The United States largest smelter owned by the Alcoa Inc. will be closed soon as the company is struggling to keep profit due to uncertainty in the current economic condition. The closure is expected to reduce the Aluminum production of the US to its lowest in decades.
The company said that their production was hurt mainly because of the plunging price and China's producer who keeps on interfering and manipulating the price. Chinese producers also have a better advantage in terms of production as their price could be competitive due to subsidy given by the government.
Besides lowering the production, the closure will also cause a job loss to the 1,270 plant workers there. However, as reported by Reuters, Alcoa's decision for the closure is affirmative as the company consider the plant as non-competitive and is planning to focus more on another plant. According to its products president, Roy Harvey, "these assets are not competitive" amid "challenging market conditions."
According to The Wall Street Journal, Alcoa is currently planning to keep their focus on automotive and aerospace industry as demand from the industry is higher compared to the oil and gas industry. Currently, the company has already won a contract to supply aluminum for Ford's new F-150 pickup truck and also another billion dollar contract with the Boeing and Airbus Group.
The company also had slow down production in the area that will give a higher overhead cost and move to the plant with a cheaper power supply such as in Iceland and Saudi Arabia.
Currently, aluminum demand is declining worldwide and lots of closure occurred. There are only five smelters operating across the United States compared to 23 in early 2000.
The plant closure is expected to be completed by the end of the first quarter this year and will leave Alcoa with just one active smelter to cater with the demand from automotive and aerospace industry. Today Online reported that the company will only operate the 130,000 ton-per-year plant in Massena West Plant.
Previously, the plant was about to be closed by the company but was saved after it received an aid from the New York state aid worth around $70 million.
Alcoa has been actively shutting down and selling its smelting capacity since the previous global economic crisis in 2007. Currently, the company had reduced its capacity to just 52 percent. The company is also expecting the latest plant closure will cause them a maximum of $180 million in charges.
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