Charlie Straface, president of Norwegian aluminum manufacturer Norsk Hydro’s North American extrusion operations, convenes a coronavirus task force every other day to push cost-cutting measures to stem declining revenues and protect the unit’s cash balance during the financial slump associated to the pandemic.
With little clarity on when the U.S. economy will reopen, firms of all sizes have been bracing for at least months of restricted revenues. With some $500 billion of corporate debt attributable to mature this year, and in 2021, many businesses should conserve cash and bolster liquidity.
The picture was shakier for Lake Zurich, Illinois-based CCTY Bearing. The supplier of bearings to automakers and development and agriculture equipment manufacturers mentioned it might face an issue if the economy stays shut even into May.
Forty-one states have ordered their citizens to stay at home to stem the coronavirus outbreak. In consequence, many of CCTY’s customers are unable to take their deliveries.
If the gridlock continues, CCTY expects to develop a 50% increase in inventory in May, locking up millions of dollars.
At Hydro’s North American extrusion arm, slumping revenues have boosted the need for working capital 15% over the last month, and the worst is yet to come.
To protect its cash stability, Hydro has furloughed about 10% of staff in the U.S. and Canada and asked all 23 facilities to cut operating expenses by 20%.