Alcoa 2010 Annual Report Download - page 28

Howmet metal castings, Huck®fasteners, Kawneer building panels and Dura-Bright®wheels with easy-clean surface
treatments. The company’s rights under its trademarks are important to the company as a whole and, to varying
degrees, important to each business segment.
Competitive Conditions
Alcoa is subject to highly competitive conditions in all aspects of its aluminum and non-aluminum businesses.
Competitors include a variety of both U.S. and non-U.S. companies in all major markets. Price, quality, and service are
the principal competitive factors in Alcoa’s markets. Where aluminum products compete with other materials – such as
steel and plastics for automotive and building applications; magnesium, titanium, composites, and plastics for
aerospace and defense applications – aluminum’s diverse characteristics, particularly its light weight, recyclability, and
flexibility are also significant factors. For Alcoa’s segments that market products under Alcoa’s brand names, brand
recognition, and brand loyalty also play a role. In addition Alcoa’s competitive position depends, in part, on the
company’s access to an economical power supply to sustain its operations in various countries.
Research and Development
Alcoa, a technology leader in the aluminum industry, engages in research and development programs that include
process and product development, and basic and applied research. Expenditures for Research and Development (R&D)
activities were $174 million in 2010, $169 million in 2009, and $246 million in 2008.
Most of the major process areas within the company have a Technology Management Review Board (TMRB) consisting
of members from various worldwide locations. Each TMRB is responsible for formulating and communicating a
technology strategy for the corresponding process area, developing and managing the technology portfolio and ensuring
the global transfer of technology. Alternatively, certain business units conduct these activities and research and
development programs within the worldwide business unit, supported by the Alcoa Technical Center (ATC). Technical
personnel from the TMRBs, ATC and such business units also participate in the corresponding Market Sector Teams. In
this manner, research and development activities are aligned with corporate and business unit goals.
During 2010, the company continued to work on new developments for a number of strategic projects in all business
segments. In Primary Metals, progress was made on inert anode technology with tests carried out on a pilot scale.
Progress has been successful in many respects as a result of full pot testing of anode assemblies, although there remain
technical and cost targets to achieve. If the technology proves to be commercially feasible, the company believes that it
would be able to convert its existing potlines to this new technology, resulting in significant operating cost savings.
The new technology would also generate environmental benefits by reducing certain emissions and eliminating carbon
dioxide. No timetable has been established for commercial use. The company is also continuing to develop the
carbothermic aluminum process, which is in the research and development phase. The technology holds the potential to
produce aluminum at a lower cost, driven by reduced conversion costs, lower energy requirements and lower emissions
at a lower capital cost than traditional smelting.
The company continued its progress leveraging new technologies such as bio-mimicry, nanotechnology, and low-cost
sensing in 2010. For example, riblets that reduce aerodynamic drag have been analyzed and produced on a test basis.
Self-cleaning nano coatings have been demonstrated on building products. Energy saving sensing devices are being
integrated in company manufacturing plants. Integrated thermal management products for consumer electronics have
been developed and are being validated by our customers.
A number of products were commercialized in 2010 including aluminum tie downs for military ships, new fasteners,
primary aluminum with Cradle to Cradle®Certification, and new armor plate alloy solutions. The company continues
to develop its Micromill™ technology. Scale-up to full commercial width has been successful. Product development
continues, and commercialization has commenced.
Alcoa’s research and development focus is on product development to support sustainable, profitable growth;
manufacturing technologies to improve efficiencies and reduce costs; and on environmental risk reductions.
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