Alcoa Standard Template

Report
Masters Class in Business Ethics
2nd Annual Conference on Teaching
Ethics in Universities
May 24, 2011
Bill O’Rourke, Alcoa
Background and Introduction
My approach:
 Introduce myself.
• message: this guy has some broad corporate experiences.
 Describe my corporation – Alcoa.
• Message: Alcoa is a large, global organization.
 Give a few additional details on my Russian experience and the Alcoa
Operation in Russia.
• Message: There are cultural differences around the World.
 Touch on the concepts of Corporate Values and Leadership.
• Message: Values have to be more than just words, they must be supported
by behaviors, especially the behaviors of the leaders.
 Give specific ethical situation examples and have the class wrestle with
them.
• Messages: - There are structured approaches to dealing with these issues.
- Learn about your own moral compass.
 Summary.
Agenda
 Brief Overview of Alcoa
 Leadership
 Leadership Challenges:
 Alcoa’s Investment in Russia
 Business Ethics Situations
 Ethical Challenges
 Questions/Comments
2010 Revenue:
$21.0 Billion
An Overview: Alcoa Inc.
31 Countries
59,000 Employees
Alcoa
Russia
Alcoa is 1 of 61 “survivors” on the
Fortune 500 List since its inception.
Alcoa – Global Leader in the Aluminum Industry
 Founded in 1888 in Pittsburgh
 A leading producer of primary
aluminum, fabricated aluminum and
alumina.
 2010 Revenues: $21 Billion
 60,000 employees in 31 countries.
 Strong Values. Environment, Health &
Safety (EHS)
In 2010 it was 10 times safer to work
for Alcoa than it was in 1991.
GHG Emission Reduction – 44% on a
1990 base and 22% on a 2005 base.
Results: Alcoa Lives Its Values Every Day
Safety Incident Rate History and Significant Accreditations.
Best Ever Safety Performance
4.0
3.86
3.57
COVALENCE ETHICAL RATINGS – No. 1 in Industry
Incident Rate
3.5
Total Recordable Incident Rate
3.0
2.5
2.26
1.85
2.0
1.48 1.4 1.5 1.42
1.32 1.30
1.5
0.5
0.0
Continued Sustainable Growth
9h Consecutive Year
2.03
1.0
Strengthened Reputation
Lost Workday Incident Rate
0.29 0.32
0.19 0.19 0.13 0.13 0.11 0.15 0.14 0.15
0.11
Established Carbon Leadership
Founding Member
6
Products
Packaging/Can Sheet
Aerospace Sheet, Plate &
Hard Alloy
Lithographic Sheet
Marine Plate
Automotive Brazing
Hard Alloy, Oil & Gas
VISION
Alcoa aspires to be the
best company in the
world.
ALCOA VALUES
Integrity. Alcoa’s foundation is our integrity. We are open, honest and
trustworthy in dealing with customers, suppliers, coworkers, shareholders
and the communities where we have an impact.
Environment, Health & Safety. We work safely in a manner that
protects and promotes the health and well-being of the individual and the
environment.
Customer. We support our customers success by creating exceptional
value through innovative product and service solutions.
Excellence. We relentlessly pursue excellence in everything we do,
every day.
People. We work in an inclusive environment that embraces change,
new ideas, respect for the individual and equal opportunity to succeed.
Profitability. We earn sustainable financial results that enable
profitable growth and superior shareholder value.
Accountability. We are accountable - individually and in teams - for
our behaviors, actions and results.
Our Values
Respect
- We treat others as we would like to be treated ourselves. We do not
tolerate abusive or disrespectful treatment. Ruthlessness, callousness
and arrogance don’t belong here.
Integrity
- We work with customers and prospects openly, honestly and sincerely.
When we say we will do something, we will do it; when we say we cannot
or will not do something, then we won’t do it.
Communication
- We have an obligation to communicate. Here, we take the time to talk with
one another. . .and to listen. We believe that information is intended to
move and information moves people.
Excellence
- We are satisfied with nothing less than the very best in everything we do.
We will continue to raise the bar for everyone. The great fun here will be for
all of us to discover just how good we can really be.
Some Leadership Concepts
I recommend that you have a “vision.”
I urge you to define “Personal Success.”
Consider seeking “True North” – the ultimate goal.
 Health & Safety
 Inventory
 Procurement
 Audit Function
 Payroll
Some Leadership Concepts
Leaders venture out of their comfort zones.
Leaders question the rules.
 “If you don’t ask ‘why?’ at least five times, you don’t know
why.”
Leaders challenge the status quo.
 “When the situation is better than ever, that might be the ideal
time to make change.”
Leaders “drive” for change.
 “Do you have a license to drive?”
 Is it better to ask for permission or seek forgiveness?
 Go; until someone tells you to stop.
Challenge Yourself. A most important challenge.
Leadership
What are the most important qualities of a Leader?
The Foundation of Leadership is Values
A leader has a strong foundation:




