8 Jan 2009

Alcoa cuts jobs and production

10:59 am on 8 January 2009

Alcoa Inc is to cut more than 15,000 jobs as it reduces aluminum production in the face of the global economic downturn.

It will also halve capital spending and sell four businesses.

The moves are the the third in three months by the largest aluminum producer in the United States.

Employee numbers will be reduced by 13,500 - mostly in the United States and Europe. An additional 1700 contractor positions also will be eliminated.

Total primary aluminum output will be reduced by more than 750,000 tonnes, or 18% of annual output.

In November, Alcoa said it would cut 350,000 tonnes of production and in October it curtailed output at its 265,000-tonne smelter in Rockdale, Texas.

Alcoa also said production of alumina, which is refined from bauxite and smelted into aluminum, also will be reduced to a total of 1.5 million tonnes by the end of the first quarter 2009.

The programme is expected to save about $US450 million before taxes on an annualized basis. Capital expenditures in 2009 are projected to be down to $US1.8 billion, a 50% decrease from 2008.

Alcoa also intends to divest four non-core downstream businesses: Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe.

The price of aluminum is down almost 50% since peaking at $US3380 per tonne last July. On Tuesday, aluminum was selling for around $US1600 per tonne.

It is used for aircraft and auto bodies and products such as kitchen foil and beverage cans.