HANNIBAL - Mike Tanchuk hopes to avoid cutting nearly 1,000 employees at Ormet Corp.'s Hannibal Primary Aluminum Reduction Plant, but he said uncertain market conditions and rising electricity rates could undermine the company's recent success.
Tanchuk, Ormet's president and chief executive officer, said the Monroe County plant will shut down one of its six potlines by September, leaving 30-50 employees out of work. However, a Worker Adjustment and Retraining Notification Act notice filed with the Ohio Department of Job and Family Services shows Ormet is prepared to cut as many as 837 hourly and 161 salaried positions by the end of this year.
"Future aluminum prices and electricity rates will determine how many employees we can maintain," Tanchuk said. "Whenever we have a reduction in force, we notify the entire plant. Right now, we are only shutting down one of the potlines."
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One of the six potlines at Ormet Corp.’s Hannibal Primary Aluminum Reduction Plant will be shut down, and company President and Chief Executive Officer Mike Tanchuk said this will affect 30-50 employees.
The WARN notice states the "curtailment of operations and reduction in force is expected to be indefinite." It also notes that the workers represented by the United Steelworkers will be recalled to work in accordance with seniority provisions. Last year, Ormet officials inked a new five-year contract with union workers at the Hannibal plant.
A receptionist for USW No. 5724 said the union had no comment on the Ormet WARN notice.
Ormet posted a $1.1 million net loss for the first three months of 2012, but company officials spent $1.9 million during this time to reline 22 pots at the Hannibal facility during that time. In the first three months of the year, workers shipped 67,981 metric tons of product, compared to 58,079 tons during the same time in 2011.
"Demand for the physical metal is very good," Tanchuk said. "Our employees are all doing a great job - this is in no way a reflection on them or their efforts. This is all about pricing and macroeconomic issues."
Among those global matters, Tanchuk said, is the unstable situation with European currency. He said the metal is traded on the London Metal Exchange in U.S. dollars.
"The world is a small place now. The uncertainty of the European economy is playing a role in what we are able to do," he said.
Another factor in Ormet's future will be the cost of electricity. Tanchuk said American Electric Power may raise his company's rates to a point that it cannot maintain current operations.
An AEP representative declined to comment specifically about Tanchuk's assertions but said AEP believes it is working on a deal that will be fair to all consumers.
AEP announced plans last year to close the Kammer Plant south of Moundsville by the end of 2014, citing increased air pollution regulations by the U.S. Environmental Protection Agency. The Kammer facility opened in the late 1950s, primarily for the purpose of supplying electricity for the Ormet plant, although it no longer operates in that capacity.
This is not the first time Ormet employees have faced an uncertain future. In 2004, the company filed for bankruptcy protection, but it emerged from bankruptcy in 2005 in the midst of an 18-month walkout by union employees from the Hannibal plant. Ormet closed and sold its former rolling mill to the south of the reduction plant shortly thereafter.
In 2009, fears grew that Ormet might shut down all six of its potlines due to a disruption in the worldwide supply of alumina. However, the company ultimately decided to keep at least four of the lines going before eventually restarting all six when the alumina supply issue ended.
