A scaled-down Alcoa returns to the nest
Alcoa’s decision to return its headquarters to Pittsburgh is welcome news. However, it is important to remember that the company is a ghost of its former self, and the return mostly has symbolic value for Pittsburgh, which was once a headquarters town and would like to become one again.
The company, founded in the Strip District in 1888, had its headquarters Downtown and then on the North Shore before moving it to New York — a trendier, more convenient place, the corporate brass thought — in 2006. What poor judgment. The more expensive scenery did nothing to arrest Alcoa’s financial unraveling, spurred by years of low aluminum prices and, according to some, ineffective leadership.
In November, the aluminum maker spun off its parts manufacturing businesses into a new company, Arconic, which will remain headquartered in New York. Arconic is listed on the Fortune 500; Alcoa is no longer on the prestigious list. (Arconic’s CEO, Klaus Kleinfeld, who ran Alcoa before the spinoff, was forced out last week because of an impolitic letter he sent to the executive of a hedge fund that was trying to oust him because of dissatisfaction with his performance.)
Alcoa’s headquarters relocation is part of a global series of office consolidations intended to save $5 million annually. But only 10 employees will be moving with the headquarters. They will join about 205 Alcoa employees and contractors still working on the North Shore. Also working there are Arconic employees who remained based in town after the spinoff.
Alcoa and Pittsburgh are both poorer for the company leadership’s 11-year distance from Pittsburgh. With luck, the company will rebound and join Pittsburgh’s resurgence. Arconic’s headquarters would be welcome, too.