Summary
This 8-K filing from Alcoa Inc. (formerly Howmet Aerospace Inc., ticker HWM was associated with Alcoa at the time of this filing) reports a significant operational decision: the curtailment of aluminum production at its Eastalco aluminum smelter in Frederick, Maryland, effective December 19, 2005. This decision stems from Alcoa's inability to secure a competitive power supply for the facility. The curtailment will lead to the layoff of approximately 600 employees over the next 12 months, with a small team remaining for site maintenance and the continuation of billet processing using existing equipment. Investors should note that Alcoa will incur a pre-tax charge of approximately $14 million in its fourth quarter 2005 results, primarily for cash severance costs. While the smelter production is ceasing, Alcoa plans to continue discussions with government and local officials to explore options for re-establishing a competitive power supply for the 195,000 metric ton per year facility. The filing also incorporates by reference a press release dated November 23, 2005, detailing this announcement.
Key Highlights
- 1Alcoa Inc. announced the curtailment of aluminum production at its Eastalco smelter in Frederick, Maryland, effective December 19, 2005.
- 2The primary reason for the curtailment is the inability to secure a new, competitive power supply for the facility.
- 3Approximately 600 employees will be laid off over the next 12 months as a result of the production halt.
- 4Alcoa will record a pre-tax charge of approximately $14 million in Q4 2005 for cash severance costs.
- 5Billet casting and distribution operations will continue at Eastalco using existing equipment, with output from other Alcoa locations.
- 6Alcoa will continue to engage with government and local officials to seek a long-term competitive power solution for the smelter.
- 7The 195,000 metric ton per year smelter's future operations are contingent on securing favorable power arrangements.