The intention of Alcoa Inc. to restructure its Russian locations was announced on January 6, 2009 Eastern Time as a part of a series of actions to reduce negative impact of the global economic downturn on the Company.
Actions for Russian operations are targeted at the alignment of production with demand, reducing costs and raising efficiency. In the current situation characterized by the deficit of the orders, the restructuring is also aimed at ensuring the normal workload and stable conditions of the production facilities, as well as insuring safe operations of both Alcoa Russia plants.
While implementing restructuring measures, Alcoa Russia is firm in its intention to insure accurate orders’ execution according to all signed agreements and to fully comply with the Russian law in all aspects.
“Russia remains one of the strategic markets for Alcoa. The restructuring plan will allow us to enhance our competitive position in the long run,†said Andrey Donets, President of Alcoa Russia.
“We have to make a number of very tough decisions. As we already announced, the restructuring will impact about 18% of our employees. People have always been a priority and the most strategic asset for Alcoa worldwide and it’s extremely difficult for us to see some people leave the Company. But this is caused by the current economic situation which we can’t ignore if we want to survive through this unprecedented crisis. At the same time, we have developed a complex of measures to support the employees under release and are going to fulfill it during the year.
We will work closely with the Employment Centers in Samara, Belaya Kalitva and Moscow to mitigate the negative impact of the re-structuring on our employees.
We will also collaborate with the local and regional administrations. On the 4th of March, we have already signed an Agreement of cooperation, information exchange, and redeployment and retraining of the released employees with Samara City Administrationâ€.
Restructuring measures
Restructuring measures will affect all production and administrative units and all categories of employees – salaried and hourly, workers and administrative staff.
Many restructuring measures have been already developed. Key measures to reduce costs, raise efficiency and provide normal workload and stable condition of the production facilities at both plants include:
- Energy consumption decrease, more rational use of electricity and gas. Here we will be actively using Alcoa Business System and lean production worldwide experience to allow us to save money.
- Headcount optimization.
- Possible introduction of a shorter working week.
- Training and re-training of employees to increase staff mobility within plants and raise efficiency. It will allow saving jobs.
- A number of services earlier provided by subcontractors will be carried out by our own staff. This will also allow us to save jobs and to reduce expenses for subcontractors. (For example, the Technical Center that we will establish at SMZ will create 100 new jobs. These jobs will be occupied by the employees from the most impacted shops.
Major production restructuring will be undertaken at Extrusions and Forgings business units of both plants.
In addition to all general measures mentioned above, to optimize production at Extrusion shops of SMZ and AMR, to insure workload and effective cost control, some orders for extrusion products will be relocated between two plants.
This measure in the mid term is aimed at production specialization for certain groups of orders at each plant. Depending on the economic situation and the volume of orders in the future, it is possible that part of the production facilities will be mothballed.
Also, at Alcoa Metallurg Rus (Rostov region), Forgings and Extrusion production units will be merged due to very tough situation with orders for Forgings plant. Idled Forgings equipment will be preserved and maintained.
We believe that these measures will help us to increase efficiency and insure normal level of capacity utilization at both plants during the year.
Headcount optimization and work with employees
As announced earlier this year, about 18% of the Alcoa Russia employees in Samara, Moscow and Belaya Kalitva will be impacted by the restructuring.
The figure includes employees of all categories. The headcount optimization program will be carried out gradually during the year.
We are focusing at reducing headcount mostly by mutual agreement. and in total accordance with the law. Above this, the Company intends to provide comprehensive assistance in retraining and redeployment to the workers under reduction.
We are planning to work closely with the local Employment Centers in Samara and Belaya Kalitva during the year. We are discussing the following possible measures for collaboration:
- Establishing consulting center for employees at the territory of the plant
- Together with the Employment Center organization of retraining programs for the plant employees
- Launching of the pilot retraining/redeployment project for the laid-off employees of the plant
- Opening of a consulting center providing informational and legal advice for the laid-off employees
