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Bellingham Herald: Here’s how Intalco’s loss of 700 jobs will ripple through Whatcom County

The Bellingham Herald | April 23, 2020 | Dave Gallagher

The announced closure of the Alcoa’s Intalco Works aluminum smelter near Ferndale is expected to have a strong ripple effect in the Whatcom County economy beyond the 700 direct jobs lost.

Alcoa Corporation made the announcement on Wednesday, April 22, that it will close its Intalco Works smelter near Ferndale amid declining market conditions. The curtailment is expected to be complete by the end of July 2020.

“While our employees have worked diligently to improve the facility, the smelter is uncompetitive, and current market conditions have exacerbated the facility’s challenges,” said Alcoa President and CEO Roy Harvey in the news release. “This is difficult because of the impact on our employees, and we will ensure appropriate support as we work to safely curtail the facility.”

Ferndale Mayor Greg Hansen said news of the closure is simply heartbreaking.

“The smelter is part of the lifeblood of our community, and they have been putting food on the tables of Ferndale families for almost three generations. This closure will be a critical blow to our local economy in the midst of a difficult time,” Hansen said in an email. “We are Ferndale, we look after each other especially when things look the most grim. I know that I will do everything in my power to breathe life back into this facility and fight like hell for all of our Ferndale families that find themselves out of work.”

It is unclear whether this will become a permanent closure for the facility, which opened in 1966.

On Wednesday the company and the workers talked about the importance of closing the facility in the best possible condition for a potential restart down the road, said Glenn Farmer, business representative for the International Association of Machinists Local 2379 District 160.

Farmer said in an email, though, that it will be a tough road to get to a restart.

“There are a lot of folks out there in similar situation. Hopefully, some lessons will be learned. We need to watch out for each other, and reimagine a better future. Opportunities will come, we need to be ready,” Farmer said.

Legislators responded to the news by saying they will do what they can to save the facility. When Intalco was in danger of closing in the past due to difficulties including high energy prices, officials at the local, state and federal levels worked with the company that allowed the smelter to continue operating.

“The Intalco Works is critical to our national manufacturing infrastructure, to our local economy and to the working families of Whatcom County. We can’t let this curtailment become permanent,” said Washington State Sen. Doug Ericksen, R-Ferndale. “This is a matter of national significance, as we look to protect industries that are critical to our country’s industrial base and our national security. It is one of many challenges we will face as we rebuild our economy in the wake of the coronavirus shutdown… our battle is just beginning.”

State Rep. Sharon Shewmake, D-Ferndale, whose 42nd Legislative District includes the Intalco plant, said it was devastating news. She said in a text to The Bellingham Herald that she’ll be working with the county and the governor to see what can be done.

IMPACT ON ECONOMY

Western Washington University’s Center for Economic and Business Research estimates that closing the facility will eventually mean the loss of another 697 indirect jobs, bringing the total job loss to nearly 1,400 in Whatcom County.

Those indirect job losses will come not just from contract and maintenance work at the facility, but in other parts of Whatcom County because of the loss of wages being spent in the community, said Hart Hodges, co-director of the business research center.

This Intalco closure might be reminiscent of the closure of the Georgia-Pacific tissue mill in Bellingham around 20 years ago. Hodges noted there is a key difference in that the economy was in better shape 20 years ago for Bellingham to better handle the closure with gains in other industries.

“I don’t see the same sort of offsetting gains right now in Ferndale — though the impact will really depend on how long it takes for the economy to reopen and to rebuild,” Hodges said in an email, referring to the current situation with the coronavirus pandemic.

WHAT LED TO THE CLOSURE?

Since the beginning of the year, aluminum prices have fallen more than 20%, down 45% from the highs in 2018. In the first quarter of 2020, the Intalco smelter lost $24 million.

Steve Emig, Intalco plant manager, said the employees have worked together to address numerous challenges in an attempt to make the site competitive in the global market.

“Unfortunately, we cannot control the larger market dynamics,” Emig said in the news release. “While this is a sad day, I remain proud of our Intalco team. We will work together during this difficult transition, focusing on safety and providing all available support to our employees.”

Farmer said the low aluminum prices was a big factor in the curtailment, which is a byproduct of the pandemic hitting the United States so hard.

“We have been monitoring the metal prices for a while and expected some kind of action. We were hoping for a partial curtailment to weather the storm, but it became obvious the gap was too great,” Farmer said in an email.

The Intalco aluminum smelter has 279,000 metric tons of nameplate operating capacity; 49,000 metric tons of production was curtailed earlier according to the news release.

The Alcoa Foundation will continue its annual giving, donating $200,000 to qualifying non-profit organizations in the local community in 2020.

The property that Intalco sits on is owned by Alcoa, according to the Whatcom County Treasurer’s Office. The company did sell the pier and some associated items including the aquatic lands lease to Petrogas in 2016 for $122 million.