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Alcoa to shed 13,500 jobs
By Daniel Lovering |
January 8, 2009, Thursday
|
Print Edition
Print Edition
ALUMINUM producer Alcoa Inc is to cut about 13 percent of its global workforce by the end of the year.
The elimination of 13,500 jobs, along with deep production and spending cuts, follows cost-saving measures unveiled by the Pittsburgh-based company last autumn. At that time it reported a 52-percent decline in third-quarter earnings because of sharply lowered aluminum prices and weaker demand.
The latest moves also include the elimination of 1,700 contractor positions and the planned sale of four business units. Alcoa has also imposed a global salary and hiring freeze.
The company said it will reduce production by an additional 135,000 metric tons a year, lowering output by more than 750,000 metric tons, or 18 percent, annually. Alcoa said the reductions would mean charges totaling between US$900 million and US$950 million in the fourth quarter of 2008 and savings of about US$450 million annually, before taxes.
"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn," Klaus Kleinfeld, Alcoa's president and chief executive, said.
As part of the plan, Alcoa will sell its electrical and electronic systems, global foil, cast auto wheels and European transportation products businesses.
Those units, which employ 22,600 people at 38 locations, operated at a loss of US$105 million on revenue of US$1.8 billion last year.
The cuts also include about 18 percent of Alcoa's jobs in Russia, and about 6,500 positions in its electrical and electronic systems business across North America and Europe.
The planned sale of the Europe-based transportation products business includes factories in Italy, Hungary and Germany.
Analyst Charles Bradford of Bradford Research/Soleil Securities said Alcoa's production cuts will not help put a floor under prices, which fell to roughly 65 US cents per pound a few weeks ago from US$1.50 per pound in July.
Broader production cuts are needed by Alcoa and its competitors, such as the Rio Tinto Group and aluminum producers in China.
The elimination of 13,500 jobs, along with deep production and spending cuts, follows cost-saving measures unveiled by the Pittsburgh-based company last autumn. At that time it reported a 52-percent decline in third-quarter earnings because of sharply lowered aluminum prices and weaker demand.
The latest moves also include the elimination of 1,700 contractor positions and the planned sale of four business units. Alcoa has also imposed a global salary and hiring freeze.
The company said it will reduce production by an additional 135,000 metric tons a year, lowering output by more than 750,000 metric tons, or 18 percent, annually. Alcoa said the reductions would mean charges totaling between US$900 million and US$950 million in the fourth quarter of 2008 and savings of about US$450 million annually, before taxes.
"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn," Klaus Kleinfeld, Alcoa's president and chief executive, said.
As part of the plan, Alcoa will sell its electrical and electronic systems, global foil, cast auto wheels and European transportation products businesses.
Those units, which employ 22,600 people at 38 locations, operated at a loss of US$105 million on revenue of US$1.8 billion last year.
The cuts also include about 18 percent of Alcoa's jobs in Russia, and about 6,500 positions in its electrical and electronic systems business across North America and Europe.
The planned sale of the Europe-based transportation products business includes factories in Italy, Hungary and Germany.
Analyst Charles Bradford of Bradford Research/Soleil Securities said Alcoa's production cuts will not help put a floor under prices, which fell to roughly 65 US cents per pound a few weeks ago from US$1.50 per pound in July.
Broader production cuts are needed by Alcoa and its competitors, such as the Rio Tinto Group and aluminum producers in China.
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