Leslie Wayne New York Times Service

NEW YORK When Paul O'Neill, the Treasury secretary designate, became chief executive of Alcoa Inc. in 1987, the Rust Belt company's prospects were so dim that it had one foot out of the aluminum business and was facing an uncertain future, if it had one at all.

A dozen years later, when Mr. O'Neill retired, Alcoa was the world's biggest and richest aluminum producer, its new headquarters were winning architectural raves, its bottom line was fat and its shareholders were happy. Alcoa's stock was Wall Street's hottest performer that year, besting such investor darlings as Microsoft and Intel.

Just how Mr. O'Neill, a bureaucrat turned businessman, revived Alcoa's fortunes provides a glimpse into the man who has been designated to carry out and influence the Bush economic plan at a time of increasing financial uncertainty and general business unease.

At Alcoa, Mr. O'Neill engineered a financial turnaround through a series of deft moves that included promoting worker safety as a way of improving productivity, setting corporate goals that seemed unrealistically high but were ultimately attained, breaking down bureaucratic walls with a minimum of corporate bloodshed and shrewdly melding new technologies with old ones as he expanded the Alcoa empire across the globe.

At times so quiet as to seem almost weak, Mr. O'Neill displayed a firm determination to pursue long-term strategic goals even if it meant forsaking short-term profit or breaking with industry practice.

On the flip side, this single mindedness gave Mr. O'Neill a reputation for not suffering fools easily and for displaying a doggedness that could border on the inflexible.

"Paul O'Neill took a very difficult situation and turned it into a winner," said Ira Millstein, a New York attorney and an adviser to corporate boards. "And he did it though a number of bold steps."

When other companies lowered aluminum prices to make a quick dollar, Mr. O'Neill instead cut Alcoa's production. Where other companies were run by fiat, he managed by articulating shared corporate values and building internal consensus. Where other companies made profits their No. 1 goal, Mr. O'Neill chose productivity and worker safety. And where others begged Washington for protectionism, Mr. O'Neill offered creative alternatives.

"Paul is a very strategic thinker," said Judith Gueron, an Alcoa director. "To move an ocean liner like Alcoa in a new direction, he had to have an overall message that would inspire, and he had to build coherence and enlist the passions of his staff. He was very canny in all that."

His strategy paid off. Alcoa reached new heights of profitability, and Mr. O'Neill pulled off the remarkable feat of making money in an industry that was losing it.

"Many on Wall Street look like heroes because they made money when the market was rising," said John Tumazos, an industry analyst with Sanford C. Bernstein, a Wall Street broker. "Paul took Alcoa's stock from $5 to $40 at a time when aluminum prices were falling. He created enormous shareholder wealth when everyone in the industry was on a downhill slide."

On the surface, Mr. O'Neill, who dropped out of college at 19 to get married (he later graduated from Fresno State College), hardly seemed destined for the executive suite. A bureaucrat for 16 years, he rose through the arcane world of systems analysis to become President Gerald Ford's deputy director of the Office of Management and Budget. While there, Mr. O'Neill, who declined to be interviewed, cemented friendships with Alan Greenspan, the Federal Reserve Board chairman, with Dick Cheney, the vice president-elect, and with Donald Rumsfeld, the defense secretary-designate, all of whom were in the Ford administration.

"We were working on God-awful economic problems and everything looked bad," said Paul MacAvoy, a Ford economic adviser who is now a Yale University professor. "Greenspan. Cheney. Rumsfeld. They were all there. Time and again, Ford would turn to Paul and say, 'Is that right?' And in his quiet, direct way, Paul had the answers. He could be asked about shoe imports and Paul would know the number."

Those Oval Office connections paid off, 10 years later, when Mr. Greenspan, then an Alcoa board member, was part of a group that recruited Mr. O'Neill to become the first outsider to head Alcoa in its hundred year history.

At the time, Mr. O'Neill was a new director on the Alcoa board and president of International Paper Co. In a quiet boardroom coup orchestrated, in part, by Mr. Greenspan, Alcoa's top managers were all taken to lunch at an elegant Manhattan club and ousted. Mr. O'Neill was tapped to perform the alchemy of turning Alcoa aluminum into cash.

"We wanted someone with fresh eyes," said Franklin Thomas, an Alcoa board member. "Paul was someone who asked targeted questions, was persistent in his attention to the issues and wouldn't take an answer he thought was mechanical or prepared. He wanted people to think on their feet and anchor their thoughts with data."

Immediately Mr. O'Neill took Alcoa's focus away from an ill fated diversification plan and back to its core aluminum business. He broke up Alcoa's "command and control" structure and replaced it with 20 autonomous business units to respond to customers and report to him directly.

He wiped away symbols of corporate excess. Gone was the corporate limousine, and he began to fly commercial class. He immediately turned down a membership in a prestigious Pittsburgh golf club because it banned women and blacks, and he forbade the use of Alcoa funds for dues at clubs that discriminated. He moved out of the executive suite, with its private reception area and conference room, and into a cubicle like everyone else.

But mostly, he figured out how to make money - not by cutting costs or slashing the payroll, but by improving productivity and making worker safety his top goal. His relentless push on safety had bottom-line benefits - he argued that a production process that was so flawed that workers got hurt was one that could not turn out high quality products efficiently and cost-effectively.

"Every speech he made began with a discussion of safety," said one Wall Street analyst, who asked not to be named. "He'd go visit investors and talk about safety. They could care less and he's off for 20 minutes on it. But he would say, 'I'm trying to create a cultural change. If I can unify employees on the obvious issue of safety, I can unify them behind return on investment and assets."'

He won over the unions by telling workers that if they worked smarter and more efficiently, productivity gains would not cost them their jobs. He promised to expand Alcoa's business to keep them employed, and he did so through a series of joint ventures, international acquisitions and new aluminum product lines. When he came to Alcoa, the work force numbered 59,000; when he left, the company had 140,000 employees in 36 countries.

In addition, Mr. O'Neill aligned everyone's financial interest with those of Alcoa. He devised an innovative "floating dividend" program providing shareholders with higher dividends in years of exceptional profitability. Rank-and file factory workers received profit bonuses, and executive pay was tied to profitability.

Once Alcoa gained financial stability it went on a buying spree, picking up depressed former state run aluminum makers in Hungary, Italy and Spain as well as taking over the No. 3 domestic producer, Alumax Inc., and then buying its main rival, the Reynolds Metal Co., in August 1999.

Everyone got rich under Mr. O'Neill's tenure - including Mr. O'Neill.

Alcoa's revenue grew to $16.3 billion in 1999 from $9.8 billion in 1988, and the company's market capitalization - the value of its outstanding shares held by stockholders - rose to $30.5 billion from $4 billion.

Last year, Mr. O'Neill took home $36.1 million from Alcoa: a $950,400 base salary, a $2 million bonus and $33.1 million in stock options that he exercised. He also holds options on millions of Alcoa shares that the company, in government filings, values at $86.3 million.