Alcoa Cuts More Aluminum Output in Quebec

(Bloomberg) -- Alcoa Corp. will further curtail production at a Canadian smelter as the biggest U.S. aluminum producer faces a shortage of workers amid a dispute with unionized workers and the impact of U.S. tariffs on shipments of the metal.

The Pittsburgh-based company said it will curtail half of the one operating potline’s 138,000 metric ton capacity at its majority-owned Aluminerie de Bécancour Inc. smelter in Quebec. Alcoa attributed the cut to recent departures and retirements of salaried employees, who were already working extra shifts since the producer locked out more than 1,000 union employees on Jan. 11.

The move is the latest twist in a labor dispute that started over pensions and recruitment rules, but turned into a deadlock that shut the smelter’s two other potlines. Prior to Wednesday’s announcement, Bloomberg Intelligence senior analyst Andrew Cosgrove estimated that the lockout at Becancour could curtail 280,000 tons this year from the global market.

Decreasing Ranks

“We’ve had salaried employees operating one full line since Jan. 11, and since that time we’ve had retirements and resignations, so we’ve seen a decrease in salaried staff and we decided we need an adjustment on that line,” Jim Beck, an Alcoa spokesman, said in a telephone interview. “We still are committed to reaching a negotiated agreement with the labor union.”

Alcoa, which generated more than half its revenue outside the U.S. last year, has had mixed effects from the 10 percent tariffs that the Trump administration slapped on most U.S. aluminum imports earlier this year. The company, which didn’t support the levies, warned in July that the tariffs were increasing the costs of shipments to the U.S. from its plants in Canada.

The United Steelworkers union, which represents the locked-out workers at Becancour, called the latest curtailment a “blatant disregard for the negotiation process,” which Quebec’s labor ministry had asked parties to conclude by Dec. 21. It said the cuts will increase costs and the necessary time to resume production.

According to the union, Alcoa’s offers in current negotiations have been below the content of last year’s proposed package, which employees had rejected this year. “Alcoa wants to make workers and the whole region pay for its own lockout,” Clement Masse, the head of the union’s chapter at the plant, said in an emailed statement.

Alcoa owns 75 percent of the Becancour plant, which has nameplate capacity of 413,000 metric tons per year, and Rio Tinto Group owns the remainder.

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