Alcoa Inc (NYSE:AA) retracts from one community, expands in another
Alcoa Inc (NYSE:AA), the aluminum mammoth, announced that it is planning on closing its Fusina primary-aluminum smelter located in Italy, permanently. The company is seeking to improve competitiveness and cut costs and has already reined-in some of the activities at this facility in 2010 June. This planned closure will bring down the company’s annual smelting capacity of 4.2M metric tons, by 44,000 metric tons. Last month AA had announced that it will in most probability be cutting back on aluminum production and had an even broader restructuring plan. The Fusina closure is in conjunction with it.
The aluminum rollercoaster
Aluminum prices had peaked by 33% in the 2011 fiscal year. Since then, the aluminum market has only headed downhill. Alcoa had stated that it will be reviewing
460,000 metric tons of its smelting-capacity over the following 15 months and curtail production. Shuttering facilities also means laying-off jobs and the company realizes that it has a responsibility towards the community as well. It will be working with the affected communities and explore methods of redeveloping the Fusina smelter. In addition to this, it will also be consulting local unions and find some way of helping the 14 employees who have been laid-off.
The modernization project
While it shutters the Fusina facility, this week Alcoa commenced construction on a modernization project at a New YorkState aluminum facility. This is just one of the almost $600M worth of projects that the company has agreed to investing, in New York. The agreement that had been signed by AA with the New York Public Authority guarantees the company low-cost electricity in lieu of creation or retention of every job per $15,000 that is loaned.
In this instance, AA has received a loan of $10M and 478 MW of cheap-electricity in lieu of modernizing its facility to retain its 1,000 workers who are employed there. During the groundbreaking ceremony, Andrew Cuomo recognized the investments and the economic development efforts that AA is making in the state. Now maybe all that Alcoa Inc (NYSE:AA) needs to do to maintain its credibility is to see what it can do for those 14 ex-employees in Fusina.