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October 3, 2003
Alcoa Intalco Works officials said their plant has until Oct. 15 to decide whether to continue production or shut down the Ferndale plant, which would result in 600 layoffs.
The fate of Intalco is hanging on Bonneville Power Administration's final decision on its 2004 power rates. If BPA lowers its rates, Intalco can continue with business, but if rates increase, Intalco may have to curtail production, Intalco spokeswoman Melanie Hughes said.
"Our company strategy is to secure long-term, low-cost power supplies," Intalco spokesman Kevin Lowery said. "All we need is BPA's rates to go down. We just need some final number. Give us a number so we can get on with our lives."
For the past few months, Intalco employees have been unsure of how much longer they may have jobs.
"Given uncertainty about the rate increase, we must continue to prepare for a shutdown," said Bernt Reitan, President of Alcoa Primary Metals, in a statement on the company's official Web site. "But in fairness to our employees and the community, we will wait another two weeks so there is more certainty about the costs before making a decision."
The closure of the Ferndale plant would have a dramatic effect on the community, said Pat Rowe, operations manager for the Bellingham Chamber of Commerce.
"It would be in the millions of dollars," Rowe said. "Another effect is on people's psyche because it's a very negative type of vibe about the direction we're heading."
Tony Impagliazzo has worked for the company for more than 30 years, and he said he is concerned about the future of his job.
"We don't know yet until the end of the month," he said. "We have to wait and see what happens. There is a rumor that they may keep one pile running -- of course, they go by seniority."
BPA supplies Intalco with energy to operate their plant.
"We serve (Intalco) with about 11,000 megawatts of power -- that is 46 percent of the region's consumption of energy and nearly the same amount of power it takes to operate the city of Seattle," BPA spokesman Mike Hansen said. "Of those 11,000 megawatts, (we serve) 8,000 megawatts of power, which leaves a deficit of 3,000 megawatts. We have to go to market to purchase (the extra 3,000), like everyone else. The 3,000 megawatts costs a lot more than our own."
When too much water is in the Columbia River Basin, BPA runs the water through the dam to create surplus power, which it sells for a profit to help keep rates down, Hansen said.
Recently, because of a drought in the basin, BPA has not received that extra income from surplus power, so rates must increase.
The 2001 lawsuit filed against BPA by the public utilities stems from the way BPA distributed power during the energy crisis. The power rates for 2004 hinge on the outcome of this settlement.
"If we can get a settlement, we could actually drop rates by about 7.5 percent, which, for 2004, would drop our rates down to an average of $30 a megawatt hour and $31 for the next three years," Hansen said. "If we don't get this settlement dropped, our prices for 2004 would be about $33.50, a 2.2 percent increase. We will know supposedly by Oct. 10 about the settlement. The dropping of this lawsuit is very important to aluminum companies."