Alcoa Works, Not Plays,
During Shutdown

Intalco’s Two-year Closure Seen as Boon,
not Bust, for Company, Employees, Community

Article and photos by Michael Barrett

The white signs with blue lettering proclaiming: “We support Alcoa Intalco Works and the aluminum industry” are everywhere. You see them on private lawns, along roadsides, in shop windows and particularly along Mountain View Road west of Ferndale, which leads directly to Intalco itself. It’s here, amid cows grazing within sight of Georgia Strait and the distant Gulf Islands, that the West Coast energy crunch has landed with full fury.

Intalco, a leading Whatcom County business for 35 years, manufactures primary aluminum ingots, the material used to create light-weight aircraft and auto parts and rolls of foil. When all of its 720 “pots” are cooking on high, Intalco uses as much electricity as all of the rest of the county combined, according to General Manager Jim Frederick, a 34-year veteran of the plant.

So, in an effort to make up a shortfall of approximately 3,000 megawatts of contracted power to utilities, electricity supplier Bonneville Power Administration (BPA) asked Intalco to curtail operations for two years, offering a sweet deal in the process to make it worth while for company, employees and community. Al-coa agreed to stop producton, effective May 18.

“There are two pieces (to the deal),” Frederick explains. “The first piece is from now until Sept. 30, stating that we have the rights to buy power under the old contract. They (BPA) were desperate to get that power back and agreed to purchase it from us at a deep discount of market price. But it was enough to make it a good deal all around.”

According to the two-year agreement, BPA will pay Alcoa Intalco Works for about 90 percent of the smelter’s power needs at $18.50 per megawatt hour, instead of purchasing the same amount on the open market, Frederick continues, adding,“That’s enough for us to pay our employees a base wage and benefits and have some left for the community.”

If Alcoa kept the power under the contract, it might have forced BPA to raise rates to utility customers by as much as 250 percent. From May to Sept. 30, BPA is paying $22.50 per megawatt hour under the old contract.

 

Everyone wins

“This works for everybody,” Frederick enthuses. “Bonneville gets to issue only a small rate increase to all of its customers; so politically, it takes the heat off of them. Those other customers, in effect, don’t have to raise their rates to their residential customers by so much, so that takes the heat off of them. The residential customers get a better deal than they would otherwise. And our employees get paid instead of laid off. The company gets to keep most of the workforce intact.”

That’s a big deal, considering Alcoa Intalco Works has a $65 million annual payroll and pays on average about $19 an hour base pay.

According to Alcoa Inc., which has major plants all over the United States and abroad and owns 61 percent of Intalco, the Ferndale plant was pegged to produce 115,000 metric tons of aluminum this year, which would have been about 43 percent of capacity. At Intalco, it takes about 6 kilowatt hours to produce a pound of aluminum — “That’s one of the most efficient numbers in the industry,” Frederick says — or a total of 480 megawatts of power per hour at peak production.

Frederick concedes the losers in the proposition with BPA are many of the vendors that Intalco uses since, for the next two years, some will not be supplying the Ferndale company with goods and services.

Gary Duling, another Intalco executive who helped put the plant together in 1966, says his team is doing all it can to help the vendors.

“We have valued, longtime suppliers, and we’re doing the best we can to mitigate a negative impact on them,” he states. “Some activities are still going on. We’ll take a look at some of the supplies we need.

Indeed, during the two-year closure, Intalco plans to re-refine some product for specialized purposes and will require help from suppliers for that, continued administration, planned capital improvements and plant maintenance. All that will happen, really, is shutting down the three electricity-hungry potlines that, through a chemical-reaction process, turn Australian bauxite into raw aluminum.

And what about the 930 employees, an uncommonly large number of whom have been with the plant all or most of their working lives?

 

Ten job categories planned

An undisclosed number will be laid off or retired early, Frederick says, adding that the total will be relatively few. During the shutdown, the employees will be kept busy in 10 categories: cleaning up following shutdown, mothballing equipment, planning for restart, recasting ingots to make a higher-valued product, managing the plant including finance and administration, undertaking capital improvement projects, tackling smaller projects ignored in the past, continuing training and development, sending some employees temporarily to other Alcoa plants in the system and, finally, building on community service.

“For years, we were process driven around here,” Frederick observes. “The process worked 24 hours a day, seven days a week. We had to feed the pots, make the anodes, tap the metal and make and ship the product; it was process driven. That doesn’t exist any more. Now it’s project driven.”

When the news broke that Alcoa Intalco Works would shut down for what amounts to 28 months, many longtime employees, some approaching retirement, understandably panicked.

“The average age is around 43 with an average of 20 years’ service, and we have at least one third-generation employee,” Duling notes. Since then, however, there has been elation among employees who see the shutdown as an opportunity.

“(Reaction) runs the gamut,” Frederick explains. “People like certainty in their lives. For years, certainty around here was that this place continued to operate, the retirement benefit was well established, and the employees knew what that was. Now we’ll have 28 months (of closure), and people find that really hard to deal with; it isn’t normal.

“You still have the people who are saying the glass is half empty — what am I going to do? — and those who say the glass is half full and look what I’m going to do.”

If 40 hours a week cannot be filled on the job over the shutdown period, the community will benefit, say Frederick and Duling.

“Community has always been a priority for Intalco,” explains Duling, who serves both as quality-systems and community-relations manager. “Intalco is a major supporter of numerous community events and nonprofit organizations that include the Ski to Sea Grand Parade, Relay for Life, American Red Cross, Boys and Girls Clubs of Whatcom county, United Way of Whatcom County, Mt. Baker Theatre, Bellingham Festival of Music, Big Brothers/Big Sisters, among others.”

 

More community service

During the idle period, Intalco workers will be expected to continue their community service and more, including mentoring children, coaching, tutoring and helping English as a Second Language (ESL) students, for example, and much, if not all, of this will be on “company time.”

“We purchased that labor by selling (BPA) back our power rights, so we want to make good use of that asset,” Frederick points out, enthusiastically. “It’s not free labor, and certainly it’s not being paid for by the homeowner or utility customer. Some people have that misconception.”

“We’re planning this very carefully so everybody gets a 40-hour work week,” Duling chips in.

And what happens if the time runs out Oct. 1, 2003, and the energy problems still exist?

“There’s a series of possibilities,” Fredericks says, realistically. “One possibility is that we’ll get to that point and there will still be a shortage of power; we’ll say we really want to extend this deal and that might happen. Another is, we might have another resource lined up by then — either one you build yourself or something we go out and find. Another possibility is that we get a series of ‘pineapple expresses’ (warm, wet winds) through here in the fall, spring comes with a heavy snowpack and Bonneville is awash in energy.”

Although counted as a win-win-win all around, Frederick still cannot feel a sense of sadness about closing down production at the plant, even temporarily.

“This is painful — very, very painful,” he states. “I try to be positive and see the glass as half full. . . . The people here created something really special and to have them lose it though no fault of their own is tough to swallow. But every time we’ve ever asked this workforce to do something, it has.”

“Community support has been overwhelming, too,” Duling adds. “It’s been something to see.” He says the approximately 5,000 white-and-blue support signs distributed and displayed between Everett and Blaine attest to that. “They seem to be everywhere,” he notes.

“This is an excellent workforce,” Duling concludes. “It’s one of the best plants in the Alcoa system and one of the most efficient in the world. It’s the people who do that.”