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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/