Arconic takes measures to mitigate COVID-19 impacts

Arconic Corp., headquartered in Pittsburgh, says its board of directors has approved several measures to further mitigate COVID-19 impacts on the company.

These mitigating actions are effective immediately and will continue until market conditions warrant. They are estimated to reduce operating costs by approximately $150 million on an annualized run-rate basis, according to the company. These actions combined with capital reductions of $50 million, or 30 percent, are designed to improve the company’s financial profile by approximately $200 million:

• The CEO’s salary and the board of directors’ annual cash retainer will be reduced by 30 percent.
• Senior-level management will incur a 20 percent salary reduction and all other salaried employees will incur a 10 percent salary reduction.
• The salaried workforce will be restructured, targeting a 10 percent reduction.
• The company’s Tennessee and New York facilities have been idled to adjust to reduced demand. Arconic’s Massena, New York, facility produces aluminum extrusions, including cold-drawn rod and bar, extruded forge stock and extruded rod and bar. According to local press reports, roughly 150 employees will be affected and will apply for unemployment benefits. Its Alcoa, Tennessee, facility produces aluminum rolled products for the automotive and industrial and commercial transportation markets. In early 2019, the company announced it was investing nearly $100 million to expand its Tennessee hot mill capabilities and add downstream equipment, with an expected completion date in the fourth quarter of 2020. The mill employs roughly 600 people, according to local media reports. Arconic has not responded to a request for an interview regarding the ongoing status of this project.
• All other U.S.-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 401(k) match program will be suspended for salaried employees.

Chief Executive Officer Tim Myers says, “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.”

“The board supports management’s plan to swiftly and actively mitigate the impact from COVID-19,” says 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.”

Myers says, “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,” he adds.