Jul 9 2007
Norsk Hydro ASA will reduce operational costs in the United States in order to meet challenging market conditions. The measures, which include sale or closure of the remelting activities in Ellenville, New York, entail rationalization charges and write-downs of USD 31 million in the second quarter 2007.
Hydro has decided to close or sell its aluminium remelting operations at Ellenville, New York. A possible closure would be effective by the end of September 2007. Ellenville customers would be served from other Hydro US remelting facilities, including its Henderson operations. Initiatives to further improve operations at Hydro’s St. Augustine remelt facility in Florida, as well as additional cost-improvement initiatives will be taken.
While preparing a possible closure, Hydro will also actively explore a potential sale of the Ellenville facility. The viability of a potential sale of the business will be evaluated over the coming weeks. Around 55 affected employees will be supported closely and provided with transition assistance.
“Following the decision earlier this year to close the extrusion plant in Ellenville, which is located wall-to-wall with the remelter, the aluminium remelting operations will continue to see rising utility and transportation costs. In combination with a significantly weaker market outlook this necessitates a restructuring and further improvement of our US remelting operations,” says Yogi Shergill, head of Hydro’s North American Metal Unit.
The measures will result in impairment write-downs of USD 25 million related to its remelters in Ellenville, New York and St. Augustine, Florida in second quarter 2007. The previously announced closure of the Ellenville extrusion plant is expected to result in rationalization costs of USD 6 million in the second quarter. Consequently, total charges related to Hydro’s North American operations will amount to some USD 31 million in the second quarter.
The Ellenville facility was established by Channelmaster in the 1950s and subsequently purchased by German based VAW in 1965. Hydro acquired the operations as part of its acquisitions of VAW in the US in 2002.