By Daniel Lovering
Wednesday, January 7, 2009
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.