Alcoa 2010 Annual Report Download - page 5

• To support the rebound in the aerospace industry, our Engineered Products and Solutions group made several
strategic acquisitions in its fastener business. In purchasing Republic and Van Petty, we expanded our product
range; in buying Demicron we gained a foothold in Morocco, where we can most competitively serve the Western
European aerospace market; and in agreeing to purchase TransDigm Group Inc. (in January 2011), we are broadening
our technology and product base for our aerospace customers. We also added to our portfolio the commercial
window business of Traco, which solidifi es Alcoa’s exterior building and construction systems offerings.
• In the growth market of Brazil, we formed a hydropower consortium that guarantees our operations will be 38%
energy self-suffi cient at very competitive prices. We also brought critical investments online in Brazil, with a 2.1
million metric-tons-per-year expansion at our São Luís refi nery in Brazil and the completion of our Juruti mine.
• In response to China’s rapid growth and soaring demand for cars, consumer electronics and lithographic sheet,
we ramped up the capacity at Alcoa’s Bohai and Kunshan mills for Flat-Rolled Products. With China consuming a
staggering 40% of the world’s aluminum and a 36% growth rate in that nation’s automotive industry, we are looking
at a variety of strategies to grow in the region.
• Alcoa’s plant in Samara, Russia, is prepared to meet heightened demand from beverage customers in Russia, the
Commonwealth of Independent States, Turkey and Eastern Europe. Since Alcoa Samara is the sole domestic can
sheet provider in Russia, we are targeting 14% revenue growth in Alcoa Russia from 2010-2013, outpacing the 8%
market growth.
Our forecasts are based on an estimated compound annual growth rate of 6.5% (for the period 2010-2020) for the
consumption of aluminum – a doubling of worldwide demand over the next 10 years that will be driven by urbanization,
population growth and environmental and energy concerns. Meeting the 20-year projections for the industry would
require the equivalent of four of our Ma’aden/Alcoa bauxite mines; fi ve Ma’aden smelters; and four Ma’aden-sized
refi neries coming on line every year for the next 10 years. That would equal a $30 billion annual investment for the
aluminum industry.
Fortunately for Alcoa, we’ve already made the investments to ensure that we have a solid head start in capturing those
growth opportunities. And, with our cash fl ow the strongest since 2003 and overhead expenses at their lowest level
since 1999, we have the cost structure and balance sheet to ensure that our growth will be profi table.
Our Customers
Alcoa’s growth in 2010 was driven by deepening relationships with our valued customers and new partners. At the Alcoa Technical Center, I personally
hosted visits by the senior leaders of major companies across our customer spectrum, from beverage companies to aerospace and automotive. Each
came looking for technological solutions in their quest to be more competitive in global markets. We also reached out to those individuals who specify
and purchase our aluminum with a simple yet powerful “Net Promoter Score” tool. It enabled our commercial teams to ask our customers, “How likely
is it that you would recommend Alcoa to a friend or colleague…and why or why not?” Our customers’ answers are driving major changes in everything
from our manufacturing processes to distribution to quality control. This feedback from our customers is what keeps us excited and motivated to continue
to push the envelope every day, and to apply our unique capabilities to making our customers stronger.
The common denominator among all our customers, whether CEO or purchasing agent, is that aluminum helps them overcome the increasing cost of
energy and meet their sustainability goals. They look to Alcoa to develop technologies that can lighten the weight of their products, make them more
durable and stronger, and render them infi nitely recyclable. A few examples:
• Last year, I told you that Chevrolet chose Alcoa’s wheels for its new
energy-effi cient Volt car. Because Chevrolet was so satisfi ed with a
wheel that provides lightweight performance and extends fuel economy,
it again chose Alcoa wheels for its latest vehicle. Weighing less than 18
pounds, the wheels help the Cruze Eco achieve an estimated 40 miles
per gallon on the highway. Chevrolet is convinced that Alcoa provides
lightweight solutions that benefi t the environment and enhance their
consumers’ driving performance, making it a win-win scenario for all.
Alcoa’s
growth in
2010 was
driven by
deepening
relationships
with our
valued
customers
and new
partners.
Alcoa 2010 Annual Report and Form 10-K 3
Chevrolet Cruze Eco