Ormet officials say they are optimistic no further layoffs will be needed at its Hannibal plant in the coming months, after 82 layoffs earlier this year.
Ormet Corp. managed to stave off a wholesale closure of the plant last month when the Public Utilities Commission of Ohio ruled that the aluminum manufacturer could defer its November and December electric bill payments.
In anticipation of increasing electricity costs, the plant had already cut production and lay off staff.
In August, officials announced the closure of two of the Hannibal plant's six potlines. Ormet also filed a Worker Adjustment and Retraining Notification Act (WARN) notice and announced they would begin a round of layoffs in September. A spokeswoman for plant manager Mike Griffin said 82 employees are currently laid off as a result of scaled back operations.
However, United Steelworkers Local 5724 President Tom Byers said no further layoffs have occurred since the initial round.
"I'm optimistic. We are still a four line operation right now. Hopefully the market will improve," he said.
The recent ruling will keep the plant operational at least through the end of the year and give Ormet time to hunt for a solution to the problem of rising electricity prices and a declining aluminum market.
"There are a lot of discussions and negotiations going on," said Terry Tamburini, executive director of the Southeastern Ohio Port Authority.
The Appalachian Partnership for Economic Growth (APEG), a division of JobsOhio, is one such group involved in those discussions.
Recent Ormet timeline
July: Ormet filed a Worker Adjustment and Retraining Notification Act (WARN) notice and announced upcoming layoffs in anticipation of rising electric costs.
August: The Public Utilities Commission of Ohio froze American Electric Power's base generation rate, Ormet estimated their electricity costs would rise by $20 million annually and opts to shut down two of its six potlines.
September: The first round of job cuts occurred, ultimately resulting in 82 employees being laid off.
Oct. 17: The PUCO approved a deferment plan that would allow Ormet until 2014 to begin making payments on its Nov. and Dec. electric bills.
"JobsOhio and the company are working hard to arrive at a solution for the long-term viability for Ormet," said Marty Walsh, APEG vice president.
That long-term viability has been in question since August when the PUCO approved an AEP rate plan that meant higher prices for most customers.
Ormet, which had previously operated under a reasonable rate arrangement with the power company, estimated the new rate plan would cost them an additional $20 million annually.
"Ormet was claiming that it created a severe hardship with them. We wanted to work with Ormet to make sure they didn't go out of business," explained PUCO spokesman Matt Schilling.
A complete closure of the Hannibal plant would result in the loss of nearly 1,000 jobs.
The recent PUCO ruling will allow Ormet to stretch out its November and December electric payments over a 15-month period beginning in Jan. 2014, explained Schilling.
However, the commission stipulated that any further requests on behalf of Ormet will need to include a business plan, proving their future ability to exist without assistance, he added.
According to AEP spokesman Jeff Rennie, the power company did not object to the decision because there are provisions in the order that allow them to recover any money not paid back.
In the meantime, Ormet has hired independent investment banking advisory firm Evercore Partners, who according to their website, handle "divestitures and restructurings" among other things.
It would not be Ormet's first brush with a reorganization strategy. In 2004, the company filed for Chapter 11 bankruptcy and exited bankruptcy the next year after undergoing a restructuring that included selling off company assets.
It also temporarily shut down two potlines in 2009 when worldwide aluminum prices plunged.