Ormet Reducing Output to a Third
HANNIBAL – Ormet Corp. soon will only operate two of its six aluminum potlines because the company must quickly reduce costs, President and Chief Executive Officer Mike Tanchuk said.
Tanchuk said he was “terribly disappointed” the Public Utilities Commission of Ohio on Wednesday refused to grant emergency rate relief in Ormet’s ongoing dispute with American Electric Power.
And although a spokesman for the United Steelworkers believes Ohio Gov. John Kasich has the ability to “make or break Ormet,” a Kasich spokeswoman disagrees.
The rate dispute is taking place because AEP could raise Ormet’s bills to $62.83 per megawatt hour. The rate was just $39.66 per megawatt hour when the companies reached their power agreement in 2009, he said.
“In the current metal pricing environment, Ormet simply cannot overcome the massive increase in the Ohio Power electric rates experienced over the past several years. Ormet must receive the relief requested to continue operations and build a future for our employees and community,” Tanchuk said.
Tanchuk said earlier this year the company had about 860 employees working at the Hannibal plant. The company already had cut back to running just four of its six potlines, but will now reduce operations to just two of the lines.
“Ormet is trying to stay open to save these jobs,” said USW staff representative John Puskar, whose coverage area includes Ormet. “They have done everything they can. You are talking about 1,000 jobs that could be gone.”
Tanchuk could not be reached for further comment, while Puskar did not know exactly how many employees would be affected by this reduction.
Wednesday, the PUCO ruled against Ormet’s emergency relief request, instead deciding to hear the case on Aug. 27. Ormet officials hoped to gain the lower AEP rate relief so they could complete the $221 million sale to Wayzata Investment Partners as a means to emerging from the bankruptcy case it filed in February.
However, commissioners Wednesday denied Ormet’s request for emergency relief, stating, “The financial distress of a single non-utility company such as Ormet does not rise to the level of an emergency.”
Puskar said he believes Kasich has the power to save Ormet. However, Kasich spokeswoman Connie Wehrkamp said the state of Ohio has “worked hard to help” Ormet succeed, including allowing the company to take millions of dollars worth of subsidies at the expense of other AEP customers.
“It’s unfortunate that the company has taken this step,” she said. “We’ll continue to work with the company to provide additional appropriate help, and also work with employees to ensure they get the assistance they need going forward.”
AEP spokesman Jeff Rennie had no comment on the matters.
Last summer, Ormet issued a Worker Adjustment and Retraining Notification Act notice regarding the possibility of laying off 998 employees, but the notice expired Dec. 31. At the time, Tanchuk said AEP wanted to raise Ormet’s bills by $20 million per year.
As of late Thursday, the Ohio Department of Job & Family Services website did not show a new WARN notice for Ormet.