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January 20, 2006

Joint Statement From the International Association of Machinists and Aerospace Workers (IAM) and Alcoa

PITTSBURGH--(BUSINESS WIRE)--Jan. 20, 2006--Alcoa (NYSE:AA) and the International Association of Machinists and Aerospace Workers (IAM) have reached a new five-year contract representing approximately 175 employees at three plants in Louisville, Kentucky, and Richmond, Virginia.

In the past, the IAM has jointly negotiated with the United Steelworkers (USW). Since May 2005, Alcoa and the unions have been attempting to reach an early agreement for the contract that expires on May 31, 2006. Although their issues are similar, the IAM chose to negotiate separately with Alcoa, in order to represent the needs of its members.

According to Stephen Spain, chief spokesperson and Aluminum Coordinator for the IAM, "Our two unions (USW and IAM) respect each others' views, and want to accomplish the same goals. However, the Machinist Union views how to accomplish these goals differently, and felt that we needed to break ranks from the USW in order to get our own vision of the future across to the company and represent the needs of our own members."

Jack Miller, Vice President of Foil Operations for Packaging and Consumer, said "This took strong leadership from IAM and I commend them for their responsible action. These negotiations were a give and take in which both sides made compromises. We looked toward the future together, and acknowledged each others' issues to protect employees, the company, the union, our customers, and our communities."

Three main issues were addressed during the Alcoa / IAM negotiations:

-- Health care - Acknowledging that health care is a national crisis that is not the fault of Alcoa or employees, the new contract gives IAM members the same program--Select Benefits--offered to almost 80% of Alcoa's U.S. salaried, union, and non-union employees. Employees will begin making contributions toward their health care costs in January 2007, and will be offered a range of choices to meet their needs.

-- Wages - To create more equality and bring employees at these locations up to the same level, Alcoa and the IAM agreed to substantial base hourly wage rate increases. These new increases will be in effect for 11 months before employees start making contributions for health care benefits.

-- New hires - To be more competitive both in the U.S. and globally, a new benefit structure will be adopted after ratification of the contract that will give new hires the same pay as current employees, but somewhat different benefits more closely aligned with new salaried employees.

Both Alcoa and the IAM agree that addressing these issues helps the long-term job security of employees and these locations. In addition, the plants will focus on improvements in productivity and efficiency to make them more competitive.

According to Miller, "This is good news for our employees represented by the IAM and Alcoa. We are working together to protect good, U.S. manufacturing jobs."

"A new contract on our terms is good for our members," said Spain. "We chose to negotiate early so that our members' needs were known by Alcoa, and that we were protecting their long-term job security. We feel it was best to be more proactive in resolving the health care issue than turning it into a major labor dispute where neither party would truly win. In the end, we feel that we acted responsibly by sending a signal to the company that we want them to hire at these plants and invest here in the future."