CFAC not done fighting yet

'We are not going out of business'

With production at just 10 percent of capacity and layoffs looming at the end of July, things look bleak for Columbia Falls Aluminum Co.

But the plant, a Columbia Falls institution, is not yet done fighting.

"It is not a shutdown," spokesman Haley Beaudry said of the impending July 28 closure. "A shutdown implies you are going out of business. We are not going out of business. We're going to curtail production."

Even while production is curtailed, the plant will continue negotiations with Bonneville Power Administration, trying to get the best possible power supply agreement, Beaudry said. CFAC has been in almost constant negotiations with Bonneville for the last several months, ever since a December 2008 decision by the 9th Circuit Court of Appeals "neutered" the plant's contract with Bonneville.

CFAC's contract with Bonneville wasn't supposed to end until Sept. 30, 2011, Beaudry said, but the court's decision - the result of a lawsuit against Bonneville by several western cooperatives claiming the company's rates are too high - ended the contract on Dec. 1, 2008.

After the decision, CFAC notified its employees that it would have to shut down by the end of February. An 11th-hour "bridge agreement" with Bonneville allowed the plant to extend operations through the end of June. Another round of negotiations this spring allowed the plant to remain open through the end of July.

Now, Beaudry said, CFAC and Bonneville are negotiating a power supply contract that would last from Oct. 1, 2009, through Sept. 30, 2011.

"We're also negotiating for a post-2011 power supply agreement," he added.

In the meantime, the future is uncertain at CFAC - just as it has been for the last several months. In July 2008, the plant, which is owned by Swiss company Glencore AG, shut down one potline and laid off 125 employees. Today the plant is operating half a potline and has 88 employees, Beaudry said.

Living with the uncertainty as the plant negotiates with Bonneville has been hard on the employees who have kept their jobs there, Beaudry said.

"It's tough going month to month like that. It's very tough," he said. "It's hard to run any kind of ongoing business on a month-to-month basis."

CFAC's troubles stem from a perfect storm of problems: Aluminum prices have plummeted as supply exceeds demand, the cost of raw materials - including electricity - has remained resilient, and other countries face fewer power restrictions, giving them a competitive edge in the worldwide marketplace.

In the Middle East, for example, oil companies that used to flare off natural gas are capturing the fuel and using it to generate electricity, which is then used in plants to make aluminum, Beaudry said.

"They're basically turning natural gas into aluminum," he said.

CFAC may receive help from the federal government if the Montana congressional delegation can obtain stimulus money for it, Beaudry said. He said he didn't know what form the aid would take, whether through subsidizing power prices or buying aluminum from a storehouse.

But CFAC is a perfect candidate for stimulus money, he added.

"This goes far beyond the shovel-ready situation," Beaudry said. "Here the shovel was put away 55 years ago. …

"This is there right now. There's no two years of construction, no planning, no contracting. None of that stuff is necessary.

"It's just work right now, starting today."

According to Sen. Max Baucus' office, the senator is working with CFAC and Bonneville to help keep the plant open.

"I've fought to help keep Columbia Falls Aluminum Co.'s doors open for 30 years, and I'm not giving up now," Baucus said. "CFAC is a critical business partner for companies throughout the Northwest and during these tough economic times, we've got to do all we can to keep folks on the job."

Beaudry said the plant appreciates the support from Baucus, Sen. Jon Tester and Rep. Denny Rehberg.

"We just keep after it, and they just keep after it," Beaudry said. "If there's any way to keep this plant going, we'll find it. I'm confident that we'll find it - and we'll implement it.

"We'll make it happen."

Reporter Kristi Albertson may be reached at 758-4438 or by e-mail at kalbertson@dailyinterlake.com