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Wednesday, Dec. 17, 1997
Reynolds alumina plant goes to full production
Economy, increased aluminum use cited in operation's planned jump from 75 pct. capacity
By GLASTON FORD
Staff WriterThe Reynolds Metals Sherwin Alumina plant in Gregory is going to full production for the first time in almost two years to meet the rising demand for alumina used in the production of aluminum metal, plant manager Frank Newchurch said.
A generally healthy economy and the growing use of aluminum in homes, automobiles and bridges has helped increase demand, said Newchurch, whose operation produces a product that is still several steps removed from end users.
``I cannot pinpoint (what's driving the market) exactly,'' he said. ``I'm not that close to the market to do that.''
The plant, which had been running at 75 percent to 85 percent of capacity, has added 40 employees, including skilled craftsman, entry-level production workers, supervisors and engineers, and put idle production equipment back in service, Newchurch said.
``Everyone is certainly very happy about it,'' Newchurch said. ``It is a nice time of year to do this sort of thing.''
The plant officially went to full production on Nov. 21.
``The outlook is encouraging for the next five years as we see it,'' he said. ``The sobering thing is it is an extremely competitive business and everyone has to be committed in order to be successful.''
The plant extracts aluminum oxide, or alumina, from imported bauxite ore, which has the appearance of red dirt. The alumina is then shipped to other facilities where it is used in the production of aluminum.
Several aluminum manufacturing companies, such as Reynolds Metals and the Aluminum Co. of America (Alcoa), plan to bring additional aluminum production capacity on line in 1998, which increases the demand for alumina, said Thomas Van Leeuwen, a metals analyst with Credit Suisse First Boston in New York.
Reynolds Metals announced recently that it will start aluminum metal production at a plant in Troutdale, Ore., Newchurch said.
Whether there is sufficient global demand for the additional aluminum is ``the $64,000 question,'' Van Leeuwen said.
``I hope there will be. I expect there will be,'' Van Leeuwen said.
When companies invest in new production capacity, whether through expanding an old plant, building a new one or improved technology, they must generate cash to pay off the investment, he said, and the only way to do that is to increase production. So the demand for alumina should remain strong, he said.
The booming economy has increased demand for aluminum products. Despite weakening demand in Asia, demand is still strong in the United States and in Europe, he said.
The Sherwin Alumina plant produced 1.2 million tons of alumina in 1996 and is on pace for 1.35 million tons in 1997, Newchurch said. At full production, the plant is rated for 1.6 million tons of alumina. To do that, it must process 3.5 million tons of bauxite, he said.
With 870 employees and an annual payroll of $40 million, Reynolds Metals is the eighth-largest private employer in Nueces and San Patricio counties. Reynolds has two other alumina plants, one in Germany and one in Australia. The company has operated the 1,600-acre plant in San Patricio County since the 1950s.
Reynolds Sherwin Alumina Plant
Location: 1,600 acres near Gregory
Employees: 870
Annual payroll: $40 million
Product: Aluminum oxide, or alumina, used in the production of aluminum metals
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