Ohio-based flat rolled steel service center, Olympic Steel, announced this week that in order to reduce operating costs during the continuing weak economy, it will write down the value of its inventory as of March 31, 2009 by 12 percent, or $31 million. The company also said that it has issued layoffs to 21 percent of its workforce since last year.
In addition to the inventory write-down and employee layoffs of about 21 percent from peak 2008 levels, other cost-cutting measures the Olympic Steel has taken include reducing work hours, issuing company-wide pay reductions by about 2.5 percent to 10 percent effective March 30, 2009, as well as benefit reductions and increased control over all other discretionary spending.
Altogether, the company said it expects to reduce 2009 operating expenses by an estimated $65 million, or 35 percent from 2008 operating expenses.
Commenting on the company's actions, Olympic Steel's Chairman and Chief Executive Officer Michael D. Siegal, stated, "In light of challenging market conditions in 2009, where February year-to-date steel service center shipments have declined by 43 percent compared to the same period of 2008 according to the Metals Service Center Institute's Metals Activity Report, we have taken actions to reduce our expenses and preserve our cash."