Ormet Workers Reject Contract

HANNIBAL – Ormet Corp. union workers rejected the company’s five-year contract offer Tuesday, leaving the possibility of a strike on the table.

“We are hoping to avoid a strike,” said John Puskar, staff representative for United Steelworkers Local 5724 at Ormet. He noted company officials extended the union’s current contract until June 9, by which time he hopes the two sides can reach a new agreement.

Puskar said there are now 871 union employees working, with all six potlines in operation, at the Hannibal Primary Aluminum Reduction Plant. He said those workers rejected the company’s new contract offer in a vote that “was not close,” but he would not provide specific totals.

“We are looking forward to seeing exactly why our union members rejected this and attempting to address their concerns in our negotiations with the company,” Puskar said.

In 2004, Ormet had filed for bankruptcy protection, but it emerged from bankruptcy in 2005 in the midst of an 18-month walkout by union employees. The company closed and sold its former rolling mill shortly thereafter.

Mike Tanchuk, Ormet’s president and chief executive officer, did not return calls Tuesday seeking comment for this report. Earlier this year, however, he told The Intelligencer regarding the upcoming labor negotiations, “We have a great relationship with the Steelworkers. We expect to sit down and talk through any issues that we have like we normally do.”

Tanchuk also said the market for aluminum is strong, as the auto industry continues its attempts to make lighter vehicles.

The negotiations for a new contract come at a time when Ormet is reporting significantly higher revenue compared to last year. The company’s public financial statement notes that for the quarter ending March 31, Ormet reported gross profits of $13.8 million, compared to $8.3 million for the same period in 2010. This marks an increase of $5.5 million year to year.

Net sales from continuing operations at Ormet for the first three months of this year were $124.2 million compared to $100.2 million for the same period last year.

While profits and sales are up for Ormet, the financial statement shows operating expenses are down. For the quarter ending March 31, operating expenses were $3.7 million, a decrease of $1.7 million from the $5.4 million for the same period in 2010.

The fifth and sixth potlines at the Hannibal facility restarted earlier this year. Ormet’s financial information states that due to “the restarting of the two idled potlines in the 2011 first quarter, shipments in the first quarter of 2011 increased to 58,079 metric tons from 44,219 tons for the same period in 2010.”

This means the company shipped 13,860 more tons of aluminum during the first three months of this year than last.

Regarding the financial statement, Tanchuk said, “Our objectives remain clear. We must reduce our raw material costs and grow profitably.

“We continue to look at multiple growth opportunities where we can apply our proven ability to increase productivity, reduce cost, develop strong local relationships and manage metal price risk,” he added.

City Editor Jennifer Compston-Strough contributed to this report.