Source: WSJ.com

Acknowledging that earlier cost-cutting moves are insufficient due to the sustained economic downturn, aluminum maker Alcoa Inc. announced deeper work-force cuts, more plant closures and a 50% reduction in capital expenditures.

By the end of this year, there will be 15,000 fewer positions at the company, or roughly 14.5% of its current employees and contractors, Alcoa said Tuesday.

The moves raise the question as to whether other companies, which have instituted cost-cutting measures to conserve cash, will likewise find their efforts inadequate. Alcoa, which announced a round of cost cutting in the fall when demand for commodities and availability of credit began to drop, said the sustained economic downturn was forcing even more drastic moves.

“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 that emerge. These are extraordinary times requiring extraordinary actions,” said Alcoa Chief Executive Klaus Kleinfeld.

Alcoa said is instituting widespread salary and hiring freezes. Capital expenditures will be reduced by 50% in 2009 and the company’s aluminum smelting operation curtailments will be further reduced by another 135,000 tons to a total of 750,000 tons, representing about 18% of the company’s production.

Alcoa said that it was going to sell its electric systems business, automotive wheels business, global foil and transportation products business based in Europe.

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