Alcoa, the world’s third-largest aluminium maker, is to axe 13,500 jobs – 13% of its workforce – and slash spending and output to cope with the global economic slowdown.
The reductions expand on cost-cutting measures announced in October, when Alcoa reported a 52% decline in third-quarter profit due to sharply lower aluminium prices, weaker demand and a charge from curtailing a smelter in Texas.
In its latest announcement, which came after US markets closed yesterday, the Pittsburgh, Pennsylvania-based company said it would also cut 1,700 contractor positions and sell four business units. It has imposed a global salary and recruitment freeze.
Alcoa, which produces aluminium and uses the metal to make products such as truck wheels, will further limit smelting by more than 135,000 metric tons per year, lowering total aluminium output by more than 750,000 tonnes, or 18%, annually.
As a result of its actions, Alcoa expects total fourth-quarter charges of between £616m (€681m) and £650m (€719m) and savings of about £308m (€340m) annually, before taxes. It plans to report quarterly results on January 12.
“These are extraordinary times, requiring speed and decisiveness to address the current economic downturn,” Klaus Kleinfeld, Alcoa’s president and chief executive, said.
“We will continue to monitor the dynamic market situation to ensure that we adjust capacity to meet any future changes in demand and seize new opportunities that emerge.”
As part of the plan, Alcoa will sell its electrical and electronic systems, global foil, cast vehicle wheels and European transportation products businesses.
Among the production cuts will be all smelting at the company’s operations in Alcoa, Tennessee, though the rigid packaging division there will be unaffected.
The cuts also include about 18% of Alcoa’s jobs in Russia, and about 6,500 positions in its electrical and electronic systems business, which serves the car and heavy truck markets, across North American and Europe.
The planned sale of the Europe-based transportation products business includes facilities in Italy, Hungary and Germany. The cast car wheels unit includes a plant in Beloit, Wisconsin, that employs about 265 people.
Alcoa said it plans to consolidate operations serving the building and construction markets due to weaker demand.
About 1,100 people have been laid off from Alcoa’s global power and propulsion unit, which makes aircraft parts and other products for the aerospace and defence industries, the company said, citing lower demand. Those job cuts are included in the 13,500 total job reduction.
Alcoa plans to eliminate about 260 corporate staff and contractor positions.