Page last updated at 01:33 GMT, Wednesday, 7 January 2009

Alcoa cuts 13,500 workers' jobs

Alcoa's headquarters in Pittsburgh
Demand for aluminium has fallen sharply since last summer

The US aluminium-maker Alcoa is to cut 13,500 jobs, or 13% of its workforce, due to the economic slowdown.

The latest cost-cutting and job losses come on top of savings which were announced in October.

Alcoa said it would cut its yearly output of aluminium by 18% because of falling demand.

The Pittsburgh-based company is also planning to sell four of its non-core businesses and is imposing a global salary and hiring freeze.

Alcoa has not given any breakdown of the job losses on a country-by-country basis.

Falling prices

As a result of its actions, Alcoa expects total fourth-quarter charges of up to $950m, and annual savings of about $450m.

In October, Alcoa saw a 52% fall in third-quarter profit due to sharply lower aluminium prices and weaker demand. Its next quarterly results are due on 12 January.

Alcoa's president Klaus Kleinfeld said: "These are extraordinary times, requiring speed and decisiveness to address the current economic downturn."

As part of the plan, Alcoa said it would sell off its electrical and electronic systems, global foil, cast car wheels and European transport products businesses.

These subsidiaries employ a total of 22,600 people and had combined revenues of $1.8bn in 2008.

The production cuts are expected to be completed by the end of March.

However some analysts doubted whether Alcoa's production cuts would help stabilise falling aluminium prices, which fell to roughly 65 cents per pound a few weeks ago from $1.50 a pound last July.

"The problem is a lack of demand. With the lower price, Alcoa has got to try to bring its costs down. There is no way they can make money at 65-cent aluminium," said Charles Bradford of Bradford Research/Soleil Securities.



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