By Jacqueline Palank
Union workers are urging Ohio's governor to save Ormet Corp.'s
(ORMTQ) aluminum smelter there, warning that hundreds of jobs are
at risk.
Unlike Ormet's Louisiana facility, which has funding to continue
operating until it closes a sale, the company's Ohio smelter shut
down and doesn't have a buyer waiting in the wings.
Now, the United Steelworkers Union is seeking signatures for a
petition to request that Ohio Gov. John Kasich get involved and
help restart operations at the Hannibal, Ohio, facility, which
employed more than 600 people. Ormet shut down the smelter on Oct.
4 after failing to negotiate lower electricity rates and after the
state's utility regulator, the Public Utilities Commission of Ohio,
didn't grant full approval to Ormet's plan to keep the smelter up
and running while it transitioned to a natural gas power-generation
facility.
The union wants Gov. Kasich, a Republican who served in the U.S.
Congress for 18 years, to bring PUCO and electricity supplier
American Electric Power Co. (AEP) back to the bargaining table to
negotiate a deal that will allow the Hannibal facility to resume
full operations.
"Our union, Ormet management and creditors worked together in
the bankruptcy proceedings to reduce the company's financial
liabilities by nearly $300 million," USW International President
Leo W. Gerard said Tuesday in a statement. "It's time for the
governor to make sure PUCO and AEP do their parts as well."
Not only are there more than 600 smelter jobs at stake, but the
union warned that the smelter's permanent closure could ripple
throughout the region, cutting other jobs and leading to lost tax
revenue, among other consequences.
"We encourage everyone to help send the governor the message
that Ohio simply cannot afford to allow AEP to drive Ormet into
liquidation," said union official David McCall. "The impact of
another catastrophic job loss will devastate these
communities."
An Ormet representative couldn't be reached for comment
Tuesday.
Rob Nichols, a spokesman for Gov. Kasich, Tuesday suggested the
governor's office cannot comply with the union's request to
essentially lean on PUCO because of the commission's status as an
independent entity.
"What they've asked us to do is frowned upon heavily by Ohio
law," he said.
PUCO spokesman Jason Gilham said Ormet hasn't filed any new
applications to reopen the plan or requested a rehearing, so
there's nothing the commission can do right now. "We can only
consider what's in front of us," he said.
Ormet filed for Chapter 11 bankruptcy protection in February
after struggling with falling aluminum prices and rising
electricity, labor and raw material costs. The company later won
court approval to sell itself to private-equity firm Wayzata
Investment Partners LLC, but the deal fell apart after Ormet failed
to strike a deal with American Electric to lower its electricity
rates.
AEP spokeswoman Tammy Ridout said the dispute goes beyond Ormet
to the interests of all the company's customers, who would have to
continue subsidizing Ormet's discounts.
"It is unfortunate that Ormet can't find a way to continue
operating, but the truth is that even if the commission granted
Ormet free electricity for most of its 2013 operations, the company
would still not be able to make money with their business plan in
this challenging aluminum market," she said.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Jacqueline Palank at jacqueline.palank@wsj.com
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