Just this week, it was announced that Alcoa, the company responsible for the widespread development of aluminum, is bringing their headquarters back to Pittsburgh where the company was founded. On the surface, the move could be seen as a resurgence in aluminum manufacturing in the United States. However, growing costs and the rise of cheaper international product are bigger factors in Alcoa’s return to Pennsylvania. Here are a few details on the move:
- Consolidation – Along with the Pittsburgh move, the aluminum giant plans to close and consolidate some offices and smelters around the globe in a cost-cutting measure that will save roughly $5 million.
- No Manufacturing Jobs – Pittsburgh won’t house any aluminum manufacturing facilities, which Alcoa has relocated to Iceland, Norway and Saudi Arabia to save on energy costs. Instead, the city will house a technical and innovation center in addition to the headquarters.
So why no manufacturing jobs? The process of refining aluminum is very energy intensive, which means any production facility needs access to an abundance of cheap energy in order for the manufacturing to be profitable. For decades, energy in the Mid-Atlantic region of the United States hasn’t been cheap enough to handle this task. This explains Alcoa’s investment in facilities in Iceland and Norway, two countries known for their reliance on alternative energy resources such as geothermal.
While Alcoa’s move might not mean a lot from a manufacturing jobs perspective, its return to Pittsburgh has a lot of symbolic meaning. Pittsburgh’s transition over the decades from a blue-collar to white-collar town has attracted more businesses investing in high tech ways to utilize raw materials, such as robotics and medical equipment. With a company that reported $9.3 billion in 2016 revenue relocating their administrative presence to the Steel City, the hope is their presence will attract other publicly traded companies and, in turn, other high tech jobs. What do you think about Alcoa’s return to Pittsburgh? Be sure to let us know in the comments section below.