Pittsburgh Tribune Review, August 1, 2010, Sunday

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Pittsburgh Tribune Review

August 1, 2010, Sunday

The soul of Ravenswood, W.Va., is in aluminum

RAVENSWOOD, W.Va. -- In the west-central portion of West Virginia, even young waitresses call every customer "honey," and the Ohio River moves snake-like through hills and valleys where aluminum is king.

The lightweight metal has dictated much of the progress made in this region by the local citizenry. When aluminum prices were high, times were good. When aluminum prices fell, United Steelworkers members at the plants faced con-cessions. Everyone today keeps an eye on daily world aluminum prices and how much metal is stacked in warehouses.

California industrialist Henry J. Kaiser came to this tiny town in the mid-1950s, legend has it, to attend a sports banquet. He liked the lay of the land, including cheap river transportation, nearby coal fields to supply electricity re-quired for the power-hungry aluminum-making process, and the fact the location was in the backyard of the Aluminum Co. of America, Pittsburgh's Alcoa Inc.

Kaiser spent $300 million to open in 1957 a sprawling aluminum plant, which did everything from convert alumina ore into aluminum, known as smelting, to molding the metal into sheets for soda and beer cans. Eventually, 104 acres of land were placed under roof.

Since the 1980s, the massive plant has gone through a number of ownership changes, the biggest occurring in 1999 when owner Century Aluminum Co. sold the fabricating facility to a French company, which later was acquired by Canada's Alcan, then bought by British/Australian conglomerate Rio Tinto Group.

Century's smelting operation, located six miles south of town, was idled 18 months ago, The facility was KO'd by monthly power costs of about $9 million, aluminum prices that fell by 50 percent within six months and labor costs.

"It just wasn't economic to operate the plant," said Century spokesman Mike Dildine. "The biggest cost in a smelt-ing operation is power, then alumina, then labor."

The company has said publicly for months that it intends to reopen the smelting operation. Dildine said to restart Ravenswood, Century needs a competitive power agreement and a competitive labor contract. The existing contract with the Steelworkers expires at the end of this month. USW Local 5668 officials said they are gearing up for negotia-tions.

When it shut down, more than 600 people lost good-paying jobs. Mel Lawrence was one of 17 Century employees who withstood the February 2009 layoffs, but he was one of seven caretakers let go in October.

"Whether the plant reopens just depends on the economy," said Lawrence, 58, a tall, lanky 30-year plant veteran. "There's just so much metal sitting in warehouses."

Metals analyst Charles Bradford said excess capacity, too much potential to produce aluminum compared with demand, was an industry problem. The London Metal Exchange estimates there are more than 4.8 million tons of aluminum sitting in warehouses worldwide. Even so, aluminum prices last week rose to an 11-week high, to $2,161 a ton, the highest price since May 13.

"A lot of aluminum-making capacity is being built or has just been built," said Bradford, with Affiliated Research Group LLC in New York. Included in the new capacity added worldwide are two huge plants in the Middle East that are the equivalent of five regular-size facilities, three new plants in India, and 4 million tons of capacity added in China.

A total of five Mideast plants added nearly 9 million tons of annual aluminum-making capacity since 2008.

"The United States is not a good place to manufacture aluminum," Bradford said. "It has no raw materials, so those must be imported. And you generally have a problem with the price of power, which is a big chunk of production costs."

Lawrence and a lot of people in Ravenswood blame "Wall Street crooks," "out-of-whack" environmental laws and a federal government that they believe has turned its back on manufacturing as prime reasons why the Century plant closed.

The region breathed a huge sigh of relief when workers at the Rio Tinto Alcan plant nine days ago approved a two-year labor contract.

"I am very pleased with the outcome of the ratification vote. It is a clear demonstration that all parties are deter-mined to work together in a constructive way to shape the future of the Ravenswood plant," said Christophe Villemin, Alcan Global Aerospace's president, in a statement.

Mayor Lucy Harbert and Councilman Bob Romeo admit Century's closing had a noticeable impact on the town's business. "We're trying to hold on, to reduce costs," Romeo said.
Romeo, who retired from Century with more than 29 years of service, now works for a company that services alu-minum smelters. He sees firsthand that America's might, its manufacturing expertise, is sinking.

"The federal government doesn't care about people. We need to bring industry back to this country; we don't have any jobs," Romeo said. "When I started with Precision LLC in 1997, there were 34 smelters in the U.S. Today there are nine."

Harbert, who ran a Sears merchandise store for 20 years before entering politics, said money isn't spent, except to pay bills. Not helping the situation is that 48 percent of the town's 4,100 residents are seniors on fixed incomes.

"Ravenswood is a company town; every business in town is there to serve the workers at those two plants," said Kate Bronfenbrenner, a Cornell University labor relations professor who co-authored a book on the combined plant's nearly two-year lockout in 1990. "If you don't work at the plants, you serve people who work at the plant."

New businesses are locating near Ravenswood. West Virginia Gov. Joe Manchin in March announced that Lancas-ter-based Armstrong World Industries will build a new plant near Century Aluminum that will make materials used in manufacturing ceiling tiles. The facility, opening in 2012, will employ about 50.

The restart of Century is the best solution to moving Ravenswood and Jackson County forward, people interviewed agreed. Appalachian Power Co. is eager to sell millions of watts of power back to Century, and USW Local 5668 executives are prepared to negotiate on a soon-expiring contract.

The West Virginia Legislature this year passed legislation that allows the state Public Service Commission to enter into variable-rate power agreements. Century's cost of power would be tied to the price of aluminum.

"There's talk we might begin negotiating a contract at Century, but I tell people, 'I don't hold a crystal ball,'" said Jason Miller, the 38-year-old union Local 5668 president. "After being shut down for 1 1/2 years, will it ever come back? It's a 50-year-old plant."

LOAD-DATE: August 1, 2010