Investing.com -- Shares in Allegheny Technologies Incorporated (NYSE:ATI) inched up in after-hours trading, after one of the world's largest specialty materials component producers announced plans to eliminate 250 positions on Monday afternoon.
The layoffs, which will slash the company's Flat Rolled Products (FRP) division by approximately one-third, are expected to be completed by the end of the second quarter of Fiscal Year 2016. With the corporate restructuring, the Pittsburgh-based company expects to generate annualized cost savings of more than $30 million at the start of the third quarter.
It came as officials from 30 nations met in Brussels on Monday for an emergency session aimed at determining a strategy for reducing the continuing glut in steel production worldwide. The excess supply in steel has weighed on Allegheny Technologies' stainless steel sheet and grain-oriented electrical steel production in recent months.
“Reducing our flat-rolled products business’ dependence on unprofitable commodity products is a difficult process,” said Allegheny Technologies CEO Rich Harshman in a statement. “We believe in U.S. manufacturing. However, it is difficult for a U.S.-based company to compete in the global commodity markets, particularly when significant global overcapacity exists for products such as commodity stainless steel sheet and grain-oriented electrical steel (GOES). The restructuring and right-sizing actions we are taking, while painful for our employees and our company, are necessary to help secure the future of ATI Flat Rolled Products.
In late-December, Allegheny Technologies idled two factories in Western Pennsylvania, where almost 600 employers had been locked out for the previous four months while embroiled in a labor dispute. The company reiterated on Monday the need to idle the plants in order to reduce its exposure to stainless steel sheets.
"We are in the process of creating a smaller, more agile, streamlined, cohesive, and efficient FRP business that will focus on products and markets with significant technical barriers to entry," Harshman added.
Shares in Allegheny Technologies gained 0.02 or 0.12% to 16.90 in after-hours trading.