GOVERNOR SIGNS POWER PACT

MASSENA — Gov. David A. Paterson's signature finalized the power contract between Alcoa and the New York Power Authority on Monday. The contract will keep the largest employer north of Syracuse here for an additional three to four decades.

State and local lawmakers gathered with NYPA officials and Alcoa workers in the West Plant casthouse to sign the historic document in front of at least 200 people.

The governor's signature was the final step in the approval process, after the Alcoa board of directors and NYPA's board of trustees approved it late last year.

"This is a sound investment of New York's unique natural resources, and the clean power made available to Alcoa will be used right here in the north country," Gov. Paterson said. "This contract is particularly crucial given the challenging business conditions that international companies such as Alcoa are experiencing from the decline in the global economy."

All that remains is for the Alcoa board of directors to approve the estimated $600 million modernization project at the Massena East Plant. The former Reynolds plant was acquired by Alcoa in 2000. The project's construction would ensure that 900 jobs stay in Massena, Gov. Paterson said.

Without the project's approval, the contract is void. The board is expected to make a decision late this year.

Despite the faltering price of aluminum, which is down to about $1,500 per metric ton from $3,300 over the summer, Alcoa officials say the company remains committed to the modernization. Planning on all of the corporation's capital projects has been postponed except the one here and another in Quebec, according to state Sen. Joseph A. Griffo, R-Rome. Work details of both projects are in development.

"While our industry here, and the entire world, is facing some tough economic times at the moment, we firmly believe that this market will turn around and demand for aluminum will once again escalate," Alcoa Executive Vice President Bernt Reitan said.

The contract, which will go into effect in July 2013, guarantees Alcoa 478 megawatts of low-cost hydropower. Under it, Alcoa must retain at least 900 jobs at its two plants here and contribute $10 million to a North Country Economic Development Fund. This is the first time there has been a job commitment in the power contract.

"Alcoa is the backbone of this area's economy and a foundation for its future growth," said retired St. Lawrence County Judge Eugene L. Nicandri, NYPA trustee and Massena resident. "Without the new contract and the significant savings from the low-cost power, that future would have been imperiled."

Alcoa reported Monday that it lost $1.19 billion during its fourth quarter as demand for the metal plunged in a troubled global market. Its loss of $1.49 per share highlighted the impact of the weakening world economy on key aluminum markets, including construction and autos. It earned $632 million, or 75 cents per share, in the year-ago period.

Revenue fell 19 percent to $5.7 billion from $7 billion in the year-earlier period.

Analysts estimated a loss of 10 cents per share on revenue of $5.26 billion, excluding special charges totaling $920 million, or $1.15 per share.

Shares of Alcoa sank 75 cents, or 6.9 percent, to close at $10.06. During the quarter, Alcoa's share price fell 47 percent, hitting its lowest level in more than a decade. In 2008, Alcoa shares shed nearly 70 percent of their value.

In November, Alcoa announced that 120 of its Massena employees would be laid off because of the dismal aluminum market. Last week, it announced it would reduce its global work force by 13,500, or 13 percent, including the previously announced cuts here. The company also announced it would reduce its output and impose a global hiring and salary freeze.

With the current national financial instability, Monday's contract signing offers a ray of hope for north country residents.

"We don't know what the stability of General Motors is. I think that (this announcement) relieves the tension in our community," said village Mayor Randy G. DeLosh, who is also a GM employee. "It's unfortunate that we lose one, but it's important that we've been able to retain the other."

The GM plant here is to close later this year.

Alcoa has been in Massena since 1902. The West plant is the longest continuously operating smelter in the world. Gov. Paterson's signature may serve to keep that distinction here through at least the next few decades, Mr. Reitan said.

"Folks are going to be able to start and have meaningful, good-paying jobs with good benefits for their families," said Richard M. Orton, president of United Steelworkers Local 450A. "It's every coffee shop, it's every church, it's every school. I can't think of anyone this doesn't impact."

The Associated Press contributed to this report.