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Sen. Schumer says WTO Chinese aluminum case could help Alcoa in Massena

Posted 1/12/17

The federal government has finally “forced a case at the World Trade Organization (WTO) to address China’s potential cheating practices in its aluminum industry,” which could help Alcoa in …

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Sen. Schumer says WTO Chinese aluminum case could help Alcoa in Massena

Posted

The federal government has finally “forced a case at the World Trade Organization (WTO) to address China’s potential cheating practices in its aluminum industry,” which could help Alcoa in Massena, according to Sen. Charles Schumer, D-NY.

Schumer said this announcement is “a major victory for Alcoa in Massena and could help to protect hundreds of jobs in Upstate New York.”

“New York is home to Alcoa Massena, one of America’s few remaining aluminum smelters, so as New Yorkers we understand the value of a thriving aluminum industry – from soda cans to raw materials for our military infrastructure; protecting this vital industry is essential to not only maintaining but growing the Upstate economy,” said Senator Schumer. “Today’s announcement to finally crack down on China is promising news for Alcoa. We have all seen first-hand the impact of China’s subsidized expansion on our communities and workers. My message to the incoming Administration is clear: you must continue this push and aggressively press China on their predatory trade practices.”

“USTR’s request for consultations is intended to eliminate the devastating effects China’s actions to dominate world aluminum production have created for its competitors,” said USW International President Leo W. Gerard. “Success in this case would give hope to the thousands of aluminum sector workers across the country that have either lost their jobs or are in fear of losing them in this distorted market. We worked with allies in Congress and partners in the American aluminum industry to bring the severity of the problem to USTR’s attention and especially want to thank Senators Wyden, Schumer, Brown and Portman for their leadership."

Schumer said that China’s government is providing massive subsidies to its aluminum and steel sectors, which are primarily state-owned, in order to export high volumes of aluminum and steel. These products are sold at artificially low prices in the U.S. and global markets, crippling the U.S. industry. China has gone from producing less than 4 million tons of primary aluminum per year in 2001, to producing more than 30 million tons per year in 2015, around half of total global supply, according International Aluminum Institute data. Global prices have fallen in tandem with the growth in Chinese oversupply damaging the U.S. aluminum industry which has gone from 23 aluminum smelters employing nearly 16,000 Americans in 2000, to five smelters employing approximately 2,500 Americans in 2016. Alcoa’s Massena operation is one of the last five smelters. Smelters like Alcoa’s provide good paying middle-class jobs, that support their local communities. They also provide needed production capacity for producing military-grade aluminum used in armor plated vehicles and planes.

The aluminum industry in New York directly employs 4,600 employees and indirectly helps employ another 16,200 employees with a total economic impact of $6.6 billion, according to Schumer. Alcoa alone employs 600 workers in Massena.

Alcoa announced in late 2015 that they would shutter their Massena smelter and fire most of their workforce. They are now receiving a state bailout worth more than $70 million to keep the jobs through March 2019.

Alcoa announced on Nov. 2, 2015 it would curtail operations at the smelter at its Massena West plant, which would have eliminated at least 487 jobs, leaving about 217 positions for other functions at the plant. Under a Nov. 24, 2015 agreement, Alcoa will be required to employ a total of at least 600 full-time equivalent employees – those working at least 35 hours a week – throughout Massena West. The company offered a voluntary retirement package to eligible employees, according to a November 2015 statement from Gov. Andrew Cuomo’s office. The bailout package grants the aluminum giant $30 million from the New York Power Authority in power discounts and $43.6 million from the state.

Per a deal approved in December 2015, Alcoa will receive $73.6 million in incentives and subsidies, which breaks down to the corporation receiving about $21 million annually from New York State for 3.5 years in exchange for sparing 487 Massena West plant jobs through March 2019, or face stiff financial penalties. That’s an annual total of about $43,121 per job spared.

Schumer at the time the Alcoa deal was announced said the package does not include a provision requiring east plant modernization, which the manufacturer had previously pledged to do as part of an agreement with Albany.

Alcoa’s corporate welfare deal includes a hefty NYPA electricity discount, in addition to millions of dollars in discounts and incentives Alcoa has already received from the agency.

The 2015 deal is the latest in a long series of incentives offered to the company in exchange for maintaining jobs at the facility.

On multiple occasions Alcoa has failed to live up to promises made in previous agreements.

According to a March 2014 news release from the governor's office, the company promised to maintain 750 jobs at the west plant and provide training for the east plant's future workforce, once a promised $600 million modernization of the Alcoa East plant was underway. That plan was dropped.

In summer 2013, Gov. Andrew Cuomo was quoted as saying 1,000 jobs would be guaranteed under a deal that had been struck with Alcoa.

However, the 2015 deal includes up to $40 million in financial penalties should the company breach its commitment to maintain at least 600 jobs, or close the plant before the contract expires March 31, 2019.

The government bailout was announced after Alcoa made public plans to lay off 487 employees.