According to this plan, the company will reduce by 10 percent the salary of its executives, including the CEO, CFO and COO. Russel Metals will also reduce the cash compensation to members of the board of directors by the same percentage. Additionally, the firm also plans to reduce hours for shift workers and cut 500 jobs, or 17 percent of the company's workforce, by the end of March.
This strategy is expected to save the company up to C$25 million in 2009, but the company may increase its cost-reducing measures to the tune of C$70 million if “certain performance thresholds tied to earnings aren’t met,” said COO Brian Hedges in a company statement.
“The company’s management has taken these actions because the decline in steel prices, energy prices and demand experienced during the last two months has exceeded anything previously experienced,” Hedges added.
According to Hedges, Russel has suffered a drop in demand of about 40 percent in the first two months of 2009, as the global economic slowdown has negatively impacted global consumption of steel products.