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Alcoa plans to close final two potlines at former Reynolds plant

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MASSENA - Alcoa announced Wednesday afternoon that it will permanently close the remaining two potlines at its Massena East plant in the first quarter of this year, marking at least the temporary end of a facility that has been an aluminum smelter since 1959.

The decision was made because the potlines are no longer competitive, corporate officials said in a news release. One of three potlines at the facility was permanently closed in August 2013. The closure will reduce Alcoa’s smelting capacity by 84,000 metric tons. The plant has 332 employees.

The Massena West facility will continue to operate, company official said in the press release. That plant has 669 employees.

Plant officials shared the news with local officials and employees Wednesday before the public announcement was made.

“We will be working with our unions, state, local and other stakeholders to minimize the impact of these changes,” said Bob Wilt, president of Alcoa Global Primary Products. “We appreciate the support of the New York Power Authority and will work with them and others to ensure our continuing success at Massena West.”

In a statement from Governor Andrew M. Cuomo’s office, the state said it is planning to enforce the terms of its contract with Alcoa.

“We intend to enforce the terms of the long-term power supply contract for Alcoa’s receipt of low-cost hydropower from NYPA’s St. Lawrence-Franklin D. Roosevelt Hydroelectric Plant, which requires the company to maintain employment at its plants,” the statement said. “To be clear, we will hold Alcoa accountable to maintain the operation of the Massena West smelter and ensure the planned modernization of the Massena East facility proceeds without delays as required by the contract.”

The statement also indicates an “emergency meeting” will be held Thursday with company officials in New York City.

“Our goal is to protect jobs while avoiding involuntary layoffs in the north country - nothing less,” the statement said.

“It’s disappointing, and it certainly saddens me for the employees and their families, but unfortunately it was not fully unexpected,” Massena Town Supervisor Joseph D. Gray said. “With reports of Alcoa’s fourth-quarter losses, it is clear that the economy isn’t doing very well and the aluminum business isn’t a good one right now from a profit standpoint.”

United Steelworkers Local 450 President David W. LaClair Jr. said while the news is not good, he likewise was not surprised.

“I think the whole community has been expecting it, too,” he said.

Mayor James F. Hidy also was saddened by the news, noting the timing of Alcoa’s announcement couldn’t be much worse.

“It certainly comes at a bad time, with everything we’re trying to do to keep things positive and redevelop our town,” Mr. Hidy said. “With all of the positive things happening, news of this certainly puts a crinkle in things.”

Mr. Gray said he was told by Plant Manager Bob Lenney that the company would start negotiations with the United Steelworkers to minimize the impact of the shutdown on the Massena East employees.

Company officials said in August the closure of the one potline at the Massena East plant would impact approximately 100 employees.

Including the closure of the remaining two potlines at Massena East, Alcoa has announced closures or curtailments representing 361,000 metric tons of the 460,000 metric tons placed under review in May of 2013.

Once the Massena East potline closure is complete, Alcoa will have total smelting operating capacity of 3,950,000 metric tons, with approximately 655,000 metric tons of capacity idle.

“We are taking decisive action to close the remaining potlines, given they are no longer competitive,” Wilt added. “We continue to reshape our commodity business to ensure it is positioned for long-term success.”

Total restructuring-related charges for the first quarter of 2014 associated with the above closure are expected to be between $60 and $70 million after-tax, or $.06 per share, of which approximately 40 percent is non-cash.

Ms. Bowers said the closing of the potlines at Alcoa East would not change the company’s modernization project schedule for the Massena East plant.

“As our contract stipulates, we will conduct a financial review at the end of 2015 and move forward subject to board approval,” she said.

This spring, Alcoa committed to invest at least $600 million to modernize its Massena operations and retain a minimum of 900 jobs at the company’s Massena East and Massena West smelters in return for 478 megawatts of low-cost hydropower from the New York Power Authority’s St. Lawrence-Franklin D. Roosevelt Hydroelectric Plant.

Alcoa announced in April it planned top spend $52 million through 2015 for site work and support projects that will begin in June.

This is in addition to $40 million that has already been spent on the project.

The modernization project calls for the construction of a new potline at Massena East to produce 144,000 metric tons of aluminum per year, upgrades to Massena West and modifications to other facilities that will help integrate the two plants and support the new potline.

Staff writers Bob Beckstead and Ryne Martin contributed to this report.

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