Softening billet market leading to early closure

ADAMSTOWN -- The 38 remaining hourly employees who hoped to work for another year at Alcoa Eastalco Works aluminum smelter were told Tuesday the plant won't require their services much longer, according to Rick Dixon, the local union president.

"The location manager announced yesterday it's very likely we'll be closing the plant operations down," Mr. Dixon said. "Alcoa can't produce billets for us to process anymore. That's very depressing."

Billets are bars of metal or metal castings used for shaping other metals.

Location manager Erik Phillips said that by next year, the billet business will be gone. The only work left will be in reclaiming leftover metal.

Some employees will be kept on for metal reclaiming, and the rest of the hourly employees are likely to lose their jobs. Roughly 600 were out of work when the company shut down aluminum production in December 2005.

Eastalco stopped producing aluminum because its contract with Allegheny Power expired. That contract had been signed prior to electrical deregulation agreements in the 1990s, and rates were expected to increase by more than 80 percent with a new contract.

Since closing, Eastalco, which has been in Frederick County since the late '60s, has been processing and shipping billets from Alcoa's plant in New York, Mr. Phillips said.

The company's sudden change of plans is confusing to service employee Tom Kruger, whose 20th anniversary would have come in September.

Company officials told staff as recently as three weeks ago that work would last another 10 months because everything was looking good for 2007, he said. Eastalco had expected to produce 5 million pounds of metal.

"Now, we aren't getting nothing," he said.

Three weeks ago, Eastalco expected the demand for billets to be strong, but last week, they learned the market was softening, Mr. Dixon said. "The company is saying they'll have capacity (to make products) at their other plants."

The 10-month promise of work was contingent on the billet market, Mr. Dixon said.

"It's a shame. We're one of the newest companies Alcoa has, and they can't give us any billets," said Kenny Smith, a saw operator.

Most of the customers Eastalco ships to are in Virginia or within a couple hundred miles of Frederick County, Mr. Dixon said. Serving local customers with quality work was a source of pride for staff.

"That was the best thing about the plant operating here. We could cast, homogenize and ship within just a few days," he said.

Most of the hourly workers inside the plant have been trying to keep their jobs because they know they can't find better work elsewhere, Mr. Dixon said.

Along with the 38 hourly employees, 19 managers work inside the plant, including Mr. Phillips. He expects to retain a core group of managers after billet production stops. Those managers will eventually be transferred to other facilitates.

Both he and Mr. Dixon expect to remain until the transition is over.

"This year has been 10 months of labor pains," Mr. Dixon said. "The guys desperately have been trying to keep hold of their jobs. It's very painful to sit here and see all of these assets sit idle."