Alcoa 2009 Annual Report Download - page 28

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The company has a number of trade secrets, mostly regarding manufacturing processes and material compositions that
give many of its businesses important advantages in their markets. The company continues to strive to improve those
processes and generate new material compositions that provide additional benefits.
The company also has a number of domestic and international registered trademarks that have significant recognition
within the markets that are served. Examples include the name “Alcoa” and the Alcoa symbol for aluminum products,
Howmet metal castings, Huck®fasteners, Kawneer building panels and Dura-Bright®for wheels with dirt resistant
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 nonaluminum 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 $169 million in 2009, $246 million in 2008 and $238 million in 2007.
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 2009, 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. Progress was also made on carbothermic projects with
pilot tests. The projects, if commercially feasible, may reduce capital and energy costs, as well as provide
environmental benefits related to waste reduction.
In the semi-fabrication businesses, National Aeronautics and Space Administration (NASA) has certified Alcoa’s
Davenport, Iowa facility as a supplier in the U.S. to produce aluminum-lithium alloy 2195 thin plate for the Ares 1
crew launch vehicle, the rocket that will enable astronauts to explore space. First shipments have been made and
successfully validated by NASA.
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