Alcoa 2009 Annual Report Download - page 36

Alcoa’s human resource talent pool may not be adequate to support the company’s growth.
Alcoa’s existing operations and development projects require highly skilled staff with relevant industry and technical
experience. The inability of the company and industry to attract and retain such people may adversely impact Alcoa’s
ability to adequately meet project demands and fill roles in existing operations. Skills shortages in engineering,
technical service, construction and maintenance contractors may also impact activities. These shortages may adversely
impact the cost and schedule of development projects and the cost and efficiency of existing operations.
Alcoa may not realize expected benefits from its productivity and cost-reduction initiatives.
Alcoa has undertaken, and may continue to undertake, productivity and cost-reduction initiatives to improve
performance and conserve cash, including new procurement strategies for raw materials, such as backward integration
and non-traditional sourcing from numerous geographies, and deployment of company-wide business process models,
such as the Alcoa Business System and the Alcoa Enterprise Business Solution (an initiative designed to build a
common global infrastructure across Alcoa for data, processes and supporting software). There can be no assurance
that these initiatives will be completed or beneficial to Alcoa or that any estimated cost savings from such activities
will be realized.
Alcoa may not be able to successfully develop and implement technology initiatives.
Alcoa is working on developments in advanced smelting process technologies, including inert anode and carbothermic
technology, in addition to multi-alloy casting processes. There can be no assurance that such technologies will be
commercially feasible or beneficial to Alcoa.
Alcoa’s business and growth prospects may be negatively impacted by reductions in its capital expenditures.
In response to the global economic downturn and related disruptions in the financial markets, Alcoa changed its capital
expenditures strategy in 2009 as follows: capital expenditure approval levels were lowered dramatically; growth
projects were halted where it was deemed economically feasible; and all non-critical capital expenditures were stopped.
Capital expenditures are deemed critical if they maintain Alcoa’s compliance with the law, keep a facility operating, or
satisfy customer requirements if the benefits outweigh the costs.
Alcoa requires substantial capital to invest in greenfield and brownfield projects and to maintain and prolong the life
and capacity of its existing facilities. If demand for aluminum improves, Alcoa’s ability to take advantage of that
improvement may be constrained by earlier capital expenditure restrictions and the long-term value of its business
could be adversely impacted. The company’s position in relation to its competitors may also deteriorate.
Alcoa may also need to address commercial and political issues in relation to its reductions in capital expenditure in
certain of the jurisdictions in which it operates. If Alcoa’s interest in its joint ventures is diluted or it loses key
concessions, its growth could be constrained. Any of the foregoing could have a material adverse effect on the
company’s business, results of operations, financial condition and prospects.
Unexpected events may increase Alcoa’s cost of doing business or disrupt Alcoa’s operations.
Unexpected events, including fires or explosions at facilities, natural disasters, war or terrorist activities, unplanned
outages, supply disruptions, or failure of equipment or processes to meet specifications, may increase the cost of doing
business or otherwise impact Alcoa’s financial performance. Further, existing insurance arrangements may not provide
protection for all of the costs that may arise from such events.
The above list of important factors is not all-inclusive or necessarily in order of importance.
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