CHICAGO: Charlie Straface, president of Norwegian aluminum maker Norsk Hydro's North American extrusion operations, convenes a coronavirus task force every other day to draw up cost-cutting measures to offset declining revenues and protect the unit's cash balance during the economic slump related to the outbreak.
The unit has projected that sales will dip by up to 30per cent in April and May, causing a"significant" jump in inventory. Hydro is not alone. Heavy equipment maker Caterpillar has withheld annual salary increases and bonuses for employees. Furniture maker Steelcase has asked nearly all U.S.-based salaried employees to temporarily take a 50per cent base pay cut.Economists believe the U.S. economy already slipped into recession last month. Further cuts would almost certainly worsen the unemployment rate that in March posted the largest single-month increase since January 1975.
The Federal Reserve last week announced it would expand its corporate bond-buying program, leading to a rally in prices of junk bonds. Matthew Miskin, co-chief investment strategist at John Hancock Investment Management, said while the move"can't stop companies from defaulting", it at least helps them manage borrowing costs.
One way they are conserving is by paying suppliers later date instead!
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