As previously announced, Norsk Hydro ASA has initiated a review of staff and support functions with an ambition to be among the best of comparable companies, both in terms of cost and dimension of staff functions. Hydro’s ambition is to reduce annual staff- and administration costs by approximately NOK 700-800 million compared to the 2008 level.
Hydro is also working to simplify its business model in accordance with a strengthened and expanded Corporate Management Board, which will have a more concentrated focus on operations and markets.
About 40 percent of the cost savings are related to external costs for services and consultants. The remaining savings will be achieved by a reduced internal activity level and a corresponding reduction in manning. Hydro estimates that about 250-300 employees in staff and support functions will be made redundant as a consequence of these savings.
The majority of the costs savings are expected to have full effect from the first quarter of 2010, while some savings will take longer before coming into effect.
Hydro has already decided to implement wide-ranging measures to meet the unprecedented market situation. Primary aluminium production will be reduced by 400,000 tonnes per year, or 23 percent, compared to 2008 by the end of April this year. This will reduce manning by about 900 people. Alumina production at the part-owned Alpart refinery has been reduced by 50 percent, corresponding to 290,000 tonnes per year for Hydro’s share.
Production adjustments in Aluminium Products will reduce manning by 2,200 people by the end of 2009 compared to the middle of 2008.
Planned investments in 2009, excluding Qatalum, have been reduced by 40 percent compared to 2008.
Further improvement measures are under evaluation in light of the current market situation.