Ormet Corp. announced plans to lay off 200 people at its alumina plant in Ascension Parish because of reduced demand caused by rising power rates in Ohio.
Ormet issued 60-day federal layoff notices Tuesday for the Burnside plant, which produces the primary raw material used in aluminum production. This comes two weeks after Ormet said it would reduce operations at its aluminum smelter in Hannibal, Ohio, which uses the Burnside alumina.
On Aug. 8, the Public Utilities Commission of Ohio issued a ruling in a rate case that Ormet says will lead to a $20 million annual increase in electricity costs at the Hannibal plant. Ormet has said the ruling could threaten nearly 1,000 jobs in Ohio.
“We are still hopeful that we can all find short- and longer-term solutions to the substantial increase in our power costs and save these jobs,” Mike Tanchuk, Ormet CEO, said in a statement.
Ormet reopened the shuttered Burnside alumina plant in late 2011, after the plant had been closed for five years.
The facility had closed because of falling demand, high natural gas prices and market forces.
But company officials said rising alumina prices and low natural gas costs made it worthwhile to reopen the Burnside plant.
Ormet made a $21 million investment in the plant. The Louisiana economic development department offered an incentive package that included a performance-based loan of $1.5 million and a 5 percent refundable tax credit for plant retention and modernization, worth about $1 million.
The plant has about 250 employees.
Last year, LED said the average salary at the facility would be about $57,000 annually, plus benefits.
Stephen Moret, LED secretary, said in a statement Tuesday that he has been in regular contact with Tanchuk about the Ohio utility rates and how it affects Burnside. Moret says Ormet management has called the Burnside layoffs “a temporary, planned curtailment of operations.”
“The extent and duration of the curtailment of operations will be strongly dependent upon the progress with Ormet’s power contract negotiations in Ohio,” Moret said.
The 60-day notices mean layoffs could begin in early November.
The Baton Rouge Area Chamber, which heralded Ormet’s plans to reopen the plant, said in a statement it “will work with Ormet through this current situation as we did with their recently announced Ascension Parish expansion.”
Along with the layoffs, Ormet announced it has retained Evercore Partners, an investment banking advisory firm, to help with strategic alternatives.