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July 26, 2004

Wenatchee Aluminum Trades Council Leadership Rejects New Labor Contract From Alcoa; 400 Jobs Will Be Lost in Wenatchee, WA

PITTSBURGH--(BUSINESS WIRE)--July 26, 2004--Alcoa (NYSE:AA) announced today that the leadership of the Aluminum Trade Council of Wenatchee, Washington, an affiliate of the U.S. Steelworkers of America Union (USWA) has rejected its proposals on a labor contract at the facility there without a membership vote. As a result, the aluminum smelter in Wenatchee, which has been idled since July 2001, will remain idled and approximately 400 salaried and hourly workers will lose their jobs. Employees at the plant were informed that their last day of work is scheduled for on or about October 1, 2004.

Alcoa is expected to record a pre-tax charge of $20 million in its 2004 third quarter to cover the cost of the lay-off.

"Despite tremendous efforts by the community, the local power authority, government officials and Alcoa, we have not been able to reach a labor agreement that would have saved 400 jobs in Wenatchee," said Alan Cransberg, Alcoa's President of U.S. Primary Metals. "Unfortunately, 400 families in the community will lose steady income and good benefits. Alcoa will not continue to provide employment at the Wenatchee plant with no hope of start-up in sight. Had an agreement been reached, Wenatchee would have continued to offer some of the best paying jobs with great benefits in this area," Cransberg said.

"We compete in a global market and make a commodity product here at Wenatchee. To stay competitive, we needed to have flexibility with the way we manage the plant as well as cost sharing of healthcare benefits. We believe our wage and benefit proposal was very fair, and asked for workers to contribute to healthcare in the same manner that approximately 20,000 other Alcoa employees do in the U.S. The average monthly contribution for those 20,000 workers is $72. To further put that in perspective, that is approximately one percent of the of the Wenatchee employees' base pay and benefits package," said Cransberg.

"We benchmark using some of the world's leading service providers in health care and pension programs, and our health and welfare and retirement benefits are more valuable then the vast majority of Fortune 500 organizations," said Bob Wilt, Plant Manager at the Wenatchee Works facility. "The benefits offered through this negotiation were broader, allowed for more individual choice, and were far richer than the average American worker receives," said Wilt.

Alcoa reopened negotiations with the Wenatchee Aluminum Trades Council on July 13, 2004 hoping to reach a new contract. As part of an agreement between Alcoa and the Chelan Public Utility District (PUD) Alcoa idled the Wenatchee smelter on July 1, 2001 to enable the PUD to acquire additional power supplies to serve Alcoa and Chelan PUD customers' future needs. Alcoa has maintained a workforce of 400 employees at the plant during this period, paying workers while they perform community service.

"Through our partnership with Chelan County PUD, Wenatchee Works continued to be an economic force in the community. By continuing to employ 400 people, we accounted for nearly 2.4 percent of total employment in Chelan County in 2003. Our operations accounted for $34.9 million in personal income (2.0 percent of the county personal income) and $1.4 million in local taxes (2.5 percent of county local taxes)," Wilt continued.

"We are very proud of the more than 100,000 hours of community service Alcoa employees in Wenatchee have performed. The results of the volunteer efforts have been staggering. More than 150 nonprofit agencies, schools and governments have benefited," said Wilt.

Alcoa's Intalco facility in Ferndale, Washington, is the only aluminum smelter in the Pacific Northwest that Alcoa operates today. The Wenatchee smelter has a capacity of 182,000 metric tons per year (mtpy) following the earlier removal of its 5th potline.

Alcoa is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap(R) foils and plastic wraps, Alcoa(R) wheels, and Baco(R) household wraps. Among its other businesses are vinyl siding, closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 120,000 employees in 42 countries and has been a member of the Dow Jones Industrial Average for 45 years and the Dow Jones Sustainability Indexes since 2001. More information can be found at www.alcoa.com