Newspaper article The Canadian Press

ALCOA Splitting Its Metals Segment from Its Automotive and Aerospace Units

Newspaper article The Canadian Press

ALCOA Splitting Its Metals Segment from Its Automotive and Aerospace Units

Article excerpt

Alcoa splitting into 2 companies

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Alcoa is splitting into two independent companies as it looks to capitalize on growing auto and aerospace demand for aluminum while continuing to adjust to the weak spot metal price.

The Alcoa name will remain with the 126-year-old metals company that does mining, refining and aluminum production, It has 17,000 employees spread over 64 plants worldwide, including three in Quebec.

The other company, yet to be named, will focus on engineered products, which includes the automotive and aerospace segments, with 43,000 employees at 157 locations.

Alcoa expects the split to be completed by the second half of 2016. Industry observers don't expect much impact on the Canadian operations, which benefit from a low currency and low electricity prices.

Klaus Kleinfeld, who will be chief executive of the engineer products company and chairman of both companies, said the split recognizes that two "value engines" have been created over the past few years.

"We are launching two strong companies. Both are driving value. Both will be distinct, global leaders," Kleinfeld told analysts Monday.

The company has been shifting its focus to its more profitable downstream automotive and aerospace products, which also involves titanium, and shutting unprofitable upstream aluminum smelters amid a surplus of supply and low prices.

About 40 per cent of downstream revenues have come from the aerospace market and the company foresees strong annual growth from plane and engine makers and increased use of aluminum in cars and construction.

Analyst Charles Bradford of Bradford Research in New York said the low Canadian dollar and rock-bottom hydro electricity prices ensure Alcoa's Canadian operations in Quebec are unlikely to see much of an impact from the split.

Alcoa employs about 3,400 people in Canada, mainly in Quebec, Ontario, and Alberta. …

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