Tomahawk, WI 12/17/2013 (BasicsMedia) – Alcoa Inc (NYSE:AA) is the leading producer of aluminum, miner of bauxite and refiner of alumina. The company’s innovation can be seen in the cutting-edge construction materials for planes, automotives and more. AA has been offering industrial and consumer aluminum for more than 125 years.

The recent weakness seen in the aluminum market has been part of its greatest challenge. It is now fixing the problem with deals that could turnaround its fortunes for the long term. The company entered in a supply deal with Airbus for modern aluminum for aerospace forging in 2012 which was valued at $1.4 billion. That year, the company closed its books with more than $3.8 billion from its aerospace supply business.

The company has once again hit a jackpot with Airbus in a multi-year deal valued at $110 million. The company will supply the aircraft-maker with aluminum plates and other construction materials which meet the stringent aerospace specifications. This deal will enable Airbus to make planes which are more fuel-efficient and stronger at the same time.

For Alcoa Inc (NYSE:AA), this will offer a long-term business opportunity. Such deals will help the company mitigate the impact of poor aluminum prices worldwide which has basically made it hard for its peers to see profits.

Cutting-edge technology

AA employs superior technology in the pressing of its aluminum for automobiles and aerospace. It is this technology that gives it opportunities at the expense of competitors. Its big presence in high-end aluminum plates and sheets production plays into the hands of automobile and aircraft making industry where energy efficiency and environmental impact have become issues of great concern.

A lot of aircraft makers are looking to invest in materials which meet the aviation specifications in terms of lightness and strength. At the same time, there is a need for producing fuel-efficient machines which will help reduce the impact of global warming due to greenhouse gas emission.

This whole environment creates a good business opportunity for Alcoa Inc (NYSE:AA) whose materials have been tried and tested for quality, especially for use in the aerospace and automotive manufacturing.

Pricing factor

Alcoa Inc (NYSE:AA) beats its rivals in many ways. It has the leading technology in the industry. It also offers the best in class materials at the best prices. This means that even as aluminum prices appear weak, it is still able to employ pricing strategy to win the market share against opponents.

The reason Alcoa Inc (NYSE:AA) is also poised to use pricing strategy against its opponents is due to the fact that it is also operating low-cost production units. This means that it enjoys higher profit margins on the materials it produces and it can sacrifice its higher margins to offer its materials at prices lower than the market rate.

The company’s effort to reduce operating cost is also a factor which puts it at an advantage in the market. It is able to generate high profits even in a low-price environment because of its expenses reduction strategies. Moreover, Alcoa Inc (NYSE:AA) has been able to increase its production capacity which, in effect, allows it to retain the big stake of the market share.

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