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Alcoa plans on global expansion
Pittsburgh to remain home base

Pittsburgh Tribune - Review
Saturday May 13, 2000

By Micahel Yeomans
Tribune-Review

Alcoa Inc., will continue to roll into new markets in new countries with new products even as it doubles its United States operations due to recent acquisitions.

This was the message from President and Chief Executive Officer Alain Belda, presiding over his first annual shareholders meeting Friday in Pittsburgh.

At the same time, Alcoa Chairman Paul H. O’Neill pledged the world’s dominant aluminum company will remain based in its home city even as it continues expanding organically and through acquisitions..

O’Neill, who will remain as chairman through Dec. 31, called the planned opening of an Alcoa office in New York next year a necessity because of the company’s multinational growth.

“We don’t have the same adequacy on international travel (in Pittsburgh),” he said. “It also puts us in a position with all the acquisition work we’re doing to have constant contact with the analyst community in New York. The headquarters will be in Pittsburgh.”

Shareholders appeared jubilant at the meeting, with Belda being able to report a 61 percent jump in first quarter profits.

Belda, who took over the CEO’s post from O’Neill in May 1999, said the incorporation of Reynolds Metal Co. into Alcoa’s business system has proceeded quickly and smoothly.

Alcoa acquired the Virginia-based maker of the popular Reynolds Wrap aluminum foil for $5.75 billion in stock and debt assumption.

“We’ve learned a lot since the first (acquisition) we’ve done,” Belda said. “In the Reynolds acquisition, we had all the teams in place, cross-visiting plants and looking at costs, consumption, raw materials, contracts, and within a week we had a plan on the gaps to go after.”

With Reynolds’ consumer and packing, construction and distribution and transportation business units, Alcoa is adding nearly $4 billion to annual revenues, while adding 1.1 million metric tons to its production of alumina, the substance aluminum is derived from.

The company is also bidding to acquire Cordant Technologies Inc. for $29 billion in stock and $685 million in debt. That deal would add to Alcoa’s aerospace and fasteners product lines as well as turbines for power generation and alloys castings.

Belda and O’Neill both defended the company’s operations of plants in Mexico that have come under criticism form worker advocate groups there.

A small Mexican contingent made its way to Pittsburgh Friday to continue to push for wage increases, profit sharing and an end to forced overtime at six plants in the cities of Acuña and Piedras Negras.

At a news conference following the shareholders session, Juan Tovar, a worker in Piedras Negras, questioned what he called the wide gaps in weekly wages between the Alcoa joint venture plants.

Speaking at the headquarter of the United Steelworkers of America, Tovar said workers in an Acuña plant make $45 per week, while workers in a plant 40 kilometers away in Piedras Negras make $90 per week.

According to Ricardo Hernández of American Friends Service Committee, the company has responded to their concerns by agreeing to review the wages of the 13,000 Mexican workers in Acuña.

Belda earlier showed shareholders a two-minute video on one of the Mexican plants to support his contention that the plants are bright, clean and that workers are well-fed, safe and happy.

He said the company has increased Mexican employee’s wages 56 percent since 1998 before inflation, and he blamed the Mexican government for turning what is a $5 per hour pay for workers on the U.S side of the border to a $1 per hour pay for those in that country.

The meeting included another video — this one commemorating O’Neill’s reign at Alcoa.

Although he is retiring at the end of the year, O’Neill said he will keep a close eye on the company’s performance. He said most of his compensation has been in Alcoa stock, and remarked that he never sold a single share. According to the company’s proxy statement, he owns 800,360 shares.

During the business portion of the meeting, shareholders re-elected a number of directors, including O’Neill, Kenneth W. Dam and Judith M. Gueron.

Shareholders also authorized the increase in the number of shares of common stock from 600 million to 1.8 billion, triggering the 2-for-1 stock split announced in January.

The split shares will be distributed June 9 to shareholders of record at the close of business May 26.

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