Alcoa says cuts to affect 18 percent of Russia workforce

MOSCOW (Reuters) - Alcoa Inc (AA.N), which is cutting aluminum production and jobs in the face of the global economic downturn, plans measures in Russia that will affect 18 percent of its workforce in the country, the company said on Wednesday.

Alcoa, which employs 7,900 people in Russia, said it aimed to align production at its two aluminum fabrication plants with demand and to reduce costs. The measures will be executed gradually throughout 2009.

"We will have to make a number of very tough decisions, but such is the requirement of the current economic situation which we can't ignore," Alcoa Russia President Andrei Donets said in a statement.

Pittsburgh-based Alcoa said on Tuesday it would slash more than 15,000 jobs worldwide, halve capital spending and sell four businesses as it reduces aluminum production by 18 percent as the global economic downturn takes its toll.

Aluminum, used in aircraft and auto bodies and products such as kitchen foil and drinks cans, has lost over half of its value since peaking at $3,380 a tonne in July. Stocks in London Metal Exchange warehouses are at their highest in 14 years.

In Russia, the company owns the Samara Metallurgical Plant -- which was the Soviet Union's largest aluminum fabrication plant -- and Alcoa Metallurg Rus in the southern town of Belaya Kalitva. Neither plant is profitable.

Alcoa said job cuts were among the measures to be taken to reduce its losses in Russia. "Where possible, we will try to minimize the number of cuts through such measures as introducing a shorter working week," the company's press service said.

The company said it would redeploy and retrain employees affected by the restructuring, which will affect its Moscow office as well as the two plants.

"The restructuring plan details, including the numbers of necessary lay-offs, is being developed," the press service said.

Alcoa declined to give details about its production plans.

Alcoa bought its two Russian plants in 2005 and has invested $768 million in their development, including the $257.5 million acquisition price. Donets said Russia remained a "strategic" market for Alcoa.

Per capita aluminum consumption in Russia, at 5-6 kg per year, is about seven times lower than in the United States, where the average person uses between 35 kg and 40 kg.

Alcoa Russia, which supplies products to the aerospace, automotive and shipbuilding sectors, was last year selling 60 percent of its products to domestic consumers, up from 50 percent in 2007.

(Reporting by Robin Paxton; editing by Sue Thomas)