Novelis to lay off employees in Korea, US to curtail costs

The cut is likely to be a little less than 5% of the total workforce in these countries

Please read Novelis' clarification on this news at the end of the article. Hindalco Industries' American subsidiary Novelis will be reducing the number of its employees, as part of cost cutting. The cut is likely to be a little less than five per cent of the total.

“Some trimming of jobs is expected in South Korea, parts of Asia and pockets of the US market, to rationalise operations,” a source told this newspaper. “This is a usual exercise that businesses internationally do to align their costs with the business environment.” 

A global leader in aluminium rolled products, Novelis operates in 10 countries and has about 12,000 employees. An e-mail sent to Hindalco Industries was not unanswered. Analysts say some businesses of Novelis have been under pressure. “It makes sense to cut costs if businesses are under pressure,” said an analyst with a local brokerage, on condition of anonymity.

Satish Pai, managing director, Hindalco Industries, had earlier this week told this newspaper the company was looking at metal procurement and operational efficiency closely to cut costs. "Higher operational efficiency will bring in major savings.”

Novelis expects better prospects for its business with Donald Trump's presidential victory in the US. “The business is entirely in the US and Europe, with no import-export. If the US economy expands, it will be good for Novelis,” said Pai. 

Novelis' Brazil business has been under pressure but is not likely to see any layoffs. “Brazil is a growing market for the company and so there is no reason to have any job cuts there,” said the source. The cans business in Brazil is hit but the management expects recovery in the economy.

In the past seven quarters, with Novelis' revenue having remained at $2.3-2.6 billion, operating earnings did’nt show much growth. Cost cutting is thought to be needed to preserve cash flows.

Correction
 

Novelis has denied a report published in Business Standard on February 16 (Novelis to lay off staff in Korea, US to cut costs). Novelis said the company is delivering sustainable financial results and at this time is not planning to downsize its workforce in Korea or the US. The error is regretted.