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| August 22, 2008
Alcoa Sets Dates for Employee Layoffs at Rockdale Smelter Due to Local Power Issues
Company Will Continue to Explore
Competitive Power Options
Will Seek Damages and Other Relief from
Luminant in Ongoing Litigation
PITTSBURGH--(BUSINESS WIRE)--Alcoa (NYSE:AA) today said it has set dates for the layoff of
approximately 300 employees at its Rockdale, Texas, aluminum smelter
where the company has idled half of its production. In addition,
approximately 100 contract employees will be affected. The plant was
partially shut in June 2008 because of ongoing supply issues with
Luminant’s onsite power generating unit,
Sandow Unit 4, which have exposed the plant to uneconomical power prices.
Three of the plant’s six operating potlines
were idled as a result of the ongoing unit outages and local energy
market costs increasing to as much as $2,000 –
$4,000 per megawatt hour during peak hours, which is about 100 times the
norm. Since the lines were idled, representing approximately 120,000
metric tons per year of production, Alcoa has negotiated with Luminant
to resolve the issues resulting from Luminant’s
inability to operate Unit 4 reliably and has not been able to come to a
satisfactory conclusion. As a result, the company has provided the
required notification to bargaining unit representatives. Layoffs for
approximately 100 employees will be effective August 31st; layoffs for
an additional 60 will be effective September 7th. An additional 140
employees will be notified in the fourth quarter.
“This is in no way a reflection on our
workforce. They have been doing an outstanding job,”
said John Thuestad, President of Alcoa’s U.S.
Primary Products Division. “Unfortunately, the
power plant that Luminant operates has not been reliable over the past
year. The cost of power resulting from Luminant’s
inability to consistently operate the Sandow Unit 4, has forced us to
make this decision. We’re continuing to speak
with Luminant to see if we can secure competitive power to ease the
impact on everyone involved -- and we have been forced to seek damages
and other relief from them through ongoing litigation.”
According to Luminant’s website, it is a unit
of Energy Future Holdings Corp (formerly TXU), which is owned by KKR and
TPG Capital.
About Alcoa
Alcoa is the world leader in the production and management of primary
aluminum, fabricated aluminum and alumina combined, through its active
and growing participation in all major aspects of the industry. Alcoa
serves the aerospace, automotive, packaging, building and construction,
commercial transportation and industrial markets, bringing design,
engineering, production and other capabilities of Alcoa's businesses to
customers. In addition to aluminum products and components including
flat-rolled products, hard alloy extrusions, and forgings, Alcoa also
markets Alcoa® wheels, fastening systems,
precision and investment castings, and building systems. The Company has
97,000 employees in 34 countries and has been named one of the top most
sustainable corporations in the world at the World Economic Forum in
Davos, Switzerland. More information can be found at www.alcoa.com
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