions from employees about what happens if the issue isn't settled in court in Intalco's favor.

"It's a difficult question, one we've had to deal with many times before," said Rousseau, referring to past power contract negotiations.

"I don't expect it to be settled this summer, or even in the fall, so we'll continue to deal with that uncertainty." In the meantime, the company did have some contractors on site earlier this year doing maintenance and upgrades. Otherwise, the company continues to watch expenses.

"I think some employees enjoy telling people they've seen me vacuuming my own office," Rousseau said with a laugh. "What I'm really proud of is how the employees have handled the cuts throughout this period."

There are no plans for major capital projects while the power contract is still uncertain, just the normal maintenance work to ensure employee safety, he said. In May, the company announced a major cut in water usage after upgrading an air compressor cooling system. According to Intalco, it is now using 3.6 million fewer gallons of water per day, about 60 percent of the aluminum smelter's usage prior to the upgrade.

It has also been able to maintain its workforce at around 530 for the past year. "Once a long-term agreement has been reached, we can then start looking at some other capital projects," Rousseau said.

In last week's financial report about the second quarter, Alcoa had revenues of $5.2 billion, a 6 percent increase from the previous quarter, primarily driven by higher volume. The company is focused on producing aluminum across the world, employing 59,000 people in 31 countries.

"In our industry we're seeing signs of the economy getting better, with supply and demand at a manageable level," Rousseau said, adding that he expects to see increased demand for aluminum, from the auto industry to soft drinks.

BP - MOVING FORWARD WITH BIG PROJECTS

BP Cherry Point has been busy with local capital improvement work; it is finishing up a $50 million shop relocation project, getting started on building a roundabout at Grandview and Blaine roads, and is going through the permit process for a $300 million diesel/hydrogen unit that will mean cleaner fuel with less sulfur.

The shop relocation project is expected to be largely completed at the end of this year, while the roundabout construction is expected to be done in October, said Mike Abendhoff, a spokesman at BP Cherry Point.

BP Cherry Point's workforce continues to hover around 800, and that will grow by another 10 to 12 employees after the diesel/hydrogen unit is installed around 2012. The company continues to hire regularly, replacing retiring workers or others who have left. In today's economy, BP has the benefit of a deep labor pool, including many people who have been trained in process technology.

"We're still able to find highly qualified people for any position," Abendhoff said. "It's given us the opportunity to be very selective."

Along with the Cherry Point facility, employees have been actively working on the Gulf oil spill disaster. About 40 Cherry Point employees are rotating in and out of the Gulf of Mexico region, providing support in stopping the leak and working on the cleanup, said Abendhoff. Those workers have been putting in two-week shifts in the region before returning home.

"We've had employees taking on additional responsibilities and have been very eager to help during this time," Abendhoff said.

The second quarter earnings report for BP is scheduled to be released Tuesday, July 27.

CONOCOPHILLIPS - COMPLETED PROJECT REDUCING EMISSIONS

The ConocoPhillips refinery recently completed two major projects to keep the facility running smoothly and with less pollution.

The first was putting in a flare gas recovery system, a multimillion-dollar project that allows the refinery to better catch the flares that take place during the refining process, using that captured energy to heat its boilers. That reduces the amount of energy the refinery uses while also cutting air emissions, said Jeff Callender, spokesman for the facility. JH Kelly of Longview and Mills Electric were contractors on the project.

The second project was a preventative maintenance project in March. At the projects' peak, there were 500 contractors working at the refinery.

With those projects out of the way, the facility is focused on refining oil. The workforce has been stable at 280 employees, but there has been some hiring taking place because of retirement and attrition, Callender said.

"Overall it's been very steady around here," he said.

The second quarter earnings report from ConocoPhillips is scheduled to be released Wednesday, July 28.