Strategy Secure other resources at reasonable costs

The cost of materials continued to rise. This situation held the potential to erase savings created by increased productivity and reduced power costs. Eastern planned to find low-cost sources for raw materials as well as explore approaches for using lower-graded materials, as shown in Table 2-3. Eastern continued to manage human resources costs through employee attrition and retirements.

Key raw materials (alumina, aluminum fluoride, petroleum coke, and liquid pitch) were purchased for all parent company smelters by the same parent office. These costs were rising to a point such that Eastern's overall cost effectiveness was threatened. This issue challenged the company to find and use lower-graded materials, such as lower grades of petroleum coke. The company would continue to acquire both raw materials and supplies from the most efficient sources, all the while ensuring quality. This involved forming partnerships with suppliers to limit the number of such sources. This would accomplish two objectives: holding down costs, and minimizing purchasing and warehousing requirements.

As a major cost element, labor costs had to be controlled while productivity was enhanced through capital improvements, better management, and team and individual performance. Reduction of manhours per ton by 15 percent by the year 2000 was a major measure of success in reducing risk exposure.

Eastern continued to provide consistent and high-quality products and services to end-users and customers. As shown in Table 2-4, the company worked to ensure that all employees were aware of customers and their needs. Emphasis on the

TABLE 2-3 Securing Other Resources at Reasonable Costs

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