Business growth: Alcoa outlines strong future

Alcoa Inc. executives told investors gathered Wednesday in Davenport that the aluminum maker’s technology and innovative products are positioning it for profitable growth — particularly in its aerospace and automotive markets.

“Growth in the aluminum industry is expected to double over the next 10 years, as increasing populations in emerging markets such as China and Brazil urbanize and turn to more sustainable products in transportation, buildings and packaging,” said Klaus Kleinfeld, Alcoa’s chairman and chief executive officer. Kleinfeld was the keynote speaker as the company hosted its Investor Day at the Hotel Blackhawk.

The company update was part of a two-day conference that drew more than 50 Wall Street analysts to the home of Alcoa Davenport Works. The visit, which began with a tour Tuesday of the Riverdale plant, comes more than a month after Alcoa announced a $300 million expansion for Davenport Works.

Company executives representing Alcoa’s different businesses outlined how the company is meeting its aggressive three-to-five-year strategic goals. They discussed plans for expansions around the globe as well as efforts to lower the company’s cost position, drive down materials costs, and how innovative products and unique partnerships are helping grow the business.

Kleinfeld said the global population growth will help drive demand for Alcoa’s products, which are used prominently in the transportation industry, consumer products and construction.

He added that the birth of the world’s 7 billionth person and a move toward more urbanization worldwide spells opportunity for Alcoa.

“We in no means have reached the potential of what aluminum can do … our biggest limitation is thought,’’ he said, adding that innovation has been “part of our DNA.”

He said the company’s expansions in emerging markets, such as Russia, China, Saudi Arabia and Brazil, also will help power profitability.

“We see a very exciting future for our aluminum and other materials solutions as customers increasingly turn to Alcoa for innovative answers that differentiate them from their competitors,” he added.

The company said last year that it will add $2.5 billion of profitable growth by 2013. “We believe we will get 50 to 60 percent of this revenue growth this year,” Kleinfeld said.

Davenport Works will add to the new revenues when the new expansion is completed in 2013 and the company increases its capacity to serve the growing automotive market. “Quite a bit of that capacity has already been sold,” he added.

Kleinfeld said the automotive industry, which originally used aluminum in only its high-end models, “now is moving into the mainstream market.”

Helmut Wieser, Alcoa’s executive vice president and president of Global Rolled Products, reminded the Wall Street analysts that Davenport Works already is home to the world’s largest rolling mill for aluminum sheet and plate for aerospace. The company’s aerospace business is expected to grow by 9 percent over the next four to five years due, in part, to increasing build rates by the aerospace industry, he said.

“An exciting part of our growth story is automotive,” Wieser said. “We are going to grow this business five times from what it is today.”

This division also produces aluminum for consumer electronics and is focusing on China to grow this industry’s aluminum consumption, Wieser said. Alcoa is planning to grow this business by 166 percent by 2014.

In addition, he said Alcoa stands to benefit from the global growth in aluminum recycling. “There’s a good story here for the future and a big impact for the environment,’’ he said, adding that Alcoa is helping drive initiatives to increase aluminum recycling worldwide.

Like in Alcoa’s other businesses, Wieser said there is potential growth for the rolled products in the new emerging markets of Russia, China and the Middle East, where the company is building the world’s lowest cost mill.