Direct Subsidy To Preserve Aluminum Smelter Jobs Ruled Out | KUOW News and Information

Direct Subsidy To Preserve Aluminum Smelter Jobs Ruled Out

Jan 15, 2016
Originally published on January 15, 2016 3:25 pm

Washington's governor is ruling out a direct public subsidy to save the jobs of hundreds of workers at the Northwest's last operational aluminum smelters. But other forms of support such as retraining assistance remain under consideration.

In November, Alcoa announced it would idle its massive aluminum smelters near Wenatchee and Ferndale, Washington, for the indefinite future. The Wenatchee plant is now shut down, throwing about 415 people out of work. Ferndale ramps down starting next month at a cost of 480 well-paid jobs.

In answer to a question from public radio Thursday, Governor Jay Inslee said Washington state will not come to the rescue with a direct taxpayer subsidy as New York state did for another Alcoa smelter earlier this winter.

"What I have been advised by the Alcoa management is that there is no option that we could do that would entice them to keep these plants open,” Inslee said.

The state of New York ponied up almost $70 million in cheap power and cash to keep an Alcoa smelter in upstate New York operating for the next three-and-a half years. Inslee, a Democrat, said that kind of aid package would be an impermissible gift of public funds under the Washington State Constitution.

By this spring, the Massena, New York, plant will be Alcoa's only operating aluminum smelter in the U.S. The rest of company's domestic smelting operations will have been idled or permanently closed to reduce unprofitable capacity.

In testimony to a Washington state Senate committee Wednesday, Alcoa Ferndale plant manager Barry Hullett attributed the scale back to a sharp drop in aluminum prices. An upsurge in smelting capacity and cheap exports from China has upended the global aluminum market.

"Demand remains robust," Hullett said. "We are curtailing and that offers the opportunity of restart once market conditions improve."

"What the timeframe is, there are absolutely no guarantees," Hullett added in a follow up interview with public radio.

Alcoa intends to keep the cast house at its Intalco Works smelter in Ferndale open during the curtailment. Hullett said the more than 100 workers employed in the cast house melt and form aluminum into usable shapes for other manufacturers.

Last year, the Washington Legislature extended through 2026 a business tax break and a collection of tax credits for aluminum smelters in hopes of preserving family wage jobs. The preferential tax treatment was first established in 2004.

The unions representing the smelter workers have petitioned the U.S. Department of Labor for special dislocated worker benefits under a program called Trade Adjustment Assistance. The federal agency is currently investigating whether these layoffs are related to international trade. If confirmed, federal funding would provide a significant boost in retraining benefits and weekly cash payments similar to an unemployment check while workers upgrade their skills or learn new trades in college.

Separately, a working group that includes north central Washington ports, counties, cities and economic development interests sent a letter to state elected leaders this week asking for support to plan for an "expeditious" cleanup and repurposing of the Alcoa Wenatchee Works property in the event Alcoa decides not to restart.

Low-cost hydropower and federal defense spending during World War II and the Korean War spawned an aluminum industry in the Northwest in a relatively short time period. At its peak, the aluminum industry employed more than 10,000 workers at smelters in Longview, Goldendale, Spokane, Tacoma, Wenatchee, Ferndale and Vancouver, Washington; in Troutdale and The Dalles, Oregon; and in Columbia Falls, Montana.

Rising energy prices -- especially a temporary spike in 2000 -- knocked out one after another of the region's smelters over the past decade and a half.

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