TT ALUMINIUM INDUSTRY

The high cost of production in the United States, in addition to the availability of considerable reserves of natural gas in Trinidad and Tobago, may see the establishment of an aluminium industry here. The industry, if established, will complement the aluminium smelter to be constructed at the La Brea Industrial Estate. It will come almost 30 years after late Prime Minister, Dr Eric Williams, had looked at “the... expanding market for aluminium in the automobile industry” as a major reason for the then proposed construction of an aluminium smelter.

A feasibility study had been done and negotiations conducted in 1978, but the project lapsed for several reasons, including the slide within three years both in crude production and in the international price for oil. The resistance of aluminium smelter companies in the United States to any challenge of their markets may have been a prime factor. Oil production had peaked in 1978 at 83,777,503 barrels of crude, and by the following year had dropped by more than 5,500,000 barrels to 78,249,474, and by 1981 to 69,114,331. And with the drop in crude prices in 1981, the availability of financing would have been difficult. The climate for the setting up of a smelter as well as a downstream industry, producing, not only as Dr Williams had envisaged parts for the automobile industry, but the aircraft industry and building construction among others, exists today. In turn manufacturers, concerned at high production costs in the United States, are increasingly examining the feasibility of setting up offshore plants in countries where labour and other costs are far more competitive.

Trinidad and Tobago, because of the nearness of Guyana with its huge deposits of bauxite, from which bauxite is produced, and its (TT’s) more than adequate reserves of natural gas, a relatively cheap source of energy, is better positioned to turn out low cost aluminium and aluminium products than the United States. In addition, several US manufacturers have relocated to or set up completely new businesses in Mexico and to China where labour costs are far below those of the United States. The establishing of the North American Free Trade Area (NAFTA), of which both the US and Mexico are members, and high wage levels and/or benefits negotiated by American trade unions had been crucial factors, for example, in the move to Mexico.

So that any move to Trinidad and Tobago, in this specific case by aluminium producers, will be part of the trend to remain competitive. In addition, both the aluminium smelter and the downstream aluminium plants will be capital, rather than labour intensive. This will enable the owners (in the case of the smelter plant, Trinidad and Tobago), who will not have to treat, either with a large work force, large pension, sick leave, maternity leave and other benefits to keep the cost of production and that of the finished products down.