Alcoa: News: News Releases: Agreements With Labor And New York Power Authority Keep Alcoa Massena East Plant Operating

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December 18, 2002

Agreements With Labor And New York Power Authority Keep Alcoa Massena East Plant Operating

MASSENA, N.Y.--(BUSINESS WIRE)--Dec. 18, 2002--Alcoa Primary Metals announced today that an agreement reached with the New York Power Authority (NYPA) as well as a joint labor-management restructuring effort will allow the Massena East Smelter to remain operating as part of Alcoa's long-term, low-cost production strategy.

"Managers and leadership of USW Local 450A worked constructively and creatively to apply Alcoa Business System tools to streamline our processes," said Nelson Dube, Massena Smelting Operations Manager. "But we also had to take a hard look at staffing. We recognize that the layoffs will hit the community hard, but they help preserve long-term employment here for hundreds of others. Once we addressed the long-term costs that are in our control, we worked with political leaders, economic development leaders, Massena local leadership, and NYPA representatives to tackle costs outside our immediate control. This solution, while painful, was far better than the alternative: a complete and immediate shutdown of Massena East. . As a result of these actions, this facility moves in a more secure position on the world-wide cost curve and is now more competitive within the Alcoa and global systems."

The measures taken to improve the plant's viability are:

Restructuring of work processes and job requirements to streamline production, reduce costs and improve profitability;
Elimination of 110 hourly and salaried jobs at the East Plant that will allow the plant to stay competitive as a result of restructuring; and
Arrangement of a $7 million temporary economic incentive with the New York Power Authority that will significantly reduce the plant's operating costs in 2003.

NYPA and Alcoa today finalized a short-term agreement on a temporary economic incentive that recognizes the current volatility of the aluminum market. The arrangement will provide relief to the East Plant in 2003 and further long-term supply discussions early next year. "NYPA has been and continues to be an important business partner for the Massena facilities," Dube said. "NYPA recognized that Massena employees had already made great strides in improving our cost performance and profitability in areas we could control. They stepped forward and worked aggressively with us on an agreement that allows them to meet their obligations to the citizens of New York, while allowing Alcoa to continue to provide strong family wage jobs in the North Country.

"We have had to take a hard look at assets in the United States, where escalating energy and labor costs have made many of our smelters less globally competitive," said Al Renken, president of Alcoa Primary Metals. "Alcoa must actively manage its assets during weak economic conditions. We are encouraged by the innovation and cooperation shown by the plant leadership, union membership, the New York Power Authority and the plant's elected officials. Their collective effort to improve Massena East's long-term operating costs made the difference between shutting down and continuing to operate.

"This is outstanding news for the future of the East Plant," said John Hicks, President of USWA Local 450A. "While no one wants to see any jobs eliminated, the changes we are proposing together go a long way towards ensuring the long-term viability of this plant. This announcement is being made today because labor supports it and worked to see that it happened." Aluminum Brick and Glassworkers International Union President Emeritus Ernie LaBaff praised the outcome saying, "This is a positive outcome for the North Country. It is encouraging to see how problems can be solved when people come together with open minds."

"We appreciate the remarkable coalition of federal, state and local leaders who have joined us to competitively position Massena East for the long-term," Dube said. "US Senators Charles Schumer and Hillary Clinton and Congressman John McHugh weighed in along with Governor George Pataki, State Senators Jim Wright and Ray Meier, Assembly members Chris Ortloff and Dede Scozzafava, Assemblyman-elect Darrell Aubertine, Massena Mayor Ken MacDonnell and others.

"We will continue to work with our elected officials, NYPA, the Empire State Development Corporation and other state agencies to pursue other state programs and long-term power measures that can further improve the plant's competitiveness in 2003 and beyond," Dube added.

Alcoa is the world's leading producer of primary aluminum, fabricated aluminum and alumina, and is active 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 as a single solution to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) aluminum foil, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 38 countries. For more information, go to www.alcoa.com

Forward Looking Statement

Certain statements in this release relate to future events and expectations and as such constitute forward-looking statements involving known and unknown risks and uncertainties that may cause actual results, performance or achievements related to this joint venture to be different from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include Alcoa's inability to achieve the cost-savings for the facility, power costs, economic incentives and other risk factors summarized in Alcoa's Form 10-K for the year ended December 31, 2001.