Alcoa (AA) announced that it will fire 13,500 people and 1,700 contractors. The full-time people are 13% of the firm’s work force. Alcoa will also freeze hiring and salaries and cut capex by 50%.
The company’s CEO made a statement: "These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets." That sounds like what every large company CEO has said when layoffs hit this year.
Alcoa will take a fourth quarter charge of more than $900 million.
Alcoa shares are down from a 52-week high of over $44 to $12. In the third quarter, AA had net income of $470 million on revenue of $7.2 billion. Analyst expect that company to make a very modest profit in 2009
The drop in commodities prices and the recession are catching up to the metals industry. That largest firms in the sector will have to keep cutting. It would not be shocking to see this part of the economy lose 100,000 jobs this year.
Douglas A. McIntyre