Alcoa may slash output, jobs at Canada plant

PITTSBURGH – Alcoa Inc., the largest U.S. aluminum producer, said Monday it will curtail production and lay off 275 workers at a smelter in Canada if employees there don't agree to a 15 percent pay cut. Alcoa has been hit particularly hard by the global economic slowdown, which has hammered demand and prices for the lightweight metal used in products ranging from cars to soda cans. Last week, the company reported its second consecutive quarterly loss despite recent production cuts and plans to trim its global work force by 13 percent. Negotiations are continuing between Pittsburgh-based Alcoa and a union that represents the roughly 1,000 workers at the smelter in Becancour, Quebec, said Alcoa spokesman Kevin Lowery. But Alcoa plans to cut the smelter's output by 136,000 metric tons, or 34 percent, and eliminate 275 positions if the workers don't agree to a 15 percent wage cut by April 30, he said. Alcoa said in early March it wanted to reduce labor costs at the plant, which produces about 400,000 metric tons of aluminum annually, and other operations in Quebec, where Alcoa makes about a quarter of its total output. Alcoa owns 75 percent of the Becancour plant and rival Rio Tinto Alcan owns the rest. "We've tried to reduce costs," Lowery said the company told representatives from the Quebec Labor Federation. "We haven't been able to get it to levels where we need to." "To wind down production in a safe and efficient way, you have to begin taking some steps, and people will begin seeing those steps shortly," he added. Alcoa operates three smelters, a casting plant and a corporate office in Quebec, employing a total of about 3,600 people. The casting facility makes parts for helicopters, airplanes and missiles, among other products. Alcoa employed some 87,000 people in 35 countries at the end of 2008. The aluminum maker has taken steps to cut costs and raise cash in recent months as it confronts the deteriorating world economy. Shortly before reporting a quarterly loss in January — its first in six years — Alcoa announced plans to shed 13 percent of its global work force, sell four business units and substantially reduce production. Alcoa took further steps in March, when it cut its dividend for the first time in more than two decades, unveiled plans to sell stock and debt, and pledged to slash costs by more than $2.4 billion annually. Alcoa, which makes aluminum and uses it to manufacture products such as truck wheels and fighter jet parts, has announced cuts that would lower its total output by 20 percent. Other large aluminum companies, such as Moscow-based UC Rusal, have also announced cuts in a drive to balance the world's aluminum supply with shrinking demand. Shares of Alcoa climbed 30 cents, or 3.4 percent, to close earlier at $9.15. That's well off the 52-week high of $44.77 that shares reached last May before the market meltdown.