Alcoa To Cut Jobs, Slow Production To Offset Economic Downturn

January 6, 2009 7:34 p.m. EST

Pittsburgh, PA (AHN) - Alcoa Inc. announced Tuesday it will cut 13,500 jobs and reduce output by 18 percent as the aluminum giant seeks to conserve cash and reduce costs during the economic downturn.

The job cut will impact about 13 percent of the company's worldwide workforce by the end of 2009. An additional 1,700 contractor positions will also be eliminated. Alcoa implemented a global salary and hiring freeze as well.

The company plans to reduce smelting production by 135,000 metric tons per year, which will result in a 750,000 drop in metric tons per year for aluminum output, roughly an 18 percent reduction.

"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn," said Klaus Kleinfeld, president and CEO of Alcoa, in a press release.

"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," he added.

Alcoa projects 2009 capital expenditures to total $1.8 billion, nearly half the size of expenditures in 2008.

The company expects the latest moves to provide annual savings of $450 million, before taxes.

Alcoa expects to take restructuring charges related to the moves of $900 million to $950 million in the fourth quarter. Alcoa is set to release fourth quarter results on Jan 12.

Shares of Alcoa fell 4.3 percent in afterhours trading to $11.60.