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Alcoa Ready to Restart Smelter by P-I Staff and News Services Seattle Post-Intelligencer - July 15, 2004

Talks with union could put 400 back on job in Wenatchee

Alcoa Inc. has begun talks with its union that could put about 400 workers back on the job as its Wenatchee smelter restarts three years after it was idled because of high power costs.

Talks started yesterday between officials from the Pittsburgh-based company and the unions, Alcoa spokesman Kevin Lowery said. "Once we have a labor agreement, we will be in a better position to say where we are going," Lowery said.

The company has continued to pay its 400 workers, but they spend much of their time working on community projects, Lowery said. Alcoa is paying the workers as part of its agreement to sell energy back to the power authority.

If the plant reopens, the company and its union are expected to sign a long-term labor contract. Lowery wasn't sure how long it would take, or even whether the plant would reach its capacity of 227,000 tons of aluminum a year -- about 0.8 percent of the world production.

Prices for aluminum, used to make aircraft, car bodies and beverage cans, are expected to rise 8 percent this year as stockpiles at warehouses monitored by the London Metal Exchange have fallen by a third, according to a median forecast of 16 analysts.

Alcoa closed Wenatchee in 2001 when a dry summer sent power prices to all-time highs, prompting the company to sell back its 150 megawatts of allocated electricity to the Bonneville Power Administration.

Alcoa has negotiated a new power agreement with the Chelan County Public Utilities District and will get tax incentives from Washington state, Lowery said. Power accounts for about 40 percent of aluminum smelting costs.

Intalco, Alcoa's other smelter in Ferndale, cut its work force and is producing at a reduced rate of 90,000 tons a year, half of the plant's installed capacity. It was unable to negotiate a new power-supply contract with Bonneville after the old agreement expired in September.