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Optimism at Aluminum Smelter by Dave Gallagher The Bellingham Herald, October 8, 2006

Intalco is confident about next 5 years;
long-term power solution will determine rest

Bob Bell has learned that when it comes to the economy, consumer confidence is a big deal.

Bell, who has owned the downtown Ferndale Mini Market since 1977, learned that lesson five years ago when Alcoa Intalco Works began struggling to stay open because of higher energy costs.

"You could tell money was tighter, even for those who still had jobs," Bell said. "The uncertainty kept people from spending, and that hurt the local economy."

With the announcement on Sept. 30 that Intalco was going to ramp up production by restarting a second potline and adding 170 jobs, Bell is feeling upbeat about the economy, particularly in the Ferndale area. Intalco is planning to have the potline running sometime early next year.

"The timing couldn't be better for Ferndale," Bell said. "The community has spent the past six months talking about economic development and there is already a certain amount of enthusiasm being generated. The news about these new jobs tells the community that Intalco means to stay in the community and not fade away. That's a great confidence builder."

While the announcement of more jobs at Intalco is considered great news by many, it remains to be seen what kind of economic impact it will have.

Jim Vleming, a regional labor economist who focuses on employment trends, wonders what the confidence level will be for those new hires.

"If I'm one of those 170 people hired by Intalco, I have to wonder how long my job will last," Vleming said.

"That might impact a lot of decisions on whether I go out and make big purchases, such as buying a car or a home."

That uncertainty is a dilemma that Intalco Plant Manager Mike Rousseau will have to contend with, but it's something he's dealt with before.

"If a new employee were to ask me about the long-term future, I would tell them we're hopeful," Rousseau said. "I believe opening a second potline shows how optimistic we are. It's not something we can do on a whim, and I think the action says we expect to stay open and continue to be a productive facility for a long time."

"ALL THE PIECES FELL INTO PLACE"

Several factors took Intalco from the brink of shutting down to its latest announcement to add employees and increase production.

Signing a five-year contract with the Bonneville Power Administration was important to the company's survival, but the growing demand for aluminum is also important.

The price for the commodity is at its highest level in 18 years. Alcoa spokesman Kevin Lowery said in a recent interview for a Reuters article that demand for aluminum is expected to double in the next 14 years.

On a company level, Alcoa idled its plant in Frederick, Md., in December because it could not reach a long-term power arrangement, so some of customers at that plant could be shifted to Intalco.

Rousseau said those market factors created enough demand that they expect the second potline to be open for at least the next five years, when the current contract with BPA expires.

"We're confident we will make it to 2011 with two potlines in operation," Rousseau said. "What is important to us is finding a long-term power solution. This is not a dying facility; it's one of the youngest in the United States and Alcoa wants to keep using it."

What could be a challenge is finding qualified employees, Rousseau said.

"Right now the local unemployment level is low. We are looking for people who were previously laid off, but some have moved on to new careers," Rousseau said. "We plan to continue working with the Bellingham Technical College on developing programs to get trained millwrights and electricians for the future."

COMMUNITY IMPACT

According to the U.S. Bureau of Economic Analysis, for every job created in a manufacturing facility like Intalco, an additional one to one-and-a-half jobs are created in the community.

It will be difficult to see if it happens here because there is so much happening in the local economy, said

Hart Hodges, director for the College of Business and Economics at Western Washington University.

"There are just so many dynamics involved in an economy this size," Hodges said. "If there were a slowdown in the real estate market, for example, it would overshadow anything that is happening at Intalco."

In addition to the 170 people Intalco plans to hire, Rousseau expects to subcontract some of the work involved in getting the second potline open.

"We plan on doing what we can to get the second potline open by the beginning of the year," Rousseau said. "It is difficult to say how much, but we will have contract work for before and after the potline is running."

Whatever the impact is, Bell expects it to be one more piece to stronger economic times in Ferndale. "It's been a good business year for my store, especially compared to last year, when the bridge (on Main Street over the Nooksack River) was under construction," Bell said. "There seem to be a lot of different things that have been positive economically, and the Intalco news is another example."