Investment in Norwegian industry has all but screeched to a halt in recent months. State statistics bureau SSB predicts investment next year will be even lower than it’s been this year. Venerable industrial concern Norsk Hydro is among those planning more cost cuts and layoffs.
Hydro held its Capital Markets Days this week, to tell investors, analysts and reporters how it intends to keep tackling weak markets for its metals products and the challenges posed by the strong Norwegian currency. The latter has made Norwegian export products even more expensive than normal.
Hydro already has cut 4,500 jobs and now hopes to cut operating costs by USD 100 per ton of aluminum by 2012, reports newspaper Dagens Næringsliv (DN) . The news wasn’t welcome for unions representing employees.
“We’ve already cut down to the bone,” Billy Fredagsvik, an employee representative on Hydro’s board, told DN. “I can’t see that there’s room for more cuts, but if management comes with some good proposals, we will of course discuss them.”
Hydro was once Norway’s second-largest company in terms of revenue. Now, after selling off its fertilizer and oil interests, it’s mostly an aluminum producer facing poor demand since the global finance crisis set in. The company reported heavy losses earlier this autumn.
Hydro isn’t alone. Most of Norway’s offshore industry is deeply worried about a lack of orders, for example, while the timber industry has felt the effects of a downturn in construction.Statistics bureau SSB has recorded a sharp drop in investment since mid-2008 and predicts the downturn will continue into next year.
“The market picture we see limits the possibilities we have to invest,” Per Øyvind Sævartveit of Sør-Norge Aluminium in Hordaland told DN. Low prices for aluminum, he said, don’t justify investment in the industry beyond what’s absolutely necessary to ensure the health and safety of workers.
Katrine Boye of Nordea Markets said that SSB’s prediction confirms that prospects have dampened considerably for the industry, all because market demand is weak.
“That doesn’t tempt investors, especially when there’s so much uncertainty about how strong an upturn there will be when it comes,” Boye told DN.