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Cover Story | Alcoa: Good-bye to an old friend?

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Alcoa workers guide a crucible into place to pour molten cryolite into pots to start the process of making aluminum.

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Editor’s Note | Community continues to move forward while Alcoa idles

When it was announced that Alcoa’s Wenatchee Works plant would be “idled” it was a body blow to the local economy.

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Alcoa officials have been adamant: The “curtailment” of operations at Wenatchee Works is not the same as a permanent shut down.

But even longtime employees have commented on a sense of finality this time around — a feeling that wasn’t present when the aluminum smelter curtailed in 2001 amid slumping world prices for commodity aluminum and soaring electricity costs.

Signs of finality go beyond the Wenatchee Valley.

Alcoa last month announced it would also curtail operations at its plant in Point Comfort, Texas, and permanently shutter its smelter in Evansville, Indiana.

That leaves the New York-based aluminum giant with only two functioning U.S. smelters — New York’s Massena West, which was only spared from permanent closure by $70 million in state aid, according to wire service reports, and the Intalco smelter in Ferndale, which is slated for curtailment by the end of June. Intalco is more modern and diversified than Wenatchee Works.

Is this really goodbye to an old friend, top employer, outstanding corporate citizen and economic engine responsible for injecting some $60 million annually in the Wenatchee Valley economy?

If so, the sharp drop over the past year in global market prices for aluminum may not be solely to blame.

Mike Southwood, senior aluminum consultant at the Pennsylvania-based CRU, a consultancy for mining, metals and fertilizers, said by email that the market’s currently depressed pricing is not being viewed as a new, long-term norm. But it may stay low for a while.

We do forecast that the LME (London Metals Exchange) price will remain at low levels for the first half of this year, with only moderate improvements during the second half,” Southwood said.

Southwood points to four reasons for the pricing:

The strengthening of the U.S. dollar against the Chinese yuan. This makes U.S. aluminum exports more expensive for Chinese buyers.

Oil prices are at their lowest in years. This has had a negative impact on the price of aluminum and other commodities.

A weaker Chinese economy has reduced demand from the world’s largest consumer of aluminum.

Chinese oversupply of its own primary aluminum could result in higher exports to other countries.

Only Alcoa officials can say for sure what happens to the future of the Wenatchee Works.

That future is uncertain, but here’s a look at what the plant has meant to the Wenatchee Valley over its 63-year history.

 

May 1951

Construction begins on the new, $45 million Wenatchee Works smelter, as the federal defense industry was urging a 70-percent increase in aluminum production in the Pacific Northwest.

June 1952

The first aluminum is poured at Wenatchee Works, making it the first smelter built in the Pacific Northwest post WWII. The plant opened with 500 employees. An open house there in September draws 10,700 people, including then-Gov. Arthur B. Langlie.

August 1955

Wenatchee Works expands, adding 48 new pots, increasing output by 10 percent and adding 300 new jobs.

March-April 1966

Wenatchee Works carbon plant is expanded and work is launched to add a fifth potline slated to operate in 1968. The new line would add 120 jobs to the plant’s then payroll of 825 employees.

May 1968

Wenatchee Works becomes the North Central Washington’s largest employer under a single roof, with 1,000 workers and wages, benefits totaling $10.1 million.

Early 1980s

Plant receives a new process-control computer, new carbon-baking furnaces and improved air-quality controls.

Late 1980s/Early 1990s

Wenatchee Works suffers from market ups and downs. A glut in the foreign market causes prices for aluminum ingot to plunge. Rising energy costs threaten layoffs.

August 1992

Chelan County PUD signs a new power-sales agreement with Alcoa through 2011. New contract boosts power supplied from 155 megawatts to 197 megawatts – 60 percent of the power needed to run the five potlines.

July 2001

Wenatchee Works stops producing aluminum for the first time since its inception amid soaring electricity prices. The curtailment, which was expected to last for 15 months, lasted for three years. Alcoa and the PUD reached an unprecedented agreement the month before to sell Alcoa’s unused electricity and use the proceeds to keep the smelter’s 400 employees on the payroll.

June 2004

Since the curtailment, approximately 300 Alcoa employees whose wages were funded by the power-sale arrangement put in more than 10,000 hours of community service with more than 150 non-profit agencies and schools.

December 2004

Plant restarts. By the end of January 2005, two pot lines are operating.

July 2008

Chelan PUD and Alcoa agree on a new power-sales contract that takes effect in November 2011 and supplies enough electricity for a third pot line. Contract extends through 2028 and contains strong incentives to keep the plant operational.

March 2011

Third potline starts up. Alcoa spends $20 million to upgrade the plant’s substation. Total workforce rose to 435 employees.

November 2011

The PUD’s new power contract with Alcoa begins, supplying the plant with 26 percent of the output of Rocky Reach and Rock Island dams. In exchange, Alcoa pays that share of costs to maintain the dams. With the third pot line in operation, the smelter produces 142,000 metric tons of aluminum per year and pumped some $52 million into the Wenatchee Valley economy.

June 2012

Alcoa celebrates the 60th anniversary of Wenatchee Works with an open house at the smelter that draws hundreds for tours, speeches and birthday cake.

May 2014

A fast-moving brushfire damaged electric poles and cut power to Wenatchee Works for about four hours. The outage causes aluminum to harden in the pots and sets off a long and costly recovery process to stabilize the plant. Worries persist over slumping world prices for primary aluminum.

March 2015

Wenatchee Valley College names Alcoa an “Outstanding Friend” in March 2015 for its donations to the college of nearly $550,000 since 1990. The company was on track to contribute $250,000 last year in funding and volunteer hours to local non-profits.

September 2015

Alcoa announces an effort to boost the value of its corporate shares by separating the smelting business, which had been hard-hit by low market prices, from its profitable business of manufacturing semi-finished aluminum products.

November 2015

Alcoa announces that it will curtail operations at Wenatchee Works, now said to be the company’s most antiquated smelter, after world commodity prices for primary aluminum drop 40 percent over the course of the year. The estimated impact to the Wenatchee Valley’s economy is $60 million annually.

January 2016

Production ends at Wenatchee Works. All but a handful of the plant’s 428 workers are laid off. The Valley prepares for a future without one of its biggest employers and highest-paying manufacturer.