Agrium USA Inc. unveiled a reorganization plan for its Nikiski fertilizer plant Wednesday, letting the 296 employees know that by the end of June there will be 65 fewer positions to fill and that some of them will be gone.
Exactly which jobs will disappear, which will be redefined but remain in the new structure, and which workers will be looking for jobs elsewhere has yet to be completely determined, the company said.
The announced layoffs come in the wake of other recent hits to the local economy, including the closure of Big Kmart in Kenai and the loss of more than 125 jobs there, as well as the announced layoffs of more than 50 Kenai Peninsula Borough School District teachers at the end of the school year.
In a press release Thursday, officials with Agrium USA Inc. Kenai Nitrogen Operations, which produces ammonia and urea from Cook Inlet natural gas and sells the fertilizer products to Pacific Rim markets, said the move was the result of "an extensive analysis" that began in late 2002.
The reorganization is an effort "to improve the facility's efficiency and operating costs for global and export competitiveness and in light of the current gas supply issues with Unocal," the company said.
Tight gas supplies have kept the plant operating at only about 70 percent capacity. Agrium gets the vast majority of its supply of natural gas from the plant's former owner, Unocal Corp., which operates gas wells in the Cook Inlet region.
Agrium officials expressed regret this week that longtime employees have to go.
"It is an extremely painful and difficult decision to lay off employees that have worked at this facility for many years," said General Manager Mike Nugent. "However, we anticipate these changes will help position the plant to be more competitive in the global marketplace."
Nugent has chosen to take early retirement, an option offered to some longtime employees, and will be gone by the end of June. Nugent worked at the plant for Unocal from 1977 to 1988 and then returned in 1997 to become general manager, transferring to Agrium when it bought the plant in 2000. Nugent said the reorganization was important to the plant's long-term viability, but that the layoffs likely will be felt in the economy.
"Obviously there will be an impact," he said Friday. The layoffs "represent a little over 20 percent of the workforce. It is a difficult thing for the plant, the employees of the plant and the community, but it is important to do if we are to remain in business."
Employees were informed of the reorganization plan during 10 meetings held over Wednesday and Thursday, said Lisa Parker, the plant's government and community relations officer. They were told that those eligible would be offered early retirement, and others would lose their jobs because those jobs would be eliminated and those duties rolled into other positions.
File photo by M. Scott Moon
Outgoing workers are to receive a severance package based on salary and years of service when they leave, but they also will be eligible to apply for new positions defined in the restructuring plan. Parker said.
"Every employee currently here who doesn't take the severance package will have the option to interview for any job they are interested in and be considered for that job," Parker said.
The restructuring was top to bottom. For instance, the current eight department heads will be reduced to four and new positions created under those. It is too soon to tell who will be gone and who will remain, Parker said.
"The organizational structure was just announced. People are still evaluating their options," she said.
Asked how management and workers were handling the news, Parker said, "It's tough. People are probably a little surprised at the number. This isn't new news for employees here. They are evaluating their options. Some already knew they were going to take the severance and move on and had started making plans. Others are concerned about whether they will have a job in the end."
Agrium, which employees some 4,800 people worldwide, has been reorganizing its operations in Canada and the United States for several years. The Nikiski plant is the last of the facilities to be reorganized. Other plants and facilities already restructured include those at Kennewick, Wash., Borger, Texas, Tonda, Idaho, the Red Water Facility in Alberta, the plant at Fort Saskatchewan, Alberta, and the corporate headquarters in Calgary, Parker said.
North Kenai resident Ed Aisenbrey worked for Unocal and then Agrium for more than 25 years, most recently as technical service support supervisor. He is one of those who will lose his job. He's too young for early retirement a worker must be 55 or older. Aisenbrey said Friday he wasn't sure what he would do.
"I don't know. I haven't figured that out yet," he said. "I intend to stay in the area. If I can't figure out how to make a living, I suppose I will have to go someplace else."
Aisenbrey's layoff announcement could hardly have come at a worse time. His wife worked for Kmart. Aisenbrey said she intended to stay home and "take it easy" for a while, but all that changed with Wednesday's announcement at Agrium.
"Now both of us will have to find something to do," he said.
According to Parker, the reorganization plan is designed so the reduced workforce can operate the plant even at 100 percent capacity. If sufficient gas supply can be found there are several ongoing exploration operations in the Cook Inlet area Agrium would not have to rehire to ramp up operations to full production.
"I've been there a long time," Aisenbrey said. "I don't see how they will maintain the same level of effort with 65 less people. I don't think there were 65 people over there sitting on their butts doing nothing. They will probably have to start staffing back up. The problem is they won't get the experience back.
"I wish good luck to the people who stay, because I think they are going to have a rough time of it."
Randy Knowles, president of Local 8-0369 of the Paper, Allied-Industrial, Chemical and Energy Workers International Union, which represents Agrium's 156 union employees, said union representatives have met with company officials to discuss the reorganization. More discussions on the effects of the layoffs are scheduled for May 7, 8 and 9, he said.
"We really don't know until all this shakes out how many will go," he said. "It's hard to know at this point who may be permanently unemployed."
Knowles said efforts are under way to ease the pain of transition for those who will be out of a job.
"This area has been beaten up pretty good in the economy and in the job market lately," he said. "We are working through the (federal) Trade Assistance Act to lessen the impact. We have been in contact with the Kenai Job Center. They have a heads-up, and we've talked to them about the people who may be available."
Knowles said in some cases workers might be able to find similar jobs elsewhere in the state, perhaps with oil and gas companies, or on the North Slope or on future gas pipeline projects, but he acknowledged that job market wasn't very bright at the moment.
As to whether Agrium can successfully run the plant with 65 fewer workers, Knowles said that wasn't for him to say.
"My job is to represent those workers and try to lessen the impact wherever we can," he said. "It's (Agrium's) pie factory. They get to decide on the fillings and how many pies they are going to make."
Parker said the lack of a full gas supply was a major factor in the decision to reorganize. While she said the company remains optimistic that future gas supplies will be secured allowing the plant to operate for years to come, it is not impossible that more layoffs could happen in the near future.
"That would depend on how much gas we are able to get at the plant," she said. "Six months from now, we will be in the middle of winter. If we can only operate at 50 percent capacity, that's a possibility. We want to keep the plant competitive in the commodity markets we deal with, and we deal in a global market."
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