Aluminum plant to close

Indalex Holding Corp. plans to close its aluminum extrusion plant on West Beach Street in late March or April, putting 99 people out of work.

The announcement came Friday afternoon from the Indalex parent company in Lincolnshire, Ill., the second largest aluminum extruder in North America.

The decision to close comes on the heels of another major factory employer shutdown. Some 550 people lost jobs when frozen foods processor Birds Eye shut its plant in December.

City manager Carlos Palacios said the shutdown is part of a bigger trend.

"It's very hard for heavy manufacturing to be profitable on the Central Coast," he said, citing the high cost of land, housing and energy. "We're looking at how we can be competitive"

Indalex workers will get retraining and job-hunting assistance from the county Workforce Investment Board.

"The county put together a good program for Birds Eye [workers] and I'm sure they'll do the same for these folks," Palacios said. "Unfortunately, it is a loss. How do we help these folks transition into the new economy?"

The Watsonville plant manager did not return a call seeking comment.

Indalex spokesman Scott Langdon said the Watsonville plant has about 14 salaried employees and 85 active unionized employees. The union workers, paid an average of $15 an hour, are members of the United Brotherhood of Carpenters and Joiners of America, Local 505.

Another 46 union workers are on layoff.

Severance agreements are subject to bargaining between the company and the union, Langdon said, adding, "It is our intention to ensure employees are treated with dignity and respect"

Langdon said the decision was "not a reflection of employee performance, working conditions, wages or benefits," but "the result of an overall slowing of demand for extruded aluminum components"

Tim Stubbs, Indalex president and CEO, called the shutdown "unfortunate but necessary"

"We must align manufacturing capacity and capabilities to the needs of the market," he said.

Most aluminum extruders serve building and construction markets, and housing starts slid in 2006, Langdon pointed out, while imported extrusions have been growing.

Last summer, rival Alcan began building a $35 million aluminum extrusion plant in Slovakia. It's scheduled to come online this year.

Indalex plans to transfer production from Watsonville to a sister plant in Modesto, investing in new aluminum finishing capability there. That project is part of the company's $21 million manufacturing investment plan for this year, Langdon said.

"Consolidation in one plant instead of two is symptomatic of current market conditions," he said. "The Modesto plant has a wider array of capabilities than Watsonville and offers the potential for further expansion should market demand require it. ... We want to be in the best position to expand and grow with our customers when the time comes"

Indalex is a smaller company than it was in 2000 when it acquired the Watsonville plant and one in Modesto from Columbia Pacific Aluminum. Its North American network includes 39 presses at 16 extrusion plants, down from 42 presses at 17 plants.

The company has undergone ownership changes twice in the past two years. Honeywell bought it as part of a bigger deal in December 2004, then sold it for $425 million to Sun Capital Partners, a private investment firm in Boca Raton, Fla., specializing in leveraged buyouts and turnarounds.

The Watsonville plant also has operated under the names Ketema, Ametek and Columbia Aluminum Corp.

Indalex owns the property at 1715 W. Beach St., about five acres abutting the city limit.

"Sale of the property is likely," Langdon said. "For Indalex, one of the difficulties with the property is the limited ability to expand in the future. Nevertheless, it is possible that the