Alcoa Swaps New York for the City of SteelBy
Top U.S. aluminum producer is closing seven other locations
CEO is looking to reduce complexity, be more operator-centric
Alcoa Corp. is giving up the glamour of New York City and going back to Pittsburgh, as new Chief Executive Officer Roy Harvey steps up efforts to streamline the aluminum maker.
Changing headquarters and closing seven locations across the U.S., Europe and Asia is part of a push to lower costs after the producer of the light-weight metal split from its jets- and auto-parts business last year. Alcoa called Pittsburgh, known as the steel city, home for decades until it moved to New York in 2006.
At an industry conference in February, Harvey said his key priorities for the company moving forward would sound like “apple pie and ice cream” to Americans in the audience: “simplify, simplify, simplify.”
“Today’s announcement is another step in our drive to be a more competitive, operator-centric company,” Harvey said Wednesday in statement. “We are taking every opportunity to streamline Alcoa to reduce complexity.”
The move would come as little surprise to analysts on calls with the new Alcoa management team, which has been quick to point out its frugality. The company once regarded as a corporate bellwether has eliminated a Geneva office and reduced its office space on Park Avenue, in Manhattan, to one floor. As Alcoa Chief Financial Officer William Oplinger noted in a November call: “We did not take any of the corporate jets with us.”
Arconic Inc., the downstream business that split from Alcoa in November, remains in New York. Arconic is involved in a proxy battle with activist investor Elliott Management Corp. that this week led to the departure of Klaus Kleinfeld as CEO and chairman. Among Elliott’s complaints were Arconic’s corporate overhead expenses and Kleinfeld’s globe-trotting lifestyle.
Alcoa expects annual savings of $5 million in corporate expenses once it finalizes the changes. Affected employees will relocate to other offices or facilities or telecommute.