Alcoa squeezes contractors

Alumina producer Alcoa of Australia has revealed it's cutting dozens of jobs from its local operations and pushing all of its contractors to slash their rates by 12 per cent.

Managing director Alan Cransberg said these measures were among a suite of changes being implemented to lift efficiency and productivity.

“We’ve challenged our people to do more with less,” he told a CEDA resources conference.

“We’ve taken 20 per cent of our overheads out over the last three years.

“At our best facility in Western Australia we recently took 100 people out.

“We’re in the process of taking another 60 out at one of our other refineries.”

Mr Cransberg said the group was currently focused on cutting contractor rates, after saying “a lot of people have built a very good business over the 50 years that Alcoa has been in Australia”.

“We’ve recently gone to all of our contractors and said ‘we want you to take a 12 per cent haircut’.

“Most of them said ‘it’s not going to happen’, but we’ve managed about 7 per cent so far.

“We’re pushing everybody who works with us.”

Mr Cransberg said investment in innovation was another big focus, including in the group’s Perth-based R&D centre that services its global alumina refineries.

“That’s made an enormous difference; over the last 10 years we’ve effectively built a refinery for nothing, through applying innovation and technology,” he said.

Mr Cransberg said another challenge was seeking affordable energy.

Alcoa is one of the state’s biggest users of gas and has been a strong advocate of the ‘domgas’ reservation policy, which is opposed by gas producers such as Woodside and Shell that want freedom to focus on export opportunities.

In a gentle dig at Shell Australia chairman Andrew Smith and Woodside director Rob Cole, who shared the stage at the CEDA event, he said: “I’m sure Andrew and Rob are going to help us with that, at some stage”.