MASSENA — The corporation that has been tied to Massena for more than a century announced Monday that it will not modernize the shuttered Alcoa East plant and will shut down the smelting operation at the Alcoa West plant, a location that has long been identified as the oldest continuing smelter in the world.
The decision means nearly 500 positions will be affected by Alcoa’s decision.
Corporate spokeswoman Monica Orbe said 487 positions will be affected by the move that was announced late Monday afternoon. Alcoa currently has between 725 and 730 employees.
Alcoa, in a release, said it will idle the Massena West smelter and Intalco and Wenatchee primary aluminum smelters in Washington state, will not modernize the Massena East smelter and will permanently close the facility; potlines at Massena East have been closed since March 2014. The casthouses at Intalco and Massena West, which produce value-add shaped products, will continue to operate. The Alcoa Forgings and Extrusions facility in Massena is unaffected.
Alcoa called the move a decisive action to curtail money-losing smelting and refining capacity to ensure continued competitiveness. The company will reduce aluminum smelting capacity by 503,000 metric tons and alumina refining capacity by 1.2 million metric tons. Alcoa will begin the curtailments in the fourth quarter of 2015 and will complete them by the end of the first quarter of 2016.
A source close to the situation said the Massena West smelting operation was losing about $1 million a week.
The reductions will further improve the cost position of the Upstream business and ensure competitiveness in a lower pricing environment, including a 30 percent drop in the Midwest transaction aluminum price year-to-date, according to the company’s release.
Alcoa has been aggressively reshaping its Upstream portfolio as part of a multi-year strategy to position itself as a low-cost global leader in alumina and aluminum production. Once today’s actions are complete, Alcoa will have closed, divested or curtailed 45 percent of total smelting operating capacity since 2007.
“Alcoa has consistently taken decisive actions to create a commodity business that is positioned to succeed throughout the cycle. We have closed or curtailed unprofitable capacity, repowered key assets at lower energy prices, built-up a profitable value-add casthouse network, established the foundation for a strong commercial bauxite business and made substantial productivity improvements,” Klaus Kleinfeld, chairman and chief executive officer, said. “In the face of continued adverse market forces, we are once again not standing still. These difficult, but necessary measures will further strengthen our Upstream portfolio, reducing our cost position and driving greater resilience as we prepare to launch this business as a strong standalone company in the second half of 2016.”
Alcoa’s presence in Massena dates back to 1902.
The move to curtail smelting at the West Plant comes nearly two years after the company shuttered its East plant, the former Reynolds Metals Company plant that had opened in 1959.
The idling of the East Plant took place in early 2014, sending 332 into early retirement or employment at another one of the company’s plants, including Massena West. The decision in January 2014 to idle that plant came about two years before the company was expected to announce whether it would be moving forward with a proposed $600 million modernization project that would have given Alcoa East the technology it needed to be competitive in the modern market.
Alcoa officials said earlier this year the company’s annual active payroll, including benefits, was about $83 million.
Alcoa’s Massena Operations had agreed to maintain 750 jobs at its West Plant and train workers for high-demand, technical jobs under a deal announced in 2013 by Alcoa, Gov. Andrew M. Cuomo and the New York Power Authority.
The 750 jobs was down from the 900 jobs agreed upon in 2008 that would allow Alcoa to continue receiving low-cost power from the New York Power Authority.
Also as part of the agreement, the New York Power Authority temporarily reduced Alcoa’s hydropower supply contract of 478 megawatts while supplying enough energy to support operations at the Massena West Plant. Alcoa West produces 800,000 pounds of molten aluminum daily, according to the Alcoa Massena Operations website.
That agreement supplemented a previous agreement reached in 2009 and amended in 2011.