Pittsburgh-based Alcoa, the world's biggest aluminium company, has entered a deal with AssetTrade to sell everything from used smelters to conveyors online. AssetTrade will sell the equipment through its public marketplace as well as auctions online and offline.
The deal comes at a time when Alcoa needs it most. While last year it logged a record $23 billion in revenues, 2001 is looking grim. California's energy woes have led Alcoa to cut back production at some of its plants in the Pacific Northwest.
Meanwhile, rival BHP Ltd. plans to merge with Billiton plc, a deal that will still leave Alcoa atop the aluminum heap—but vulnerable.
Alcoa's online venture is a shrewd move that other manufacturers would do well to follow, said Gale Daikoku, senior analyst at Gartner Group Inc. "If there's a no-brainer revenue stream there, the smart ones are taking advantage of it," she said.
Alcoa CEO Alain Belda is pressuring his top managers, including Alcoa e-Business President Robert Wetherbee, to use Internet technologies to save money. "We're looking for opportunities that actually keep our costs down," Wetherbee said.
Wetherbee did not say how much Alcoa aims to save through its deal with AssetTrade. But manufacturers in like deals have sought savings in the high seven-figure range.
Alcoa's recent acquisitions, including its purchase of Cordant Technologies Inc. and Reynolds Metal Co., have left it with redundant equipment it wants to unload.
Some of the equipment could end up being placed in other Alcoa plants through an internal marketplace that King of Prussia, Pa.-based AssetTrade is developing.
Alcoa has plants in 37 countries and 19 time zones. "What's excess in one facility might be useful to another," said Bill Fox, chairman of AssetTrade. "We help them determine that, and let them neutralize equipment rather than discarding it, and avoid buying it new."
AssetTrade's 50-person sales staff will be a de facto marketing force for Alcoa. The sales people, located in 60 offices in 28 countries, will make potential buyers aware of what used Alcoa equipment is available online. They will also work to sell equipment offline.
Alcoa made a venture capital investment in AssetTrade. The amount was not disclosed.