Alcoa 1998 Annual Report Download - page 13

11
Alcoa + Alumax
Stockholders of Alumax
Inc. voted at a special
meeting in July to
approve the Alumax
merger with Alcoa.
Alcoa and Alumax had
entered into a definitive
agreement on March 8
under which Alcoa
would acquire all
outstanding shares of
Alumax for a combina-
tion of cash and stock.
The transaction was
valued at approximately
$3.8 billion: $1.5 billion
cash, $1.3 billion stock,
and $1 billion in assumed
debt. The combined
company has 103,500
employees, with 215
operating locations in
31 countries.
Rescue at Sea
An Alcoa ship, the
Marlin, bound for
Suriname, encountered
a sinking boat in the
Caribbean. Eight Cuban
refugees were rescued
and ultimately trans-
ferred to the U.S. Coast
Guard Cutter Vigorous.
Alcoa owns five vessels
in use around the world
for the transportation
of alumina between
refineries and smelters.
Outstanding
Director
Alcoa Chairman Paul
O’Neill was named one
of Corporate America’s
Outstanding Directors
by Director’s Alert, a
monthly news report for
corporate board mem-
bers and CEOs. Molly
Butler Hart, the publica-
tion’s executive director,
commented on the selec-
tion: “Paul is unusually
perceptive in assessing
situations, and he brings
this skill to the boards
on which he serves.
During his 11 years at
Alcoa, the company has
quadrupled its market
value. In addition, he
had 15 years of high-
level Washington service.
This background gives
him unique credibility in
the boardroom.”
Leveraging
an Asset
In Jamaica a 25-year
quicklime supply con-
tract was signed with
Rugby Cement Co.
Rugby will build a $20
million lime kiln facility
on Jamalco’s site, buy
power and oil, and lease
the Jamalco limestone
quarry. Construction
should commence in the
first quarter of 1999,
with lime supply sched-
uled for June 2000. For
Jamalco, this is a
significant cost and capi-
tal reduction initiative.
Technology
Teams
Alcoa has formed seven
Technology Management
Review Boards (TMRB)
to guide strategic tech-
nology development as
part of the Alcoa
Business System (ABS).
Five of these teams are
formed around Alcoa’s
core manufacturing
processes of refining,
smelting, flat-rolled
products, extrusions, and
chemicals. Two others
are market-driven
TMRBs, supporting auto-
motive and aerospace
research and develop-
ment. Each TMRB devel-
ops a technology strate-
gy for its area of respon-
sibility and manages a
portfolio of projects.
Ensuring the global
transfer of technology is
also part of the mission,
as is nurturing core
capabilities needed to
support the strategic
technology plan and to
enhance Alcoa’s competi-
tive prowess.
Record Year
for Foil
In 1998, Alcoa Foil
Products racked up its
largest shipment year
ever. Volume was driven
by a healthy economy,
unusually hot weather,
and establishment of
supplier relationships
with aggressively grow-
ing customers. Among
major foil markets, the
heat exchanger industry
continues to operate at
record levels, as an
unusually warm spring
and summer depleted
inventories. Growth in
the formed container
market, where Alcoa’s
customers are the indus-
try leaders, outpaced
GDP growth. In automo-
tive products, Alcoa
Foil Products teamed up
with a major Tier-1
supplier and showed
double-digit growth for
the year.
New Product at
San Ciprián
The Alcoa refinery at
San Ciprián in Spain has
developed a new alumina
product (SC-1) with a
low specific surface area
of 11-13 square meters
per gram (versus 65 per
gram for smelter grade
alumina). This and other
SC-1 characteristics
qualify it as a feedstock
for value-added alumina
chemicals produced
at Alcoa plants in
Rotterdam and
Ludwigshafen and for
customers in the refrac-
tory, ceramics, and cata-
lyst industries. The
product was developed
with the technical sup-
port of Alcoa’s Point
Comfort, Texas refinery.
Since last July, the SC-1
alumina has been in full-
scale production at
San Ciprián.