Attention: TDR Forum Junkies 
Alcoa (AA: 12. 121, 0. 241, 2. 03%), one of the world’s biggest aluminum companies, announced Tuesday afternoon that it plans to cut 13% of its global work force, or more than 13,500 employees, in addition to other steps taken to help it weather a global recession.
The company said those reductions will be implemented by the end of 2009. It has also instituted a salary and hiring freeze, and will eliminate 1,700 contractor positions.
Alcoa is going to curtail its total primary aluminum output by 18%, which will be done by the end of the first quarter of the year. Alumina production will also be reduced. The company is working on its re-powering strategy as well.
"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,” Alcoa President and CEO Klaus Kleinfeld said in the company’s press release.
The company said it’s in the process of streamlining its portfolio, too. It plans to divest four non-core downstream businesses: Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. Those businesses had combined revenues last year of $1. 8 billion and an estimated after-tax operating loss of approximately $105 million. They employ 22,600 people at 38 locations. Alcoa expects net proceeds from the divestitures to be around $100 million.
Alcoa said it’s halting all non-critical capital investment, though it plans to follow through on some projects, such as the completion of projects in Brazil. It specified plans to continue with the expansion of a refinery in San Luis and a Juruti bauxite mine, both of which the company expects to complete by midyear. Alcoa said the completion of those two projects will move it into the lowest-cost quartile of the global cost curve.
Alcoa said it hopes to save $450 million a year with the restructuring process. It expects charges from the restructuring, impairment and other special charges in the fourth quarter to be between $900 million and $950 million after tax, or $1. 13 to $1. 19 a share.
The company said it’s trying to address raw-material costs for components such as energy, coke and caustic soda. It said lower oil prices have helped, but said it’s working to generate new supply chains primarily originating in China “to lower its input costs for strategic raw materials. ”
The company said those reductions will be implemented by the end of 2009. It has also instituted a salary and hiring freeze, and will eliminate 1,700 contractor positions.
Alcoa is going to curtail its total primary aluminum output by 18%, which will be done by the end of the first quarter of the year. Alumina production will also be reduced. The company is working on its re-powering strategy as well.
"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,” Alcoa President and CEO Klaus Kleinfeld said in the company’s press release.
The company said it’s in the process of streamlining its portfolio, too. It plans to divest four non-core downstream businesses: Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. Those businesses had combined revenues last year of $1. 8 billion and an estimated after-tax operating loss of approximately $105 million. They employ 22,600 people at 38 locations. Alcoa expects net proceeds from the divestitures to be around $100 million.
Alcoa said it’s halting all non-critical capital investment, though it plans to follow through on some projects, such as the completion of projects in Brazil. It specified plans to continue with the expansion of a refinery in San Luis and a Juruti bauxite mine, both of which the company expects to complete by midyear. Alcoa said the completion of those two projects will move it into the lowest-cost quartile of the global cost curve.
Alcoa said it hopes to save $450 million a year with the restructuring process. It expects charges from the restructuring, impairment and other special charges in the fourth quarter to be between $900 million and $950 million after tax, or $1. 13 to $1. 19 a share.
The company said it’s trying to address raw-material costs for components such as energy, coke and caustic soda. It said lower oil prices have helped, but said it’s working to generate new supply chains primarily originating in China “to lower its input costs for strategic raw materials. ”
