Alcoa

This article is about the company. For the town, see Alcoa, Tennessee.

Alcoa, Inc.

File:Alcoa.jpg
Company type	Public (NYSE: AA)
Industry	Aluminum
Founded	1886 in Pittsburgh, Pennsylvania
Headquarters	Principal: New York, NY Operational: Pittsburgh, PA
Key people	Alain Belda (CEO and Chairman)
Products	building products fastenings castings aluminum foil automobile parts rolled aluminum milled aluminum
Revenue	US$30.4 billion (2006) [1]
Net income	US$2.248 billion (2006) [2]
Total assets	37,400,000,000 Canadian dollar (2014)
Number of employees	129,000 (2006)
Website	http://www.alcoa.com

Alcoa (NYSE: AA) is the world’s third largest producer of aluminum, behind Rio Tinto and Rusal. Alcoa leads the world in alumina production and capacity. From its operational headquarters in Pittsburgh, Pennsylvania, Alcoa oversees operations in 44 countries. It is followed closely by a former subsidiary, Alcan, a Canadian-based company in Montreal, which was the third-leading producer behind Alcoa, but in terms of sales Alcan is ahead of Alcoa. Alcoa made a hostile $27 billion bid for Alcan on May 7th, 2007, aiming to reunite the two companies and form the largest aluminum producer in the world. The takeover bid was withdrawn after Alcan announced a friendly takeover by Rio Tinto on July 12, 2007. A bid for Alcoa by BHP Billiton or another mining company is looking increasingly likely as of the morning of July 13, 2007.

In addition to aluminum products, Alcoa also makes and markets consumer brands including Reynolds Wrap foil and plastic wrap, Baco household wraps, and Alcoa wheels. Among Alcoa’s other businesses are closures, fastening systems, Howmet Castings, and electrical distribution systems for cars. The packaging unit, including the Reynolds Metals subsidiary, is expected to be spun off to satisfy antitrust regulators, in response to the proposed Alcan takeover.

History

In 1886, Charles Martin Hall, a graduate of Ohio’s Oberlin College, discovered the process of smelting aluminum, almost simultaneously with Paul Héroult in France. He realized that by passing an electrical current through a bath of cryolite and aluminum oxide, the then semi-rare metal aluminum remained as a byproduct. This discovery, now called the Hall-Héroult process, is still the only process used to make aluminum worldwide.

On Thanksgiving day 1888, with the help of financial backers, Hall started the Pittsburgh Reduction Company with an experimental smelting plant on Smallman Street in Pittsburgh, Pennsylvania. In 1891, the company went into full production in New Kensington, Pennsylvania.'

The acronym "Alcoa" was coined in 1910, given as a name to two of the locales where major corporate facilities were located (although one of these has since been changed), and in 1999 was adopted as the official corporate name.

Under President Franklin D. Roosevelt, the Justice Departmentcharged Alcoa with illegal monopolization, and demanded that the company be dissolved. Trial began on June 1, 1938.

Four years later, the trial judge dismissed the case. The government appealed.

Two more years passed, and in 1944, the Supreme Court announced that it couldn’t assemble a quorum to hear the case so it referred the matter to the U.S. Court of Appeals for the Second Circuit.

The following year, the year the world weary of war at last had a chance at peace, was also appropriately enough the year this litigation came to its end. Learned Hand wrote the opinion for the Second Circuit.

Hand wrote that he could consider only the percentage of the market in “virgin aluminum” for which Alcoa accounted. Alcoa had argued that it was in the position of having to compete with scrap. Even if the scrap was aluminum that Alcoa had manufactured in the first instance, it no longer controlled its marketing. But no, Hand defined the relevant market narrowly in accord with the prosecution’s theory.

Alcoa said that if it was in fact deemed a monopoly, it acquired that position honestly, through outcompeting other companies through greater efficiencies. Hand applied a per se rule here, saying that it doesn’t matter how Alcoa became a monopoly, since its offense was simply to become one. Indeed, Hand seemed to be saying that in some circumstances inefficiency may be a requirement of the law.

Hand acknowledged the possibility that a monopoly might just happen, without anyone’s having planned for it. If it did, then there would be no wrong, no liability, and no need to remedy the result. But that acknowledgement has generally been seen as an empty one in the context of the rest of the opinion, because of course rivals in a market routinely plan to outdo one another, at the least by increasing efficiency and appealing more effectively to actual and potential customers. If one competitor succeeds through such plans to the extent of 90% of the market, that planning can be described given Hand's reasoning as the successful and illegal monopolization of the market.

