HANNIBAL, Ohio - Ormet Corp. has issued a federal notice that the plant where 1,000 people work may shut down.
Ormet noted metal market pressures and rising American Electric Power rates in the Worker Adjustment and Retraining Notification Act notice filed last month. The notice said the first round of job cuts will take place by Sept. 18 with the remainder by the end of the year.
Company President and Chief Executive Officer Mike Tanchuk said the initial labor reduction will only impact 30 to 50 workers, but he said the company may have to shut down the plant because of poor market conditions and increased power costs.
United Steelworkers Local 5724 President Tom Byers said he is doing everything he can to prevent the closure.
"There are meetings scheduled to discuss it, but I don't know too much about it other than that," Byers said of the negotiations between Ormet and AEP. "We have not had anybody laid off yet. We are hoping to work it out. We feel pretty good about it."
Byers said operations at the plant seemed to be going well before the W.A.R.N. notice. The company posted a $1.1 million net loss for the first three months of 2012, but Ormet officials spent $1.9 million during that time to reline 22 pots at the Hannibal facility. In the first three months of the year, workers shipped 67,981 metric tons of product, compared to 58,079 tons during the same time in 2011.
Byers said Tanchuk's relationship with workers should also help the company in its negotiations to stay open. Though the relationship between union and management at Ormet has been very contentious at times through the years, Byers said that is not the case now.
The W.A.R.N. notice states the "curtailment of operations and reduction in force is expected to be indefinite." It also notes that the workers represented by the United Steelworkers will be recalled to work in accordance with seniority provisions. Last year, Ormet officials inked a new five-year contract with union workers at the Hannibal plant.
Tanchuk previously said AEP may raise his company's rates to a point that it cannot maintain current operations. Last week, the Ohio Public Utilities Commission decided to freeze AEP's base generation rate at current levels until May 31, 2015. Under the terms of the order, AEP is directed to file with the PUCO a detailed competitive bidding process by Dec. 31. Customers will still see a 6 percent to 7 percent increase in monthly bills this year, but no resident or business will be responsible for more than a 12 percent increase.
Tanchuk could not be reached for comment regarding how the PUCO decision may impact Ormet's operations. An AEP representative could not be reached for further comment.
AEP announced plans last year to close the Kammer Plant south of Moundsville by the end of 2014, citing increased air pollution regulation by the U.S. Environmental Protection Agency. The Kammer facility opened in the late 1950s, primarily for the purpose of supplying electricity for the Ormet plant, though it does not operate in that capacity today.
This is not the first time Ormet employees have faced an uncertain future. In 2004, the company filed for bankruptcy protection, but it emerged from bankruptcy in 2005 in the midst of an 18-month walkout by union employees from the Hannibal plant.
Ormet closed and sold its former rolling mill to the south of the reduction plant shortly thereafter.