Integrity
Honesty
Fairness
Treating others with Dignity & Respect
A leader provides inspiration.
A leader possesses intelligence, skills & experience
A leader gets results.
Leadership Challenges
Alcoa purchases assets in Russia.
What are the initial Leadership Challenges?
Why Invest in Russia? The Future Potential
Aluminum Consumption Per Capita, 2007
Eastern Europe & CIS Sheet & Plate Market
(kg/capita)
Japan
CAGR
7%
US
Italy
CAGR
11%
Canada
Sweden
1100
800
KMT 530
Germany
Switzerland
Spain
Russia
Other
France
UK
Mexico
2002
2006
2011
China
Venezuela
 Aerospace – The fast-growing industry
Russia
 Packaging – Major can manufacturers are
Brazil
now building new plants in Russia
Argentina
India
 Automotive/Transportation – Expected
0
5
10
15
Significant Long-Term
Growth Potential
Source: McKinsey analysis, CRU
20
25
30
35
increase in usage of aluminum rolled and
extruded products, forged wheels, etc.
Alcoa-Russia: Two Major Plants Acquired in 2005
Samara (Population 1.5 million)
Age of facility: 1950’s
Initial Headcount: 7,200
Capabilities & capacities
Cast house
Flat Rolled Products: HT & NHT sheet
Extrusions 31 small to medium presses; 2 large
presses (12,000 MT and 20,000 MT)
Forgings: 4 presses including 30KMT & 75KMT
Belaya Kalitva (Population 60,000)
Samara
Belaya Kalitva
Age of facility: Early 1960’s
Initial Headcount: 5,300
Capabilities & capacities
Cast house
Flat Rolled Products: HT & NHT Plate
Extrusions: 1-15,000 MT & 14 small - medium presses
Tubes: 15,000 MT
Forgings: 6 presses
Production Capacity
75,000 Ton Forging Press
Production Capacity
25,000 Ton Extrusion Press
A Top Priority - Invest in Russia - $1 Billion
Investment: $750 million through 2008; $1 B now.





Acquisition price: $257.5 million
2005 Capital: >$20 million
* Plus Working Capital
2006 Capital: >$100 million
Why was the 2005 Investment only $20 million?
2007 Capital: > $167 million
2008 Capital: > $186 million
Cumulative Investment: Alcoa Russia
800
Millions of
Dollars
600
400
200
0
Initial
2005
2006
2007
2008
New Slitting Operation
Before
After
Belaya Kalitva - Forging - Pump House
Business Ethics
Can a Leader be successful in Russia:





While being honest?
By playing by the rules?
While respecting the environment?
By making worker safety a top priority?
By being a good neighbor in the community?
Ethical Challenges
How would you handle the various ethical issues
that arise in business every day?
Some Examples.
You just started to work for a large, multinational company. You’re
ready to take your first business trip. Your boss tells you that while
you are away you should buy a few personal things for yourself and
submit the cost on your expense account as a little extra
compensation for all the personal inconveniences of travel and
being away from the family. Do you?
You’re the Plant Manager during a downturn in the business and
your HR Manager is accused of taking $1,000 from laid-off
employees after she approves very attractive severance packages.
What do you do?
You get a call at 5:00 PM on a Wednesday reporting that TCE was
discovered in a ground water sample taken at the border of our plant
in El Campo, Texas. What do you do?
Your HR Manager comes to you and says the black employees (in
the North Carolina Plant) are complaining about an employee who
drove his pick-up truck into the company parking lot, displaying a 4’
X 8’ Confederate flag.
You get a call from the Company “Compliance Line” Director
alleging that the Plant Manager, who reports to you and is
performing well, is instructing employees to “spin” the safety results.
The Procurement Group needs to save $1 billion. Everything is
being “bid” for better pricing. You are the electrical buyer and have
placed all the electrical supplies ($26 million) for competitive bid.
The field is narrowed to 3 finalists who passed the quality and
delivery requirements. Price bids are due next week. The President
of one of the finalists calls and invites you and a friend to the Super
Bowl where your favorite team is playing.
In the waiting area of an Airport in St. Louis, you overhear four
Buyers from one of your biggest customers openly discussing an
upcoming sales negotiation with your company.
Proactive Behaviors
Periodic Discussions with Employees.
A Compliance Program – Policy, Procedures,
Phone Line, etc.
Annual Business Conduct Surveys.
Publicized Punishment – sometimes.
Rotation of Assignments – where conflict is
possible, avoid it.
Education & Training.
Climate – where reporting is acceptable.
Values Management.
Reward Employees based on proper Ethical
behavior.
A Suggested Approach
Gather the Facts
Define the Ethical Issues
Identify the Affected Parties
Identify the Consequences
Identify the Obligations
Consider Character & Integrity
Think Creatively about Potential Actions
Check your Gut
Act
Summary
If it looks wrong or feels wrong; don’t do it.
Let others know the rules; upfront.
Be outspoken and quick when you spot potential
ethical violations.
Tell the truth.
Be Fair - to all concerned.
Walk the Talk. Leaders establish Culture.
If in doubt - seek advice.
Questions?
THANK YOU!
Nobody is LOL Now.

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