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Ormet Takes Aim at Global Market

February 21, 2011

HANNIBAL - When a full workforce returns to the production lines this March at Ormet Corp. in Hannibal, it will be the first time in nearly five years the plant has been operating at capacity.

And, as the plant operations return to normal, so does the relationship between workers at the plant and plant officials, who were embattled in an 18-month employee strike that saw animosity between the two sides boil over at times.

However, Mike Tanchuk, president and chief executive officer, said that animosity has now ceased to exist.

Article Photos

File photo by Scott McCloskey
A worker at Ormet Corp. maneuvers a piece of equipment used in the making of aluminum. Ormet currently has about 1,000 workers employed and five of the six potlines running.

"I've been here for 3 1/2 years and over that time, I have seen a relationship of trust develop between the two sides," he said. "We are very open with the union, and there is a level of understanding that the enemy is not within, but in the outside world."

Since reaching an agreement to end the strike in 2006, the plant has seen a slow but steady increase in both production and jobs. Tanchuk said since the plant officially began operating again in 2007, about 1,000 workers have been brought in to operate the plant's potlines at the Hannibal Primary Aluminum Reduction Plant, with five potlines currently operational. Plans call for the sixth potline to be operational in March.

The opening of the fifth and soon the sixth potlines brought in 140 additional jobs, 60 of which were former workers at the plant. However, Tanchuk said a majority of the workers at Ormet are new following the strike.

Fact Box

What's the current state of aluminum producer Ormet Corp.?

Very good, as the company has five potlines running and the sixth being restarted. More than 1,000 workers are currently employed at the Hannibal facility, and the company is looking at global markets for its future growth.

"Sixty percent of the people are new," he said. "After the strike and by the time we got everything operational again, a lot of people had moved on to other things out of necessity."

The opportunity to open the potlines and, in turn, hire more workers has been the result of an increase in demand for aluminum, Tanchuk said.

"Because aluminum is a lot more cost effective, a lot of companies in many different fields are substituting aluminum for copper, which has seen an increase in cost lately," he said.

While China continues to lead the world in growth and production, Tanchuk said the United States and, by extension Ormet, has seen consistent growth recently despite less than desirable conditions.

He said recognizing and creating solutions for roadblocks such as high energy costs, high pay scales and a lackluster economy have been the key to overcoming the problems the plant has seen in the past decade.

"We re-did the power contract for the plant in 2009, and that allowed us to get more competitive rates going forward," he said. "That has been a major factor in getting things back up and running."

The plant uses as much electricity as a city in making aluminum, Tanchuk said. However, in keeping costs low and re-opening the potlines, the plant will be on track to produce an additional 80,000 metric tons of aluminum in 2011, and an additional 90,000 metric tons in 2012 once all potlines are active. Tanchuk said as the plant moves forward, he expects to see Ormet achieve record productivity.

"Everyone involved has done a nice job of bringing down costs, and now we are focused on investing in the plant to make it more efficient," he said.

Tanchuk said while the aluminum industry remains unpredictable and is destined to rise and fall as it always does, Ormet hopes to combat those drops in demand and production by planning ahead.

"We need to broaden our footprint and be ready when those bad times come so that we can handle the swings," he said.

In addition to investing in the plant, there is talk of Ormet reopening its Burnside, La., facility, which would allow the company to make its own alumina, the material that is heated and broken down into basic elements at the Hannibal facility. This would allow for even lower production costs, Tanchuk said.

He added the company is also looking at ways to buy carbon from producers in the United States instead of from China, which carries a heavy price tag.

Tanchuk said he remains optimistic about the future of the plant, and believes the best days for Ormet are ahead, not behind.

"There may be ups and downs, but I think this is one of the best times for this plant and the industry as a whole that I've seen in my career," he said. "We are showing that we can compete not just in this country, but around the world, and we plan on doing what it takes to continue that trend."

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