Boston, MA 10/21/2013 (wallstreetpr) – Alcoa Inc (NYSE:AA) has been facing the heat for some time now on the back of oversupply in the aluminum industry. The company has been removed from the Dow Jones Industrial Average (DJIA) some days back. The world’s third largest producer of aluminum is struggling to survive and post profits. Alcoa’s CEO has been steering the company well in such uncertain times and the steps taken under his leadership appear to have benefitted the company well.
Alcoa has taken several steps to cut costs and reduce expenses. The company had planned to spend $1.55 billion in the year 2013 on CapEX related expenses. It has spent only $771 million till the third quarter end. The company is also shifting primary aluminum production from high-cost Europe and North America to Middle East to take advantage of lower power costs. It is engaged in building two potlines in Saudi Arabia with capacity of 740,000 tonnes per year. The project consists of a mine, a refinery as well as a rolling mill. Though it has had to suspend the ramp-up of one potline due to glitches, it is accelerating the ramp-up of the second line and hopes to complete the project well in time. Repairs to the affected potline are expected to be completed only in 2014. The facility is being built at a cost of $10.8 billion and will be run by the Ma’aden-Alcoa joint venture. Alcoa expects the project to be the lowest-cost facility in the world.
Alcoa is also taking steps for lowering the effect of volatility in aluminum prices on its operations. The company is aggressively building up the value added business and at the same time restructuring the commodity business. The Alcoa Technical Center near Pittsburgh is the world’s largest light metal R&D center in the world. Scientists and engineers have been successful in developing a new advanced aluminum wheel alloy in the last 45 years. The new material will result in lower weight wheels to be built. The wheels will have greater strength, lower weight, and same corrosion-resistant characteristics. Engineered Products and services now contribute 25% of the company’s total revenues.
These steps initiated by the CEO will ensure that Alcoa continues to do well in future.
