Released on January 6, 2009

Alcoa Inc., Pittsburgh, announced plans to divest its automotive wheel casting segment, along with a number of other units it called “non-core downstream businesses.”

According to a company press release, the sale of the cast wheel business would mean the closing of the Beloit, Wis., metalcasting facility, which employs approximately 265, by June 1, 2009. Alcoa said it intends to continue producing and marketing forged wheels.

The aluminum smelting giant first indicated that it was interested in selling its casting unit in late April 2007, when it announced it would “explore strategic alternatives” involving both its automotive castings and electronics businesses. Those two units produced a combined $1.6 billion in 2006 and were marginally profitable, according to a press release issued by Alcoa at the time.

In addition to the cast wheels outfit, Alcoa said it now intends to sell its Electrical and Electronic Systems, Global Foil, and Transportation Products Europe units. The four businesses had 2008 combined revenues of $1.8 billion and an estimated after-tax operating loss of approximately $105 million. The businesses employ a combined 22,600 people at 38 locations. If a buyer for the businesses is found, Alcoa expects net proceeds to be approximately $100 million.

“These are extraordinary times, requiring speed and decisiveness to address the current economic downturn and flexibility and foresight to be prepared for future uncertainties in our markets,” said Klaus Kleinfeld, president and CEO of Alcoa.

The moves come as Aloca plans companywide cost-cutting measures, including a decrease in smelting output, reducing its global workforce by 13%, freezing salaries and hires, reducing capital expenditures by 50%, seeking new sources for raw materials, and restructuring several of its smelting holdings.

“Because we recently completed an extensive competitive analysis, including a strategic review of each business, we have been able to quickly identify and implement effective responses that strengthen our financial staying power in the economic downturn,” Kleinfeld said. “We will continue to monitor the dynamic market situation to ensure that we adjust capacity to meet any future changes in demand. These are extraordinary times requiring extraordinary actions.”