Cuomo and Schumer Announce Alcoa to Remain Open

Governor Andrew M. Cuomo and U.S. Senator Charles E. Schumer announced on Tuesday that an agreement has been reached that will preserve hundreds of jobs at Alcoa’s operations in Massena, where the aluminum manufacturer had planned to curtail its smelting operations by early next year. Under the agreement, Alcoa will continue operating in Massena and will maintain a workforce level of at least 600 people at the plant for the next three and a half years.

Governor Cuomo said: “This agreement strengthens an essential part of the North Country economy and saves hundreds of jobs in the region. It gives Alcoa the opportunity to recommit to its future in Massena – just as hundreds of its employees have already done for much of their working lives with the company – and bolster the viability of these facilities over the long-term. This agreement also protects the State’s investments, ensuring that taxpayer dollars are spent wisely and that Alcoa lives up to its promises. I appreciate the efforts of everyone who helped make this agreement possible, and will continue this administration’s work to grow the North Country economy in the days ahead.”

Alcoa Chairman and Chief Executive Officer Klaus Kleinfeld said: “Senator Schumer and Governor Cuomo have been tremendous allies for Alcoa’s Massena operations for many years and we thank them for their continued support. Today’s agreement helps better position the smelter in light of prevailing market conditions, providing this facility a bridge to a stronger commodity market and maintaining jobs in the North Country. We remain focused on ensuring our Upstream business is well-positioned to succeed throughout the cycle.”

The deal changes the current contract between Alcoa and the New York Power Authority. The agreement, which is retroactive to Oct. 1 and runs through March 31, 2019, provides various state incentives to Alcoa, and includes significant financial penalties if the company defaults or terminates the deal early.

Alcoa had said on Nov. 2 it would curtail operations at the smelter at its Massena West plant, which would have eliminated at least 487 jobs, leaving approximately only 217 positions for other functions at the plant. Under Tuesday’s agreement, Alcoa will be required to employ at least 600 full-time equivalent employees – those working at least 35 hours a week – throughout Massena West. The company will offer a voluntary retirement package to eligible employees.

Provisions of the agreement include:

· NYPA will provide low-cost hydro power, already some of the lowest-cost electricity in the nation

· However, the state’s low-cost power rate will be increased as the price of aluminum increases in the global metals exchange market

· Capital and operating expense support from Empire State Development, totaling $38.8 million over 3.5 years

· Up to $40 million in penalties should Alcoa breach or terminate the agreement. The amount of the penalty would gradually decline by the end of the term.

· A requirement to have at least 600 full-time-equivalent employees on the payroll at Massena West according to the terms of the agreement or Alcoa will face financial penalties

​This is the third deal within the last five years with Alcoa. Two years ago, Alcoa reached an agreement with the state to retain 750 jobs at the plant in exchange for low-cost power. In 2008, the company received low-cost power in return for a promise to keep 900 jobs in Massena.

Governor Cuomo stated, “That agreement must, however, recognize the millions of dollars of incentives New York state has already provided the company. Now, Alcoa has to do its part.”

The price of aluminum has dropped, which was a key factor in Alcoa’s earlier decision to dramatically downsize in Massena. This new deal is meant to be short-term help, the governor said; if the price of aluminum rises before the 3 1/2 years is up, then the benefits will decrease and if Alcoa closes before the deal expires, they will face stiff penalties. Schumer and Cuomo set to work on this new deal to keep Alcoa open as soon as they heard Alcoa the announcement. According to Schumer, he heard the announcement from a secondary source and not directly from Alcoa, and Schumer stated he felt betrayed by Alcoa.