Layoffs looming at Ormet

HANNIBAL – Company and union officials remained quiet Monday regarding plans for Ormet Corp. to start laying off workers at the Hannibal Primary Aluminum Reduction Plant today.

Faced with escalating electric bills that may increase by about $20 million per year, Ormet in July filed a Worker Adjustment and Retraining Notification Act notice that states the company’s first layoffs could come today. The notice states the company could cut its Hannibal-based work force by about 1,000 employees by the end of this year.

Neither Ormet Chief Executive Office Mike Tanchuk nor United Steelworkers Local 5724 President Tom Byers could be reached for comment regarding the status of the plant and its employees Monday. In August, officials announced plans to reduce operations at the Hannibal plant from six potlines to four, but Byers said at the time that no one had been laid off at that point.

Last week, the company issued an additional WARN notice for 250 employees at the Ormet Burnside, La., aluminum refinery. These reductions come primarily because of the shutdown of two of the six potlines at Hannibal.

Tanchuk continues to blame escalating American Electric Power costs – as well as an August ruling by the Public Utilities Commission of Ohio – for the planned reductions at both Hannibal and Burnside. Lower worldwide aluminum prices are also part of the problem, he said.

AEP officials have acknowledged the rate increase will occur, but they have declined to confirm its amount. It is the result of the recent PUCO ruling, which froze AEP’s base generation rate at current levels until May 31, 2015.

Tanchuk said Ormet estimated the increased annual electricity cost for Ormet to be about $20 million.

Jeff Rennie, AEP spokesman, said the electricity producer had no further comment when asked Monday about the Ormet situation.

As Ormet moves forward, the aluminum producer has hired Evercore Partners to help determine its long-term course of action.

According to the firm’s website, Evercore handles “mergers and acquisitions; divestitures and restructurings.” A potential divestiture would involve selling some of the company’s assets.

As part of Ormet’s 2004 bankruptcy filing, the company closed and sold its former rolling mill to the south of the reduction plant.

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.