Alcoa to cut global workforce by 13%
Aluminum manufacturer to trim payroll by 13,500 employees by end of 2009.
NEW YORK (CNNMoney.com) -- Aluminum producer Alcoa Inc. said Tuesday it will slash its global workforce by 13%, or 13,500 jobs, by the end of the year as a way to remain competitive during the global economic recession.
The company said it made the move to hold on to cash and cut costs.
"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets," said Klaus Kleinfeld, chief executive of Alcoa. "We are taking a wide-ranging set of aggressive, but prudent, measures to ensure that Alcoa maintains its competitive lead in today's challenging markets while also emerging even stronger when the economy recovers."
In addition to the job cuts, the company said it has also cut 1,700 contractor positions and instituted a global hiring and salary freeze.
Alcoa (AA, Fortune 500), a Dow Jones industrial average component, said it plans to reduce its total aluminum output by more than 750,000 million tons per year, or 18% of its annualized aluminum output. The company also said that it continues to try to get raw materials from less expensive suppliers around the world, hoping to cut costs by 20% in each of the materials it purchases.
In all, the company expects to save an annualized $450 million before taxes.
Alcoa, like many materials producers, has been hurt by falling demand for fabricated goods during the recent economic slump.
Earlier Tuesday, the Census Bureau reported new factory orders fell for the fourth-straight month in November. On Friday, the Institute for Supply Management said its national manufacturing index hit a new 28-year low in December.
"It's just a sign of the times," said Scott Paul, executive director for the Alliance for American Manufacturing. "A lot of manufacturing jobs have been lost because facilities simply have had no orders."
As a result of its cutbacks, Alcoa projected capital expenditures in 2009 would fall 50% from 2008 levels to $1.8 billion. Alcoa said it will likely take between a $900 and $950 million hit to earnings in the fourth quarter of 2008, amounting to about $1.13 to $1.19 per share.
Analysts currently expect Alcoa to report a loss of 5 cents per share for the fourth quarter. The company is scheduled to release those results on January 12.