This leaves the question, what is the proper remedy once a wrongful monopolization is found? Here Hand remanded the matter to the trial court, and the whole narrative comes to an unsatisfactory conclusion – more of a dissipation, really, than a conclusion. In 1947, Alcoa made the argument to the court that there were two effective new entrants into the aluminum market – Reynolds and Kaiser – as a result of demobilization after the war and the government’s divestiture of defense plants. In other words, the problem had solved itself and no judicial action would be required. On this basis, the district court judge ruled against divestiture in 1950, but the court retained jurisdiction over the case for five years, so that it could look over Alcoa’s shoulder and ensure that there was no re-monopolization.

Until 1950, Alcoa was concerned with its domestic market, while its Canadian subsidiary Aluminum Limited (Alcan) took care of the international markets. Alcoa, Reynolds, and Kaiser were soon joined in the growing market by Anaconda Aluminum Company, a subsidiary of the copper-industry giant. In 1958 Harvey Machine Tools Company began primary aluminum production, marking the end of Alcoa's monopoly over the process which had led to its domination of the American market.

Noted economist and former Federal Reserve chairman Alan Greenspan criticized the judgment of monopoly against Alcoa (Capitalism: The Unknown Ideal; see) quotes Learned Hand, the judge in U.S. v Alcoa, who remarked, "It was not inevitable that it should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel." Greenspan believes that the characterization of Alcoa as a threat to competition is erroneous, as "ALCOA is being condemned for being too successful, too efficient, and too good a competitor. Whatever damage the antitrust laws may have done to our economy, whatever distortions of the structure of the nation's capital they may have created, these are less disastrous than the fact that the effective purpose, the hidden intent, and the actual practice of the antitrust laws in the United States have led to the condemnation of the productive and efficient members of our society because they are productive and efficient." Greenspan grants that Alcoa was a monopoly, but maintains that it was not a coercive monopoly and, hence, should not have been subject to anti-trust action.

Alcoa has established an 8% stake in China’s state-run aluminum industry and has formed a strategic alliance with Aluminium Corporation of China (Chalco), China’s largest aluminum producer, at its Pingguo facility.

Alcoa has also acquired two facilities in Russia, at Samara and Belaya Kalitva. Alcoa recently launched an offer to purchase the remaining 18% of the Belaya Kalitva plant from minority shareholders, giving it complete ownership in the facility.

In 2004, Alcoa's specialty chemicals division was sold, taking on the name Almatis, Inc..

In 2005, under heavy criticism by local and international NGOs related to a controversial dam project exclusively dedicated to supplying electricity to this smelter, Alcoa began construction in Iceland on Alcoa Fjardaal, a state-of-the-art aluminum smelter and the company’s first greenfield smelter in more than 20 years. Alcoa also signed a memorandum of understanding with the government of the Republic of Trinidad and Tobago to build a low-emissions aluminum smelter and related facilities there. However, there has been strong objection of this by the residents of the area of the proposed smelter sparking protests and marches frequently.Also, Alcoa is working with the government of Ghana on the development of the aluminum industry in that country. Furthermore, Alcoa has completed or is undergoing primary aluminum expansion projects in Brazil, Jamaica, and Pinjarra, Western Australia.

In 2006, Alcoa relocated its top executives from its headquarters in Pittsburgh to New York City. Although the company's principal office is located in New York City, the company's operational headquarters are still located at its Corporate Center in Pittsburgh. Alcoa employs approximately 2,000 people at its Corporate Center in Pittsburgh and 60 at its principal office in New York. [3]

Alcoa was named one of the top three most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland.

Environmental record

According to the University of Massachusetts' Political Economy Research Institute, Alcoa is one of the top ten most toxic companies in the country, producing 9,884,267 pounds of toxic chemicals in 2002 alone. Since 1987, state and federal regulators have cited Alcoa for more than forty-seven pollution violations. In 2002, Alcoa paid half a million dollars in fines at its Indiana plant in order to settle lawsuits charging it evaded water pollution regulations. Under the controversial grandfather provisions of the Texas Clean Air Act, Alcoa has been exempt from installing up to date pollution control devices and submitting to health-impact studies. .

