Alcoa 2014 Annual Report Download - page 57

Alcoa could be adversely affected by changes in the business or financial condition of a significant customer or
customers.
A significant downturn or deterioration in the business or financial condition of a key customer or customers supplied
by Alcoa could affect Alcoa’s results of operations in a particular period. Alcoa’s customers may experience delays in
the launch of new products, labor strikes, diminished liquidity or credit unavailability, weak demand for their products,
or other difficulties in their businesses. If Alcoa is not successful in replacing business lost from such customers,
profitability may be adversely affected.
Alcoa may not be able to successfully develop and implement technology initiatives.
Alcoa is working on new developments for a number of strategic projects in all business segments, including advanced
smelting process technologies such as inert anode and carbothermic technology, alloy development, engineered
finishes and product design, high speed continuous casting and rolling technology, and other advanced manufacturing
technologies. For more information on Alcoa’s research and development programs, see “Research and Development”
in Part I, Item 1. (Business) of this report. There can be no assurance that such developments or technologies will be
commercially feasible or beneficial to Alcoa.
Alcoa’s human resource talent pool may not be adequate to support the Company’s growth.
Alcoa’s existing operations and development projects require highly skilled executives and staff with relevant industry
and technical experience. The inability of the Company or the industry to attract and retain such people may adversely
impact Alcoa’s ability to adequately meet project demands and fill roles in existing operations. Skills shortages in
engineering, technical service, construction and maintenance contractors and other labor market inadequacies may also
impact activities. These shortages may adversely impact the cost and schedule of development projects and the cost
and efficiency of existing operations.
Alcoa may not realize expected benefits from its productivity and cost-reduction initiatives.
Alcoa has undertaken, and may continue to undertake, productivity and cost-reduction initiatives to improve
performance and conserve cash, including new procurement strategies for raw materials, such as backward integration
and non-traditional sourcing from numerous geographies, deployment of company-wide business process models, such
as Alcoa’s degrees of implementation process in which ideas are executed in a disciplined manner to generate savings,
and overhead cost reductions. There is no assurance that these initiatives will be successful or beneficial to Alcoa or
that estimated cost savings from such activities will be realized.
Alcoa may be exposed to significant legal proceedings, investigations or changes in U.S. federal, state or foreign
law, regulation or policy.
Alcoa’s results of operations or liquidity in a particular period could be affected by new or increasingly stringent laws,
regulatory requirements or interpretations, or outcomes of significant legal proceedings or investigations adverse to
Alcoa. The Company may experience a change in effective tax rates or become subject to unexpected or rising costs
associated with business operations or provision of health or welfare benefits to employees due to changes in laws,
regulations or policies. The Company is also subject to a variety of legal compliance risks. These risks include, among
other things, potential claims relating to product liability, health and safety, environmental matters, intellectual
property rights, government contracts, taxes, and compliance with U.S. and foreign export laws, anti-bribery laws,
competition laws and sales and trading practices. Alcoa could be subject to fines, penalties, damages (in certain cases,
treble damages), or suspension or debarment from government contracts.
While Alcoa believes it has adopted appropriate risk management and compliance programs to address and reduce
these risks, the global and diverse nature of its operations means that these risks will continue to exist, and additional
legal proceedings and contingencies may arise from time to time. In addition, various factors or developments can lead
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