Alcoa To Lay Off 15,200, Reduce Operations
Aluminum giant Alcoa just announced it is dealing with the economic crisis -- and abetting the economic contraction -- by letting go 15,200 employees and reducing its smelting output by 18 percent.
The headcount reduction will come via 13,500 staff jobs -- about 13 percent of the global workforce -- and an additional 1,700 contractor jobs.
The production reduction will be in place by the end of the first quarter of 2009 and is a direct result of the economic slowdown -- less stuff made of aluminum is being bought.
More than 7 percent of Alcoa's annual revenue comes from products it makes for packaging and consumer use. Another 2.5 percent comes from the automotive industry and 3.7 percent comes from aerospace. (Twice-delayed Dreamliner 787, anyone?)
Alcoa is the U.S.'s largest producer of aluminum and No. 3 in the world behind Canada's Rio Tinto Alcan and Russia's Rusal.
The company is also freezing salaries and hiring and selling four non-core businesses -- Electrical and Electronic Systems, Global Foil, Cast Auto Wheels and Transportation Products Europe. The businesses produced 2008 revenues of $1.8 billion; Alcoa expects them to fetch $100 million. It's worth noting that these businesses employ 22,600 workers in 38 cities, who may or may not keep their jobs under new ownership.
Also, Alcoa said it will slash its 2009 operating budget by a draconian 50 percent.
The company reports fourth-quarter earnings on Monday, kicking off what may prove a dreadful earnings season.
January 6, 2009; 4:36 PM ET
Categories: The Ticker | Tags: Alcoa, economic contraction
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