PITTSBURGH - Alcoa Inc., one of the world's largest aluminum makers, said yesterday it would cut 13,500 jobs, or 13 percent of its workforce, and slash spending and output to cope with the global economic slowdown.
The Pittsburgh-based company also said 1,700 contractors would be cut as part of a broad-based plan to reduce costs that includes the planned sale of four business units and a global salary and hiring freeze.
As a result of its actions, Alcoa expects total fourth-quarter charges of between $900 million and $950 million. The company plans to report quarterly results Jan. 12. Alcoa also said the moves are expected to save the company about $450 million annually, before taxes.
"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn," Klaus Kleinfeld, Alcoa's president and chief executive officer, said in a statement.
"The news is pointing in the right direction, but we believe Alcoa has to take even more drastic action in cutting high-cost smelters," Tony Robson, a Toronto-based analyst at BMO Capital Markets, told Bloomberg News in a telephone interview.
Alcoa and competitors Rio Tinto Group and Century Aluminum Co. are trying to cut costs as the global recession reduces demand for the lightweight metal used in autos, appliances and power grids, Bloomberg News reported. The price of aluminum fell 36 percent last year on the London Metal Exchange as LME-monitored inventories more than doubled to a 14-year high.
Alcoa also had announced production reductions last fall. Yesterday, it said it would further limit smelting by more than 135,000 metric tons per year, lowering total aluminum output by more than 750,000 metric tons, or 18 percent, annually.
Production of alumina, a material used to make aluminum, will be reduced to 1.5 million metric tons per year in response to market conditions, the company said.
The production cuts are expected to be completed by the end of March.
Alcoa also said it would seek to lower costs for energy and raw materials such as coke, caustic soda and aluminum fluoride.
As part of the plan, Alcoa said it would divest its electrical and electonic systems, global foil, cast auto wheels and European transportation products businesses.
Shares of Alcoa fell nearly 4 percent in after-hours trade after rising 26 cents, or 2.2 percent, to close at $12.12 yesterday.