The shutdown of operations at Ormet Aluminum's Hannibal plant could force nearly 1,000 workers into the unemployment line, but the closing will also affect many others, according to the head of the Southeastern Ohio Port Authority.
"This will go far beyond those directly affected, but in terms of the local economy a lot more people will be impacted," said Terry Tamburini, the SEOPA's executive director.
Ormet President and Chief Executive Officer Mike Tanchuk announced Friday that the Public Utilities Commission of Ohio had denied a majority of the company's request for a discount on electricity while Ormet builds an on-site natural gas power generation facility.
A company news release said the PUCO's decision would not allow Ormet to emerge from its present bankruptcy status, and the company estimated that approximately 1,600 people would be impacted by the shutdown.
The company filed for bankruptcy earlier this year due to high energy costs and low metal prices.
Tamburini called the situation "tragic" and said it is unfortunate that Ormet was unable to construct a natural gas co-generation facility in time to avoid the shutdown. He said the plant, which has produced aluminum product since 1956, has been an integral part of the Monroe County community.
Ormet shutting down
Ormet Aluminum Corp. filed for bankruptcy in February of this year due to historically low metal prices and exceedingly high power costs.
The company had requested an energy transition plan from the Public Utilities Commission of Ohio that would allow it to operate while constructing an on-site natural gas-based power generation facility.
On Oct. 2 the PUCO denied the majority of that request, which company officials said would not allow Ormet to emerge from bankruptcy.
The company announced Friday that it would immediately shut down operations at its facilities in Hannibal, idling approximately 1,000 workers.
Source: Ormet Alumimum Corp. press release.
"It will also be very difficult to market that property if the company closes permanently," Tamburini said.
He said although the SEOPA would not likely be directly involved with any marketing effort since the Ormet property is in the Hannibal area, the port authority wouldould make other companies aware the the site is available.
In the announcement released Friday, company reps said a re-start of the Hannibal smelter in the future would be contingent on obtaining a long term economical power supply as well as "an improving aluminum pricing environment."
The Wheeling Intelligencer reported Saturday that Minnesota-based Wayzata had agreed to purchase the Ormet factory for $221 million, but would only do so if the PUCO reduced Ormet's power bills. The article said the PUCO provided some relief, but it may not have been enough.
Ohio Sen, Lou Gentile, whose 30th District includes the Hannibal area, said Sunday that the economic impact of the shutdown would be devastating for Southeastern Ohio.
"But my heart goes out to the workers, their families, and retirees who are affected most by this shutdown," he said. "And I'm also concerned about what the impact will be on the Monroe County community."
Gentile noted company employees and retirees had made "significant concessions" in order to help put Ormet in a position to become successful.
"(T)hey did their part, but the (Gov. John) Kasich Administration failed to uphold its end of the deal," he said. "I have tried to impress on the state administration the importance of preserving these jobs in Southeastern Ohio."
Gentile said he and fellow Ohio 96th District State Rep. Jack Cera have stood together to advocate for Ormet employees with the Kasich Administration and will continue to do so.
"For nearly a year I have expressed to the Kasich Administration the importance of these jobs and the devastating impact it would have if they did not provide Ormet with a reasonable power agreement," Cera said in a news release Saturday.
He added that the shutdown would also have a negative impact on the Switzerland of Ohio School District as well as on local governments that rely on the tax base generated by Ormet.
Lance Erlwein, district treasurer, said the school district would lose about $109,000 per year in property taxes if Ormet is completely shut down and liquidated, according to the Saturday Intelligencer report.