Restructuring at Hydro's Aluminium Plants in Norway
May 07 2004 - 10:32AM
PR Newswire (US)
Restructuring at Hydro's Aluminium Plants in Norway OSLO, Norway,
May 7 /PRNewswire-FirstCall/ -- Hydro is preparing an extensive
restructuring programme for its Norwegian aluminium plants to
ensure continued profitable operations. Annual operating costs will
be reduced by NOK 350 - 400 million, with production remaining at
the present level. Estimates show that this may involve a reduction
of up to 800 man-years. The restructuring process will be completed
early next year. Hydro's board decided today to submit the
restructuring programme for final approval in Hydro's corporate
assembly. The employee representatives emphasized that they agree
on the need for restructuring but that they do not agree on the
de-manning figure presented. Hydro is one of the three leading
aluminium companies in the world, with considerable production
capacity in Norway. However, the Norwegian aluminium plants have
been through a period with weak financial results in recent years.
"Aluminium production in Norway is a focus area for Hydro, and we
will do everything we can to ensure that the Norwegian operations
remain competitive in the international arena," says President and
CEO Eivind Reiten. "However comparisons with both international and
other Norwegian metal plants show that productivity is too low in
our plants. A large portion of the costs involved in primary
aluminium production are linked to the international markets and
electricity prices. The measures we now implement are absolutely
necessary to safeguard the basis for continued profitable
operations of the aluminium plants in Hoyanger, Ardal, Karmoy and
Sunndalsora. "I regret the difficulties this restructuring will
cause our employees and each of the local communities affected,"
continues Reiten. "We will do all we can to ensure that the
negative impact is limited. We are aware of the particular
challenges in Hoyanger and Ardal, and have already started
proactive work to support industrial developments in this area."
Around 3,400 people are employed in Hydro's metal production in
Norway today. The cost reductions will affect all Hydro's metal
production sites in Norway. Manning will be reduced by around 20-25
percent. In addition, manning reductions have to be carried out in
Hoyanger and Ardal by the end of 2006, due to the phasing out of
the oldest lines. The Soderberg lines will be phased out in order
to comply with international requirements. The cost of realizing
the restructuring programme is estimated at NOK 800 million. Most
of this will be charged to the accounts in 2004. The corporate
assembly will consider the proposal on 13 May. The plan behind the
restructure is a rapid establishment of a new and more efficient
organization for the future operation of aluminium production. In
addition, a separate organization will be set up with
responsibility for transferring employees to other positions in
Hydro, helping to establish new jobs outside of Hydro and setting
up early retirement and severance pay arrangements during the
transition stage. The project will draw on all the expertise and
experience Hydro has gained from previous challenging processes
that have been well managed. With this in view, the temporary
organization will be made up of local support units coordinated by
central project management. There will be continued collaboration
with the employees' organizations on the practical implementation
of the manning reductions within the set frameworks. Hydro hopes to
be able to find new jobs for a certain number of the redundant
employees either in Hydro or in new opportunities arising from the
business developments that are underway, mainly in Hoyanger and
Ardal. The scope of the restructuring programme is based on an
extensive analysis of the current and future competitive situation,
manning levels and operating costs in Hydro's metal production,
compared with our competitors. Productivity is low in comparison
with competitors both in Norway and in other countries, in terms of
kroner per tonne as well as tonne per employee. The restructuring
work will begin immediately and shall be completed by 1 April 2005.
"Hydro will strive to carry out the process in a responsible way
and in continued close dialogue with the company's employees and
the local communities affected. The changes will be implemented
without reducing production, or lowering our stringent requirements
for health, safety and environment. We will endeavour to ensure
that as many people as possible find alternative work, and that the
manning reduction is realized as far as possible through voluntary
agreements. However we cannot guarantee that there will be no
dismissals," says President and CEO Reiten. Hydro produced
1,473,000 tonnes of primary aluminium in 2003, of which 850,000
tonnes were produced in Norway. This represents an increase of
200,000 tonnes from 1993. Hydro is a leading energy and aluminium
company with operations in more than 40 countries. Hydro is one of
the world's leading offshore producers of oil and gas, and the
third largest supplier of aluminium. A total of 36,000 employees
create value through developing products that benefit customers and
local communities all over the world. Contact Thomas Knutzen Tor
Steinum Telephone +47 22539115 (+47) 22 53 27 31 Cellular +47
90612359 (+47) 95 08 39 33 E-mail Norsk Hydro ASA Bygdoy alle 2
N-0240 Oslo Norway Telephone: (+47) 22 53 81 00 Fax: (+47) 22 53 27
25 http://www.hydro.com/ DATASOURCE: Norsk Hydro ASA CONTACT:
Thomas Knutzen, +47-22539115, or Cellular, +47-90612359, , or Tor
Steinum, +47-22-53-27-31, Cellular, +47-95-08-39-33, , both of
Norsk Hydro ASA Web site: http://www.hydro.com/
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