LOS ANGELES Precision
Castparts Corp.s (PCCs) recent acquisition of
Titanium Metals Corp. (Timet) is unlikely to trigger a
heightened battle for market share in the aerospace supply
chain, according to the top executive at PCC rival Allegheny
Technologies Inc. (ATI).
"We think there are enough
opportunities in the world for the both of us," ATI chairman,
president and chief executive officer Richard J. Harshman said
during a conference call with securities analysts.
Portland, Ore.-based PCCs
purchase of Timet means thatalong with PCCs
Huntington, W.Va.-based Special Metals Corp. unitthe
company now has the ability to supply both titanium and
nickel-based alloys to the aerospace sector and other major
specialty metals consumers.
PCC, a major aerospace castings
producer, acquired Dallas-based Timet for $2.9 billion in
December. It also owns Grafton, Mass.-based Wyman-Gordon Co.,
widely considered the largest aerospace forging house in the
United States, and Carlton Forge Works, Paramount, Calif.,
which it bought in 2009 for $850 million (
amm.com, Aug. 27, 2009).
ATI bought Cudahy, Wis.-based
forgings and castings producer Ladish Co. for $778 million in
amm.com, May 10, 2011). ATI already owned Monroe,
N.C.-based ATI Allvac Inc., which produces both titanium and
nickel-based mill products.
One analyst asked Harshman how
the acquisition "of one of your titanium peers might reshuffle
the market." Some outsiders had speculated that the Timet
acquisition could put ATI and PCC on a collision course for a
fight for market share.
But Harshman pointed to "direct
source agreements" that aerospace original equipment
manufacturers (OEMs) sign with mills as part of their long-term
supply relationships. These agreements require
forgersoften the first stop on the post-mill supply
chainto buy their ingots and billets from mills that
arent necessarily related.
Harshman called the agreements a
"big driver in terms of the supply and demand equation in the
"That isnt going to
change, quite frankly," he said, noting that the trend was
kicked off in the 1990s by aircraft engine manufacturer General
Electric Co. and has since been adopted by other engine
producers as well as airframe OEMs.
Moreover, when asked how much
"nondirect" material ATI supplies might be shifted to PCC,
Harshman replied "not much."
Harshman noted that PCCs
acquisition of Timet is "consistent with what youre
seeing in the supply chain of continued vertical
An ATI spokesman in Pittsburgh
declined further comment on Harshmans remarks, while a
spokesman for Portland, Ore.-based PCC couldnt be reached