Alcoa 1996 Annual Report Download - page 5

Frontline Leadership
The business unit concept which we implemented in 1991 has been a powerful force for aligning the
interests of the customer, Alcoa employees, and shareholders. It has clarified responsibility and account-
ability and created a cadre of people who are charged with leading, not just managing, their businesses.
During the first five years of using this structure, we gave heavy emphasis to the independence
of the 21 business units, and we will continue to do so. However, in 1996 we began the next stage of
our quest for world-leading performance, as the business and resource support units worked together
to identify $300 million (25%) of combined savings in administrative costs.
In this process the joint teams have developed or elaborated concepts of shared services and
centers of excellence which will save money while protecting or enhancing the quality and timeliness
of the work we do.
The Power of Information
To leverage our human, physical, and technological assets around the world, we have been working on
common data structures and seamless information connectivity. The early evidence of success in this
area is visible every quarter, as we are the first major company to report earnings results for the previous
three-month period. This notion of “seamlessness” in access to and availability of information is critical to
our ability to add value as we expand geographically, which we have been doing at an accelerated pace.
Projecting our technological and product competence into all of the important markets of the
world is a big part of our vision for Alcoa’s future.
In 1996 we completed the acquisition of Alumix, the largest Italian aluminum company; and we
added significantly to our non-U.S. activities in Australia, Hungary, Norway and Brazil while completing
a major 30-year alumina supply contract with the China National Nonferrous Metals Industry
Corporation. We will continue this global thrust while looking for attractive opportunities to grow in
the United States as well.
Underpinning our ability to entertain growth opportunities is a conservative financial structure,
which we will maintain.
Together these elements will ensure that your company, Alcoa, remains the definition of excellence in
our industry.
Paul H. O’Neill
Chairman and Chief Executive Officer
February 10, 1997
3
“This is a profound
change in culture, a
transformation from
old habits of settling
for the “inevitable”
(accidents happen…
costs go up…markets
get glutted…strikes
are a fact of life) to
the belief that a com-
pany can seize the
initiative and shape
its own future.”