AK Steel Plans 5% Pay Cut for Salaried Workers, Other Cost Reductions
12/04/2008 - AK Steel will implement a salaried employee cost reduction program that includes an indefinite 5% pay reduction for salaried employees and temporary incentives for voluntary retirements.
AK Steel is implementing a salaried employee cost reduction program that includes—among the elements—an indefinite 5% pay reduction for salaried employees. The pay reduction, which begins on January 1, 2009, will affect all salaried employees, including the company's CEO and all executive officers.
The company said it is implementing the cost reduction measures in response to the major downturn in the economy, which has resulted in sharply lower demand for some of the company's products.
Additional salaried workforce cost reductions the company plans to implement include freezing the defined-benefit plan for salaried employees and replacing it with a defined contribution retirement benefit, and offering temporary incentives for voluntary retirements. The temporary retirement incentive program will end on February 6, 2009.
If the pay reduction and voluntary retirements do not produce adequate cost savings, the company said it could not rule out the need for involuntary salaried job reductions.
The company outlined the planned measures in a December 1, 2008 letter sent to all salaried employees.
"Unfortunately, this extraordinary global economic downturn requires significant and rapid measures to reduce our costs in light of sharply lower order levels from our customers," said James L. Wainscott, Chairman, President and CEO.
AK Steel currently employs about 1500 salaried employees in its West Chester headquarters, its Middletown, Ohio, research center, field sales offices and in seven steel operations in four states. The company said that about 350 salaried employees are currently eligible for a company-provided retirement benefit.
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, appliance, construction and electrical power generation and distribution markets. The company employs about 6500 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
