Titanium producers look to diversify downstream

Sep 30, 2012 | 07:00 PM | Frank Haflich

Tags  titanium sponge, RTI International Metals, Titanium Metals Corp., Timet, Allegheny Technologies, ATI, Dawne S. Hickton, Remmele Engineering Claro Precision

Titanium producers who just a few years ago were obsessed with bolstering their front ends are today looking downstream in a drive to integrate the aerospace supply chain.

At the height of the last market cycle, in 2006 and 2007, which was marked by panic-buying in sponge, each of the three major U.S. titanium producers was charting new capacity in the crucial upstream product:

• RTI International Metals Inc., Pittsburgh, planned a $300-million greenfield sponge operation in Hamilton, Miss.

• Dallas-based Titanium Metals Corp. (Timet) launched design and engineering efforts for a new sponge facility that would produce 22 million to 44 million pounds per year.

• Pittsburgh-based Allegheny Technologies Inc. (ATI) looked to build a new sponge plant in Rowley, Utah.

But fears of a front-end bottleneck had eased by 2008. RTI canceled its Mississippi project in late 2009, while Timet, which already produced sponge in Henderson, Nev., decided against a second plant. Both companies also expanded and extended their sponge supply agreements with the Japanese, who had substantially raised their own capacity. Only ATI’s plant, a $460-million facility with a capacity of 24 million pounds, was actually built.

“Today, the world looks quite different” than it did when the industry was concerned with sponge capacity, said Dawne S. Hickton, vice chairwoman, president and chief executive officer of RTI, which did build a mill products facility in Martinsville, Va.

In an effort to achieve “integrated titanium manufacturing” in forming, machining and assembly, RTI has directed its expansion efforts downstream. In February, it made its largest acquisition ever: the $182-million purchase of Remmele Engineering Inc., a New Brighton, Minn., machining and engineering company serving the aerospace, defense and medical device markets. This followed the 2011 purchase of the forming division of England’s Aeromet International Plc, now called RTI Advanced Forming Ltd., for $34 million. In 2004, RTI paid $30 million for Claro Precision Inc., a Laval, Quebec, manufacturer of aerospace components and complex mechanical and electrical assemblies, and later invested $100 million in the operations, quadrupling the size of its physical plant. ....