Alcoa’s late afternoon announcement of 13,500 job cuts or 13% of its workforce by the end of 2009, comes on the back of major production cuts of 750 million tons annually. The job cuts, however, only tell part of the story. MetalMiner insiders tell us that the cuts are part of an all-out cash management strategy also discussed in the article.
The company is cutting 1700 contractor positions, curtailing all capital non-essential spending, cutting its stock buy-back program, putting in place a hiring and salary freeze and, will even try to buy raw materials “from less expensive suppliers around the world, hoping to cut costs by 20% in each of the materials it purchases.”
It is always regrettable when jobs are eliminated. But Alcoa is probably taking the right steps to secure the company for the long term. Much of the steel industry, on the other hand, like the automotive industry, has less flexibility when it comes to workforce reductions. And though we all want companies to maintain as many jobs as possible in tough economic times, the reality is everyone ends up paying one way or another.