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To: stockman_scott who wrote (64060)	7/31/2002 1:48:44 PM
From: 2MAR$	Respond to of 208838

Alcoa cutting U.S. output, sees 3rd-quarter charge (Recasts paragraph 1; adds byline, details, analyst comment; updates stock price; pvs PITTSBURGH) By David Howard Sinkman NEW YORK, July 31 (Reuters) - Alcoa Inc. <AA.N>, the world's No. 1 aluminum producer, on Wednesday said it would idle or eliminate production at three U.S. plants, cutting 377 jobs, because of high energy and labor costs. Aluminum prices have been battered by excess capacity and soft demand for the past 18 months, exacerbated by weakness in airline manufacturing following the Sept. 11 attacks. Alcoa will take a third-quarter after-tax charge of between $15 million and $20 million to cover costs associated with the job losses and plant decisions. Alcoa will temporarily curtail output at its aluminum plant in Badin, North Carolina, which produces 120,000 metric tons per year. It will also close and dismantle its mothballed plant in Troutdale, Oregon, and the idled portion of its Rockdale, Texas unit. The Oregon plant and the idled part of the Texas operation no longer had any employees, said Kevin Lowery, a spokesman for Alcoa. Badin, which employs 377 people, has been operating at a reduced capacity of 90,000 metric tons per year since September 2000. Curtailment will begin immediately and all production will be idled by Aug. 16, though ingot casting could proceed until year-end. After completion of the closures, Alcoa will have idled 438,000 metric tons per year of aluminum production, or about 11 percent of the company's base output of 3.95 million metric tons per year. Analysts do not expect further plant closings in the aluminum industry because other producers do not have the flexibility Alcoa has, and because of the high fixed cost of production. "To expect more plant closings is premature. While the economic recovery is uncertain, aluminum prices over the next 12 to 18 months should recover modestly," said Daniel Brebner, an analyst at UBS Warburg. Alcoa, which has been cutting costs to cope with low aluminum prices, said the production cutbacks will have no adverse impact on internal or external customers. Alcoa posted a 24 percent drop in second-quarter profits earlier this month, citing a sluggish demand from the manufacturing and aerospace industries depressed aluminum prices. Shares of Alcoa rose 2 percent to $26.51 in afternoon trading on the New York Stock Stock Exchange. (additional reporting by Janet McGurty) ((-- David Howard Sinkman, Janet McGurty, New York Raw Materials Desk, 646 223-6093)) REUTERS * end of story *