After opening a nickel-based alloy engine part manufacturing facility in Indiana; investing in a Virginia facility that will generate nickel-based alloy jet engine blades; and recently signing a deal with jet engine parts manufacturer Firth Rixson to produce parts that use nickel, titanium, and aluminum-lithium alloys, Alcoa has now opened another Indiana-based facility that will manufacture aluminum-lithium alloy parts for the aerospace industry.
Alcoa chose to shift its focus because it doesn’t want to solely rely upon aluminum, since the aluminum market has been struggling with weak demand and overcapacity. While it looks like the aluminum market is picking up again, China’s growing aluminum production and growing exports of semi-manufactured products is now stunting the market. Alcoa has chosen to diversify by concentrating on alloys, which are cheaper, improve fuel efficiency, and curb maintenance fees. Overall, a better option for the aerospace industry, instead of titanium and composites.
Alcoa is ramping up its investments in lightweight metals and alloys: the company has contracted $100 million in aluminum-lithium manufacturing for 2017. For 2014, Alcoa has predicted an eight to nine percent growth in its aerospace sector. Alcoa is banking on the aerospace industry continuing to grow, and indeed it is. The demand for regional jets will increase by 13.2 percent in 2014, while the large commercial jet sector will increase by 12.1 percent in 2014.
Moving into the aerospace industry is a smart step for the aluminum mogul. In 2014, the company made a $4 billion profit from the industry, or 17 percent of Alcoa’s entire revenue for that year. Now that aerospace is set to grow, Alcoa is set to grow with it.
More about Alcoa:
After 125 years, Alcoa looks beyond aluminum
Alcoa, Novelis face new competition as aluminum gains in auto segment
Alcoa & Boeing Form Aluminum Recycling Program
Alcoa Posts a Jump in Net Profit
Developed and Written by Dr. Subodh Das and Tara Mahadevan
October 8, 2014
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