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Ormet Aluminum Is in It for the Long Haul

February 23, 2012
By JENNIFER COMPSTON-STROUGH - City Editor , The Intelligencer / Wheeling News-Register

Ormet Primary Aluminum Corp. has been employing area residents for a long time. What's been the company's recent key to success?

Mike Griffin, vice president of operations for Ormet, said good working relationships between management and union employees have changed the way things work within the company.

"We've had some rocky times in the past," he said, attributing many of those problems to disputes between members of the United Steelworkers union and past management teams. "We've put all that behind us. Now our focus is on running a good, stable operation and involving people in making decisions."

Article Photos

File Photo
An employee processes aluminum at the Ormet plant in Hannibal. Crews are expected to keep working at the site for many years, as the company plans to keep building on its recent success.

He said the improved relations have impacted the financial side of the operation as well, influencing the way Ormet sells and prices its products in the marketplace.

"Without a stable manufacturing base, we don't have the ability to secure our financial side," Griffin added.

He pointed out that although the reduction plant at Hannibal has been operating since 1958, it has broken production records each of the last three years.

Fact Box

Q: Ormet Primary Aluminum Corp. has been employing area residents for a long time. What's been the company's recent key to success?

A: First, there's a good working relationship between union and company leaders, something that hasn't always been present in the past. The company also has a stable business plan that officials believe will keep it financially sound for the long-term.

"In 2011, we surpassed any efficiency numbers in the 54-year history of the plant," he said. It's really how our people work together, their technical skills and understanding of the process at all levels of plant. Everybody does their job efficiently and in the correct way."

Ormet also has changed the way it obtains the raw materials it needs to produce aluminum at Hannibal. Griffin explained there are two basic parts to the operation: acquiring large quantities of raw material and selling large quantities of aluminum output.

"We're operating in a world market," he stressed. "We can't make a pound of aluminum more valuable than a pound from China or Russia. So we've got to control our raw materials and electricity costs."

Aluminum production is an electrolytic process that requires the plant to use a lot of electricity - "as much as a city," according to Ormet President and Chief Executive Officer Mike Tanchuk. This means increased production at Ormet is good for other industries in the local area, including coal mines and coal-burning power plants.

Griffin spoke about Ormet's recent successes from Burnside, La., where he was working in mid-January with other Ormet officials to restart the company's refinery. He said Ormet invested more than $90 million in the facility - which also dates to 1958 and had been idled for years - in 2011, preparing it to provide feedstock for the Hannibal plant.

According to Griffin, Ormet refurbished the Louisiana refinery and hired about 275 permanent employees to operate it. About 1,000 people work at the Hannibal plant.

One reason officials decided to restart the refinery is that it is fueled by natural gas, which Griffin said is very affordable at the present time. He also noted natural gas production is picking up steam in the Ohio Valley, which may help prices for Ormet continue to improve.

"By operating this facility, we will no longer be exposed to market pricing for raw materials and can better secure the future for Hannibal," he continued.

Because alumina is such an abundant element in the earth's crust, Griffin said, Ormet buys bauxite - material he described as "red dirt" - from mines, primarily in Brazil. That bauxite is processed at a refinery - like the one Ormet owns in Louisiana - to produce alumina, the white powder that serves as the raw material for the processes conducted at Hannibal. By consolidating all that processing into company-owned facilities, Ormet will improve its bottom line, he said.

The healthy company that results, he said, will continue to provide jobs for Ohio Valley residents for years to come.

Griffin acknowledged many people employed locally will be eligible to retire by 2017 - 45 percent of the maintenance staff, 25 percent of production workers and 45 percent of salaried personnel.

"We're still expecting more technical, higher-level jobs to see significant turnover in the next five years," he said. "But we've hired an awful lot since the restart in late 2006 - 60 percent have been hired since then - and we've seen quite a large turnover in the smelter."

The Hannibal plant remained partially curtailed until 2011. Griffin said due to the plant's increased production capacity and employee retirements, more than 200 people were hired last year.

Ormet's biggest hiring challenge now is filling supervisory positions. Griffin said while many people in the local area are qualified to do production jobs, it has been very difficult to find potential employees with supervisory experience in an industrial setting. He said this surprised company officials, given the distressed state of the local steel industry,

As a result, Ormet hires and trains new supervisors or promotes from within its existing work force.

"Compared with the Ormet of the past, we have a good, stable business and we plan to be there for years," Griffin concluded. "We would like to get the word out to find people interested in coming to work there.

"We are hiring now - first line supervisors, not hourly employees, but I anticipate we will late in the first quarter."

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