On the other hand, In 2005, BusinessWeek magazine, in conjunction with the Climate Group, ranked Alcoa as No.5 of "The Top Green Companies." in cutting their carbon gas emissions .

Alcoa in Ghana

Alcoa's affiliate in Ghana, the Volta Aluminum Company, was completely closed between May 2003 and early 2006, due to problems with its electricity supply. [4] [5]

Alcoa in Iceland

By the middle of September, over 50% of the Alcoa Fjardaál smelter construction in Iceland has been finished. The total workforce on site is 1,750 people, of which 80% are of Polish origin. It is expected to be on line by 2007. Alcoa and the government of Iceland have signed an agreement on instigating a thorough feasibility study for a new 250,000 tpy smelter in Bakki by Húsavík in Northern Iceland. In order to power Alcoa's new smelters in Iceland, vast tracts of otherwise untouched wilderness are being flooded to provide hydroelectric energy.

Alcoa In South Wales (Swansea)

On November 21 2006, Alcoa announced that it is to close its Waunarlwydd works in Swansea, with the loss of 298 jobs. Production ceased at the Swansea plant on 27 January 2007. Decommissioning works are now taking place. Although rolling operations at the plant have now ceased, a small workforce is still employed in homogenisation, where heat treatment takes place for the Kitts Green plant.

• BBC News
• Forum for former workers from the Swansea plant

Alcoa in Australia

Alcoa operates bauxite mines, alumina refineries and aluminium smelters through Alcoa World Alumina and Chemicals, which is a joint venture between Alumina Limited and Alcoa. Alcoa operates two bauxite mines in Western Australia - the Huntly and Willowdale mines. Alcoa World Alumina and Chemicals owns and operates three alumina refineries in Western Australia: Kwinana, Pinjarra and Wagerup. Two aluminium smelters are also operated in the state of Victoria at Portland and Point Henry.

Alcoa in the United States

ALCOA was lured into Blount County, Tennessee and created a plant just outside of Maryville, TN. This plant was the biggest provider of aluminum in the South. The area needed housing for workers, so ALCOA built many houses. The area eventually turned into a city and decided to name its self after the the Aluminum Co. Alcoa, TN was founded 1919.

Alcoa World Alumina and Chemicals

Alcoa owns and operates the majority of its alumina refineries through its 60% share of Alcoa World Alumina and Chemicals.

Alcoa Primary Aluminium smelters

Alcoa has interests in 25 primary aluminium smelters in 8 countries.

Alcoa smelters

Country	Location	Equity ownership	Plant Total Nameplate capacity (kt per year)	Alcoa's Capacity (kt per year)
Australia	Point Henry	100%	185	185
Australia	Portland	55%	353	194
Brazil	Poços de Caldas	100%	96
Brazil	São Luís (Alumar)	60%	438	263
Canada	Baie Comeau	100%	438	438
Canada	Bécancour	75%	409	307
Canada	Deschambault	100%	254	254
Italy	Fusina	100%	44	44
Italy	Portovesme	100%	150	150
Spain	Avilés	100%	90	90
Spain	La Coruña	100%	84	84
Spain	San Ciprián	100%	225	225
United States	Evansville, IN (Warrick)	100%	309	309
United States	Frederick, MD (Eastalco)	100%	195	195
United States	Badin, NC	100%	60	60
United States	Massena, NY	100%	130	130
United States	St. Lawrence, NY	100%	125	125
United States	Mount Holly, SC	50%	229	115
United States	Alcoa Operations, TN	100%	215	215
United States	Rockdale, TX	100%	267	267
United States	Ferndale, WA (Intalco)	100%	279	279
United States	Wenatchee, WA	100%	184	184
Ghana	Tema	10%	200	20
Norway	Lista	50%	94	47
Norway	Mosjøen	50%	188	94

See also

• Alumina
• List of alumina refineries
• Alcoa World Alumina and Chemicals
• Alcoa, Tennessee
• List of aluminium smelters

External links

• Official Website
• Top Companies of the Decade From Business Week magazine
• The Bad Neighbor: Alcoa's Dirty Dealings in Texas From Dollars & Sense magazine.
• Russia dethrones US metals king
• Alcoa smelting plant pursues excellence in reliability - Case study
• Something in the Air - The Clash Between a Giant Industry that makes an essential product and a small community dogged by illness and struggling for survival
• Protesters plan to lodge Supreme Court writ over Alcoa smelter
• Alcoa expands despite toxins