Arconic Corporation announced today that its Board of Directors approved several measures — including salary and workforce reductions and the idling of two facilities — to mitigate COVID-19 impacts on the company.
Arconic said in a news release that it is implementing mitigating actions effective immediately that are estimated to reduce operating costs by approximately $150 million on an annualized run-rate basis. These actions as well capital reductions of $50 million will improve the company’s financial profile by approximately $200 million.
The following actions will be in effect until market conditions warrant:
- The CEO’s salary and the Board of Directors’ annual cash retainer will be reduced by 30%.
- Senior-level management will incur a 20% salary reduction and all other salaried employees will incur a 10% salary reduction.
- The salaried workforce will be restructured targeting a 10% reduction.
- Tennessee and New York facilities have been idled until demand returns.
- All other US-based rolling and extrusion facilities will decrease production and operate with a reduced labor force through shortened work weeks, shift reductions, layoffs, and the elimination of temporary workers and contractors.
- All rolling mill facilities in Europe, China and Russia will modify schedules, adjust work hours, lower costs, and delay raises.
- The 401K match program will be suspended for salaried employees.
- Capital expenditures will be reduced by approximately $50 million or approximately 30%.
“The Board supports management’s plan to swiftly and actively mitigate the impact from COVID-19,” said Frederick “Fritz” Henderson, Chairman of the Board. “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.”
“Arconic was launched with a strong balance sheet and capital structure,” said Chief Executive Officer Tim Myers. “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 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.”