Alcoa to sell 4 units, lay off over 15,000 workers

07 January 2009

Alcoa Inc, the world's largest aluminium producer, will sell off four units, halve capital spending and lay off  over 15,000 workers as it cuts production in the face of falling demand.

Alcoa, based in the US, also imposed a global salary and hiring freeze as it seeks to cope with the "extraordinary times," in the face of the global economic downturn.

For Alcoa, which expects a third quarter loss of almost $1 billion, this is the third production cut over the last three months. Alcoa is scheduled to announce its fourth quarter results next week.

According to Alcoa's latest plan,

• Smelting output will be reduced by 750,000 million tonnes per annum, or by 18 per cent;
• Headcount will be reduced by 13,500 (13 per cent of global workforce) and an additional 1,700 in contractor positions;
• Freeze salaries and hiring;
• Sell off four non-core downstream businesses;
• Reduce 2009 capital expenditures by 50 per cent;
• Take advantage of new sourcing for raw materials;
• Exchange equity stakes with Orkla -  Alcoa to take 100 per cent ownership of 2 Elkem smelters for its 45 per cent stake in SAPA; and
• Take after-tax charges for 4Q 2008 ranging from $900 to $950 million (80 per cent non-cash);

These measures are meant to conserve cash, reduce costs and strengthen the company's competitiveness through additional production curtailments, cost and procurement efficiencies, portfolio streamlining and reduction of capital expenditures and other liquidity enhancements during the current economic downturn, the company said in a release.

''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, president and CEO of Alcoa Inc.