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Intalco Adding 60 Jobs, Restarting Idled Smelting Capacity by John Stark The Bellingham Herald, January 7, 2011

Alcoa Intalco Works will be adding 60 jobs as it ramps up production capacity at its aluminum smelter west of Ferndale, the company announced Friday, Jan. 7.

In a press release, plant manager Barry Hullett said Intalco would be increasing production by about 40,000 metric tons per year. That is about 80 percent of capacity. Intalco has been operating at about two-thirds capacity recently.

The restart is expected to be complete in the first quarter of 2011.

"We are delighted to add 60 family wage jobs for the benefit of our long term viability and the positive economic impact on our local communities," Hullett said in the release. "We are also appreciative of the support from key elected officials who have aided the plant to restart idled capacity. Governor Christine Gregoire, senators Patty Murray and Maria Cantwell, Rep. Rick Larsen and numerous state, county and local officials have been very supportive in ensuring that Intalco remains an economic force in the region."

Intalco now employs about 500 people.

Hullett said the 60 direct jobs also would generate another 174 jobs from the indirect economic impact, according to some estimates.

Intalco is operating under a short-term contract with the Bonneville Power Administration that provides 320 megawatts of relatively low-cost power now through May 26, 2012, while negotiations on a long-term contract with BPA continue.

Hullett said the Intalco smelter will be increasing its power consumption to about 365 megawatts as part of the increase in production, and will be purchasing the added power on the market this spring.

BPA officials have said they expect to have extra power to sell at that time, and they may be the source of the additional Intalco power, Hullett added.

Power supplies are becoming more abundant in the region as wind turbines come online, Hullett said, adding that using that power for Northwest industry makes more sense than transmitting it to California to heat hot tubs.

U.S. Rep. Larsen, D-Everett, said Friday's announcement helps BPA make the case for a longer-term power arrangement to keep Intalco operating.

"This is a great message to the other (power) users in the region that BPA is making a wise decision," Larsen said. Some of BPA's other power customers, such as publicly owned utility districts, have opposed BPA's sale of power to Alcoa, arguing that the region's limited supply of cheap hydropower should be reserved for them. As they see it, Intalco's power appetite forces BPA to buy additional power from more costly sources, and that means higher electric bills for other power users in the Northwest.

But BPA Administrator Steve Wright has argued that the direct and indirect economic impact of Intalco is important enough to justify the company's share of hydropower from the federally owned dams on the Columbia River.

Aluminum smelters require enormous quantities of power. Intalco's current 320-megawatt share of BPA power is equivalent to about 25 percent of the power demand for the city of Seattle.

Alcoa, the world's biggest aluminum company, also announced production increases at smelters in Wenatchee and Massena, N.Y.

Larsen said Alcoa's announcement is an indicator that demand for the metal is bouncing back, along with the rest of the global economy.

"Part of the message is how closely our economy is tied to what happens in the global economy," Larsen said.

TIMELINE OF MAJOR EVENTS AT ALCOA INTALCO WORKS SMELTER

1966: The Ferndale-area facility begins operations as Intalco Aluminum Corp., owned by Alumax, Pechiney and Howmet.

June 1998: Alcoa Inc. and Alumax merge, creating Alcoa Intalco Works.

May 2000: Alcoa executives consider building their own power plant to fuel Intalco out of concern over rising energy rates.

May 2001: Not able to cope with high energy prices, Intalco decides to close the plant for two years, keep its employees and sell its power back to Bonneville Power Administration to aid in the energy crisis. BPA pays for the wages and benefits of nearly all the workers plus $1.75 million to cover Intalco's tax burden.

May 2002: After being shut down for six months, the facility reopens two potlines.

October 2003: Alcoa shuts down a potline because of high energy costs, cutting 200 jobs and leaving only one of the three potlines in operation.

February 2004: Mike Rousseau takes over operations as plant manager of the facility, replacing Mike Tanchuk.

June 2006: Alcoa becomes full owner of the facility, buying out remaining partners.

August 2006: Alcoa signs a five-year contract with BPA ensuring continued work for its 450 employees.

February 2007: The Ferndale facility restarts its second potline, increasing employment to 575 employees.

October 2008: BPA proposes a long-term contract deal to supply power to Intalco.

October/November 2008: In response to the economic recession and less demand for aluminum, the Ferndale facility institutes a series of budget cuts, including cutting about 100 jobs.

January 2009: Alcoa and BPA are unable to reach a long-term agreement proposed by BPA in October.

March 2009: Intalco officials say facility is at an "extreme risk" of closing unless BPA approves company proposal for new power contract.

July 2009: BPA and Intalco reach tentative power agreement for enough low-cost power to operate the plant at or near two-thirds capacity for seven years, guaranteeing at least 528 full-time jobs.

September 2009: After an August court ruling restricting BPA's authority to share power with Intalco, the July proposal appears to be in jeopardy.

December 2009: BPA approves a two-phase power contract that guarantees enough power to keep 528 workers employed for 17 months. After that, BPA could offer five more years of power if courts approve and economic conditions permit.

Sources: Intalco Web site, The Bellingham Herald archives.

ABOUT INTALCO Alcoa Intalco Works

Location: 4050 Mt. View Road, west of Ferndale.
Production: The facility produces aluminum metal either in billets (logs that are later transformed into a variety of products, such as bicycle frames) or foundry material for specialty products. The plant has three operational potlines, one of which has been idled in recent years.
Capacity: The smelter is capable of producing about 278,000 metric tons of aluminum metal per year. With two potlines, the facility produces about 180,000 tons.
Employees: About 500 people work at the facility. Before the energy crunch in 2000, the plant had about 1,100 employees when running at full capacity.
Web site: alcoa.com.