Arconic is executing mitigation measures with immediate effect that are estimated to reduce operating costs by approx. $150 million on a yearly rate basis. These deduction measures, as well as capital reductions of $50 million, will enhance the Company’s financial profile by approx. $200 million.
The various measures that the company is implementing will be continued until the market again regains its move. The CEO’s salary and the Board of Director’s annual cash retainer will be reduced by 30%, the senior-level management will incur a 20% salary cut and the drop-down employees will attract a10% pay cut. The salaried staff will be cropped with a 10% reduction and Tennessee and New York facilities will be kept idle until the demand grows from the customer’s side.
Tim Myers, CEO, Arconic said: “Arconic was launched with a strong balance sheet and capital structure. Additionally, we have built tremendous momentum through 2019 and into this year by driving improved operational and financial performance. However, as COVID-19 continues to escalate throughout the world, we are taking aggressive actions to increase the safety of our employees, respond to decreasing demand, and preserve the financial strength of our business.”
Arconic has also decided to drop the production of all other US-based rolling and extrusion facilities and keep operating with a reduced labour force, squeezed work weeks, shift deductions, layoffs and expulsion of temporary and contractual staff.
The rolling mills in Europe, China and Russia will restructure schedules, adjust work hours, lowers cost and pay hikes to get delayed. The 401K match program will be suspended for salaried employees. Capital expenditures will be condensed by approximately $50 million or approx. 30%.
Frederick Henderson, Chairman of the Board, said: “The Board supports management’s plan to swiftly and actively mitigate the impact from COVID-19. We are taking these actions as well as others as necessary to preserve our financial strength for the long-term benefit of all of our key stakeholders.”
Mr Myers also added: “Arconic employees have strong values that have been proven time and again, and their safety is our highest priority. We are heightening measures at all of our locations to maintain strict hygiene, increase social distancing, and enable employees to work remotely where possible. I am confident we will overcome present challenges to achieve sustainability and industry-leading growth well into the future.”
source https://www.alcircle.com/news/the-corona-impact-arconic-declares-200-million-reduction-from-operating-cost-53491
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