Alcoa 2007 Annual Report Download - page 24

Automotive
8% $2.5 billion
Alcoa segments that sell products to this market: Flat-Rolled Products,
Engineered Solutions, Extruded and End Products
• Alcoa supplies advanced components and systems to most of the major
global automotive OEMs. Alcoa’s technology can be found in engi-
neered automotive components such as wheels, driveshafts, closures,
and electronics, as well as in sophisticated system-level solutions
such as full-vehicle body structures and advanced electrical systems.
Recent CO2and fuel economy-related regulatory actions in Europe
and North America will bring increased attention to aluminum and its
ability to reduce fuel consumption without sacrificing safety.
• Global auto production continued to grow at a robust rate of 5% versus
2006 led by growth in China, Southeast Asia, and South America.
Europe had another strong year, posting growth of 6% . In contrast,
North American production fell 2% . North American-based auto
manufacturers continue to be forced to cut production and restructure
at home as they lose share to Asian-based manufacturers.
Commercial Transportation
5% $1.5 billion
Alcoa segments that sell products to this market: Flat-Rolled Products,
Engineered Solutions, Extruded and End Products
• Alcoa holds the #1 share position in four product categories of the
North American commercial vehicle market. Our products include
electrical systems, wheels, Huck fasteners, and semi-fabricated
sheet products for trucks and trailers. Alcoa’s core value proposition
of delivering increased payload capacity, improved fuel economy,
durability, and good looks continues to resonate with our commercial
transport customers globally.
• Global heavy truck production fell 1% due entirely to an anticipated
steep drop in North America. Production volumes in North America
declined 44% in 2007 following implementation of new emissions
regulations. In Europe, heavy truck builds increased for a fourth
consecutive year at an annual rate of 8.5% . In Asia, 2007 heavy
truck production was up 17% driven by strong economic growth in
the region.
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Aerospace
12% $3.7 billion
Alcoa segments that sell products to this market: Flat-Rolled Products,
Engineered Solutions, Extruded and End Products
• Alcoa aerospace products are widely used in the manufacturing of
aircraft and aircraft engines, including high-technology airfoils for jet
engines, fastening systems, and advanced alloys for the fuselage,
wings, landing gear, and wheels. Aerospace products are also serving
defense and space applications.
• More than 60% of Alcoa aerospace revenues come from propulsion
and fastening systems.
• Orders for large commercial aircraft surpassed 2,750 units in 2007 –
far exceeding last year’s mark of over 1,800. This order total was the
highest in aviation history and easily eclipsed the prior record of
around 2,100 units set in 2005.
• Robust orders during the past two years have now pushed backlogs
of large commercial aircraft to close to 7,000 units – at current deliv-
ery rates, this record backlog now equates to approximately seven
years’ worth of production from Airbus and Boeing.
• 2007 deliveries by both large commercial aircraft OEMs surged to
895 units – an 8% increase versus 2006. Working off the existing
backlog of undelivered aircraft is projected to keep production lines
humming through at least 2011.
Packaging and Consumer
24% $7.3 billion
Alcoa segments that sell products to this market: Flat-Rolled Products,
Packaging and Consumer
• Alcoa has agreed to sell its Packaging and Consumer businesses to
New Zealand’s Rank Group Limited for $2.7 billion in cash. The trans-
action is expected to be completed by the end of the first quarter 2008.
• Alcoa will continue to produce aluminum that is used in more than
30 billion can bodies and 43 billion ends each year. Aluminum cans in
the U.S. declined by 1.3% in 2007 affected by a drop in the shipments
of cans used for carbonated soft drinks.
Global Light Vehicle
Production by Region
millions of $
Demand of Aluminum for
Automotive Applications
kg/vehicle
Source: CSM Source: Ducker Research
0
10
20
30
40
50
60
70
0
30
60
90
120
150
90 00
00 01 02 03 04 05 06 07 06
North America
Europe
Japan
South Asia
South America
North America
Middle East
& Africa
Japan & Korea
Greater China
Europe
Trends in Major Markets
South America
East Europe
North America
West Europe
Asia
Global Heavy Truck
Production
thousands of units
Source: Global Insight
0
300
600
900
1200
1500
04 05 06 07
Boeing
Airbus
Large Commercial Aircraft
Orders
units
Large Commercial Aircraft
Deliveries
units
Source: Airbus, Boeing Source: AeroStrategy
0
1000
2000
3000
0
200
400
600
800
1000
1200
1400
04 05 06 07 06 07 08e 09e 10e 11e
Pacific
Middle East & Africa
Europe
Latin America
U.S., Canada & Mexico
Aluminum Consumption
for Beverage Cans
billions of cans
Source: CRU Alcoa
0
50
100
150
200
250
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