PITTSBURGH -- Pittsburgh-based Alcoa announced 13,500 job cuts late Tuesday that will affect employees locally and around the globe.

WTAE Channel 4 Action News reporter Jon Greiner spoke with a representative from the world's third-largest aluminum manufacturer hours after the announcement in an effort to ascertain a better idea of how many Pittsburgh jobs will be affected.

Video: Alcoa Cuts Could Taint Pittsburgh's Image

"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn," Alcoa President and CEO Klaus Kleinfeld said in a statement. "We will continue to monitor the dynamic market situation to ensure that we adjust capacity to meet any future changes in demand and seize new opportunities that emerge."

The reductions expand on cost-cutting measures announced in October, when Alcoa reported a 52-percent decline in third-quarter profit due to sharply lower aluminum prices, weaker demand and a charge from curtailing a smelter in Texas.

Additionally, Alcoa has already cut about 40 people at its technical center in Lower Burrell, and plans 260 corporate cuts.

The company, which started in Pittsburgh in 1888, did not immediately provide exact figures, but 1,000 people work at the corporate center on the North Shore.

The corporate center's lobby holds pictures of some of the things made from its aluminum, such as cars, trucks, airplanes and construction materials, all industries rocked by the economy.

"Some of these indications are that the aluminum market is as bad as it has been in the last 20 to 25 years, and that doesn't bode well," Duquesne University Professor Kent Moors said.

In its latest announcement, which came after U.S. markets closed Tuesday, the Pittsburgh-based company said it also will cut 1,700 contractor positions and sell four business units. It has imposed a global salary and hiring freeze.

Cuts To Coincide With Production Reductions

Besides cutting 13,500 jobs -- 13 percent of the company's work force -- Alcoa is cutting production by 18 percent and taking other cost-cutting measures.

"We've been around for 120 years. We've seen many downturns. We know how to operate in a downturn," Lowery said. "Unfortunately, one of the things you have to do is cut back a little and do some of the things we had to do today."

Local Layoffs Could Taint Pittsburgh's Corporate Appeal

Although there won't be massive layoffs in Pittsburgh, the city's image as a corporate center could suffer.

"Whenever something happens to Alcoa, people liken that to something happening in Pittsburgh," Moors said. "One of the concerns I think in terms of the city's overall image is on the heels of the decline in big steel. Is this going to be seen as a decline in another major metal?"

Alcoa's stock didn't react much Tuesday, closing down 3 percent, but it's up 100 percent from its November low when Alcoa levied layoffs.

Dropping Aluminum Costs Affect Alcoa's Profits

"Whenever something happens to Alcoa, people liken that to something happening in Pittsburgh. ... Is this going to be seen as a decline in another major metal?" - Professor Kent Moors Duquesne University

Alcoa, which produces aluminum and uses the metal to make products such as truck wheels, said it will further limit smelting by more than 135,000 metric tons per year, lowering total aluminum output by more than 750,000 metric tons, or 18 percent, annually.

As a result of its actions, Alcoa expects total fourth-quarter charges of between $900 million and $950 million and savings of about $450 million annually, before taxes. It plans to report quarterly results Jan. 12.

The price Alcoa charges for its aluminum is set on the London Commodity Exchange.

"The price of aluminum in July was about $3,300 a ton, and today, it's down to $1,500. So, it has cut more than in half. So, it's a difficult environment to be operating in," Alcoa spokesman Kevin Lowery said.

Analyst Charles Bradford of Bradford Research/Soleil Securities said Alcoa's production cuts will not help put a floor under plummeting aluminum prices, which fell to roughly 65 cents per pound a few weeks ago from $1.50 per pound in July.

Broader production cuts are needed by Alcoa competitors, such as Rio Tinto Group and aluminum producers in China, Bradford said, and prices are unlikely to stabilize unless more drastic steps are taken.

"The problem is a lack of demand," he said. "With the lower price, Alcoa has got to try to bring its costs down. There is no way they can make money at 65-cent aluminum."

Alcoa Cuts Affect International Business

The cuts also include about 18 percent of Alcoa's jobs in Russia, and about 6,500 positions in its electrical and electronic systems business, which serves the auto and heavy truck markets, across North American and Europe.

The planned sale of the Europe-based transportation products business includes facilities in Italy, Hungary and Germany. The cast auto wheels unit includes a plant in Beloit, Wis., that employs about 265 people.

Alcoa said it plans to consolidate operations serving the building and construction markets due to weaker demand.

About 1,100 people have been laid off from Alcoa's global power and propulsion unit, which makes aircraft parts and other products for the aerospace and defense industries, the company said, citing lower demand. Those job cuts are included in the 13,500 total job reduction.

Alcoa plans to eliminate about 260 corporate staff and contractor positions.

Lowery said he did not have a breakdown of the job cuts by country. The company employs at least 94,000 people in 34 countries, though the size of the total work force fluctuates, he said.