September 27, 2007

Alcoa Australia Rolled Products announces business restructure

Alcoa Australia Rolled Products has announced a restructure of its operations in Western Sydney and Geelong to strengthen the ongoing sustainability of the business.

The restructure is the result of a review which identified the need for Alcoa Australia Rolled Products to reduce costs and focus on increasing production of its core product lines to ensure the company remains competitive and sustainable.
 
The restructure will consolidate the company’s product range to aluminium can sheet and screw cap closures which are its core products, representing around 85% of its output. Alcoa Australia Rolled Products Western Sydney plant will shut down its aluminium common alloy sheet, coil and foil operations at the end of December 2007.
 
This will mean the loss of approximately 194 jobs across the Alcoa Australia Rolled Products plants at Yennora in Western Sydney and Point Henry in Geelong.
 
A reduction of around 138 positions at Yennora and about 56 at the Point Henry plant will occur over the next seven months. Most of the reductions will take effect at the end of 2007.
 
The recycling operations will be unchanged at Yennora and the operation will remain Australia’s largest aluminium recycling facility.
 
This restructure relates only to Alcoa Australia Rolled Products and does not include Alcoa of Australia’s Western Australian mining and alumina refining and Victorian smelting or power station operations.
 
“This decision has not been easy, and it has only been made after long and careful consideration,” said Alcoa Australia Rolled Products Managing Director, Mike McKinstry.
 
“We regret the impact this decision will have on employees and their families and will support them through this process.  As a starting point, where applicable, we will be calling for expressions of interest in redundancies. We will also provide outplacement services and communicate redeployment opportunities for affected employees in other Alcoa operations. Counselling and financial planning services will also be available for affected employees.”
 
“Alcoa Australia Rolled Products will continue operating at Yennora and Point Henry and this restructure is being undertaken to improve the competitiveness and sustainability of both plants through a more strategic focus on our high volume products.”
 
 “We are conscious of concerns this decision may raise in our local communities in Western Sydney and Geelong and wish to assure these communities that we remain committed to them and will be an active and supportive corporate citizen into the future.”
 
“We have development and investment plans to strengthen our remaining business, keeping key strategic manufacturing operations alive in Western Sydney and Geelong.”
 
“The financial performance of the business has been communicated to our employees on an ongoing basis throughout the year, and they have positively contributed to various improvement activities.  We will continue to communicate with employees throughout the restructure process.” said Mr McKinstry.
 
In recent years, global competition has created a number of challenges for Alcoa Australia Rolled Products leading to part of the business becoming unsustainable.  The restructure is necessary to overcome some of these challenges which include competition from cheaper imports, rising labour and raw material costs and the strength of the Australian dollar which reduces export earnings.
 
The key change is that Alcoa Australia Rolled Products will cease production of low volume aluminium foil, sheet and coil products at Yennora. “We have been working closely with customers and have kept them informed of our ongoing business review,” said Mr McKinstry.
 
Alcoa Australia Rolled Products
Alcoa Australia Rolled Products employs around 750 people in NSW and Victoria.
 
Alcoa Australia Rolled Products is 100% owned by Alcoa Inc.  It is a separate business entity to Alcoa of Australia which is owned 60% by Alcoa Inc and 40% by Alumina Limited, and operates mines, alumina refineries, aluminium smelters and a power station in WA and Victoria.
 
Alcoa Australia Rolled Products operates aluminium rolling plants at Point Henry in Geelong in Victoria and Yennora in Western Sydney.
 
These plants produce rolled aluminium products for packaging, building materials, signage and other uses.
 
Around half of the company’s output is exported, with the balance supplied to other industries in Australia.
 
The Yennora plant is Australia’s largest aluminium recycling facility and recycled around 72,000 tonnes of aluminium in 2006.  The recycling operations will be unchanged by the restructure.
 
The restructure
The restructure will close the sheet, coil and foil production lines at the Yennora plant. 
 
These changes at Yennora will reduce its demand for common alloy ingots which are produced at the Point Henry plant in Geelong. As a result, one of the two ingot casting facilities at Point Henry will cease operation.
 
The Yennora sheet, coil and foil operations are expected to close in late December 2007.  The ingot casting facility at Point Henry will continue operating until April 2008 while the other casting facility is upgraded.
 
The Yennora plant will continue producing aluminium sheet for can bodies and screw cap closures while the Point Henry plant will continue producing aluminium sheet for can ends.
 
The restructure will result in the following workforce reductions:
  • Around 138 positions at Yennora
  • Around 56 at Point Henry
 
The restructure is necessary because both plants have been impacted by a range of factors including:
  • increasing competition from cheaper imports;
  • increasing labour and raw material costs; and
  • the strength of the Australian dollar which reduces the profitability of export sales.
 
By consolidating its product range, Alcoa Australia Rolled Products will cease production of the more complex and high cost sheet, coil and foil products which are also under greater pressure from imports.
 
This will allow an increased focus on the production of can sheet and screw cap closures which have strong and growing markets.
 
Alcoa Australia Rolled Products plans to increase production in these areas.
 
Supporting employees
Employees have been kept informed of the review that led to the restructure and we will continue to communicate with them throughout this process.
 
The restructure will result in a reduction of approximately 194 jobs and Alcoa Australia Rolled Products will be supporting employees through this time.
 
  • Where applicable, the company will call for expressions of interest in redundancies.
  • Redeployment opportunities with other Alcoa operations in Australia will be communicated to employees.
  • Outplacement services will be provided to help people find other employment.
  • Personal counselling services and financial planning workshops will also be offered.