Novelis to shut UK mill, cut 440 jobs
Novelis, the foreign subsidiary of Aditya Birla group's metals flagship company Hindalco, has decided to shut its aluminium sheet mill in Rogerstone, Wales, in the United Kingdom due to a significant decline in orders. The unit was losing £1 million per week.
In a statement on Wednesday, Novelis said the plant would shut by April end and 440 jobs would be slashed. Novelis had been working on measures to get business in the face of the economic meltdown but didn't find much success. "Despite significant efforts to achieve this, a viable plan did not emerge. The closure will affect 440 jobs," the statement said.
Arnaud de Weert, president of Novelis Europe, said the Rogerstone team made every effort to adjust the operating model and costs according to the decreasing order book. "Unfortunately, a sustainable solution could not be found," he said. The company said existing orders will be executed and clients will be contacted individually over the future handling of their business. Novelis said it has high levels of flexibility in its operations and would continue to meet future customer needs competitively.
On February 17, the company had said its sales for the quarter ended December 31, 2008, declined by 20% to $2.2 billion due to lower volumes and fall in metal prices. Novelis, which Hindalco acquired for $6 billion, had reported a $1.8 billion loss in its third-quarter results. This loss included non-cash, pre-tax charges of $1.3 billion for deterioration of goodwill.
The board of Hindalco, on February 14, approved a restructuring plan to write off the goodwill loss from its securities premium account. In a filing to Securities and Exchange Board of India (Sebi) on June 30, the company said that the goodwill in Novelis' books was at $1.86 billion.
While announcing its third-quarter results, Novelis had said that the demand for its products has been waning and the company will resort to a 10% cut in workforce across locations. The latest mill closure and the job cuts are part of its rationalisation strategy.
Martha Finn Brooks, president and chief operating officer, had said, "We are making adjustments in line with the lower demand levels we expect to continue to see in the near term. These actions include adjusting our metal intake, reducing production and aggressively cutting costs. We are in the process of reducing our global workforce by more than 10%."