Alcoa Inc. announced the elimination of about 15,000 jobs, more plant closures, plans to sell assets and a 50% cut in capital expenditures to contend with the sustained recession.
The moves raise the question of whether other companies that have cut costs also will feel the need to dig deeper. Alcoa, the world's largest aluminum producer, announced a round of cost cutting in October when demand for commodities and the availability of credit began to fall.
The combined restructuring will result in a fourth-quarter charge of $900 million to $950 million, or $1.13 to $1.19 a share. The company expects to report fourth-quarter earnings next week. Alcoa earned $632 million, or 75 cents a share, in the fourth quarter of 2007.
"Many of these things are painful and many of these things are drastic," Alcoa Chief Executive Klaus Kleinfeld said in an interview Tuesday. "We will continue to monitor the dynamic market situation to ensure that we adjust capacity to meet any future changes in demand and seize new opportunities.
My theory right now is that companies are getting the pain out of the way now after a terrible year. Note this will cause a 4th quarter charge -- a charge at the end of a long and painful fiscal year.
However, a contrary view would be, "isn't there a big stimulus bill coming down the pike? Shouldn't that help a company that works with raw materials?"
4 comments:
I'm sure none of the millionaires who run these companies will find their jobs eliminated. Only those at the bottom who already aren't paid enough to have anything left to stimulate the economy....
You may be getting a businessman's evaluation of a stimulus program on top of a trillion dollar budget deficit.
I'm curious. It seems to me that the original rationale for publicly traded companies has beome warped. These days, it seems that going public means to give the company executives and investment banks huge salaries/fees instead of to obtain capital for expansion purposes. I'm wondering if perhaps the whole concept of the publicly traded company is broken and perhaps is one of the reasons for the current economic mess. So, a question: how are privately held companies doing vs. the publicly traded ones? Info on this, Bondad?
I have been out of a permanent job for alnost two years. Most jobs are only temporary or partime here. I notice that the heads of these companies all have huge salaries but they are maintaining their positions. If the workers on the lower rung of the corporate ladder made errors to cause even one thousandth of the lost these corporate executives have caused we would have been fired and blocked from drawing unemployment which in my state (Georgia) is only $330.00 weekly before taxes, maximum. These "legitimate" robbers if they are let go get millions. Where is the justice?
Sallie Dawson
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