ALCOA TO LAY OFF 15,200 STEELWORKERS
from the PITTSBURGH TRIBUNE-REVIEW:
By Joe Napsha
TRIBUNE-REVIEW
Wednesday, January 7, 2009
Alcoa Inc. announced a major restructuring on Tuesday that will eliminate 13,500 jobs, including 260 at its corporate offices, as part of a plan to save about $450 million a year in the face of the global economic downturn.
The company decided to take the cost-cutting measures “to ensure that Alcoa maintains its competitive lead in today’s challenging markets,” CEO Klaus Kleinfeld said in a statement.
Alcoa did not specify how many of the corporate staff cuts would be made at the Alcoa Corporate Center and Alcoa Business Services Center on Pittsburgh’s North Shore, where it has about 1,000 employees. The company has its headquarters in New York, as well as corporate offices in Chicago, Cleveland, and in foreign countries including Australia.
Spokesman Kevin Lowery said the job cuts will be phased in during the year.
Included in the 260 corporate staff reductions are about 30 employees who lost their jobs in November at the Alcoa Technical Center in Upper Burrell, where about 600 are employed. A small number of the employees and contract workers were laid off from Alcoa’s offices on the North Shore in the fall.
By cutting 13,500 jobs, Alcoa will eliminate about 13 percent of its global work force and about 1,700 contract workers who are employees of outside staffing companies.
Alcoa announced the moves after the close of trading on Wall Street, where Alcoa shares rose by 26 cents to close at $12.12.
The restructuring will cost Alcoa between $900 million and $950 million, about 80 percent of which is not cash. The company plans to account for the expense in its fourth-quarter earnings report due next week. With the downsizing, Alcoa said it will save about $450 million annually.
The restructuring comes amid weak global demand for aluminum. In October, Alcoa outlined such a move when it announced its third-quarter earnings, saying it would align its production to the global demand, reduce its work force and change the way it buys raw materials.
Alcoa had to reduce capacity because the demand is so low that even China’s major producer, Chinalco, has cut production, said metals analyst Charles Bradford of Bradford/Soleil of New York.
Bradford questioned why the company waited to make the announcement less than a week before the release of its fourth-quarter earnings report.
“I thought they should have done this weeks ago,” he said.
Analysts expect the company to post a 1-cent-per-share loss, according to Reuters Estimates.
Among the major cost-cutting moves, Alcoa will freeze salaries and all hiring; reduce aluminum smelting capacity by 750,000 metric tons per year, or 18 percent; and cut capital expenditures by 50 percent, from $3.6 billion to $1.8 billion.
Alcoa already announced that it was reducing aluminum smelting capacity by about 500,000 metric tons.
The price of aluminum has slumped about 50 percent since peaking at $3,380 per ton in July as the global economic downturn has hit demand for the metal, which is used for aircraft and auto bodies and products such as kitchen foil and beverage cans. Yesterday, aluminum was selling for about $1,600 per ton.
The businesses that Alcoa wants to sell — the electrical and electronic systems; global foil, cast auto wheels and transportation products in Europe — all have interested buyers, Lowery said. Selling those businesses, which lost a combined $105 million on revenues of $1.8 billion last year — would mean a reduction of 22,600 employees at 36 locations.
“The problem is, who’s going to buy this? There’s nobody out there to buy anything,” Bradford said.
Joe Napsha can be reached at jnapsha@tribweb.com or 412-320-7993.
Images and text copyright © 2009 by The Tribune-Review Publishing Co.
from the WASHINGTON POST:
Alcoa to Slash 15,200 Jobs, Output
By Daniel Lovering
Associated Press
Wednesday, January 7, 2009; D02
PITTSBURGH, Jan. 6 — Alcoa, the world’s third-largest aluminum producer, said Tuesday it would cut 13,500 jobs, or 13 percent of its workforce, and slash spending and output to cope with the global economic slowdown.
The Pittsburgh-based company also said 1,700 contractors would be cut as part of a broad-based plan to reduce costs that includes the planned sale of four business units and a worldwide salary and hiring freeze.
Alcoa said the moves are expected to save the company about $450 million annually, before taxes. As a result of its actions, the company expects to record fourth-quarter charges of between $900 million and $950 million. Alcoa plans to report quarterly results on Monday.
“These are extraordinary times, requiring speed and decisiveness to address the current economic downturn,” Klaus Kleinfeld, Alcoa’s chief executive, said in a statement.
The news comes after Alcoa announced production cuts last fall. On Tuesday, it said it will further limit smelting by more than 135,000 metric tons per year, lowering total aluminum output by more than 750,000 metric tons, or 18 percent, annually.
Production of alumina, a material used to make aluminum, will be reduced to 1.5 million metric tons per year in response to market conditions, the company said.
The production cuts are expected to be completed by the end of March.
As part of the plan, Alcoa said it would divest its electrical and electronic systems, global foil, cast auto wheels and European transportation products businesses.
Shares of Alcoa fell nearly 4 percent in after-hours trading after rising 26 cents, or 2.2 percent, to close at $12.12 on Tuesday.
on January 13, 2009 on 1:33 pm
Recession is on every field.When can we come back from this hell???