Lucrative pacts mean upgrade

RTI's Airbus contract could generate $800 million in revenue in 10 years.
By WILLIAM K. ALCORN
VINDICATOR STAFF WRITER
WEATHERSFIELD -- Several lucrative titanium contracts, including one with a major airline manufacturer, will result in the expansion and upgrade of the RMI Titanium Co. plant here.
RTI International Metals Inc., parent company of RMI, is expected to spend a combined $78 million in two expansion and upgrade projects beginning this year at four of its facilities, including the Weathersfield plant.
RTI's expansion plans are tied to several recently announced long-term commercial contracts.
One is a 10-year agreement announced Tuesday that will supply titanium products to Airbus. The contract will provide stability for the company into the future, and the expansions will also create capacity for other new business, Timothy G. Rupert, president and chief executive officer of the Weathersfield-based RTI, said.
During a conference call Tuesday with business analysts, Rupert said shipments to Airbus will begin late this year and increase to 5.2 million pounds a year by 2008. RTI's new contract with Airbus will support production of the aircraft manufacturer's line of commercial aircraft.
RTI has been working 10 months on the contract with Airbus, which includes fixed product prices for Airbus for the first five years as well as fixed prices for the raw materials Airbus will supply to RTI for the products, Rupert said.
"It gives Airbus a reasonable price now, and because of the long-term nature of it, provides a little insurance if there is a market downturn," Rupert said.
Valley site included
He said the expansion will occur at four RTI locations: Weathersfield, Canton, Houston and Montreal, and will create 75 jobs.
The first set of investments, totaling about $35 million, consist of additions to RTI's melting and forging units, raising capability from 17 million to 23 million pounds per year. It will include two furnaces, and some upgrades to forging and grinding capacity, the company said.
RMI Titanium employs about 400 at the Weathersfield plant.
Under the agreement with Airbus, which is expected to generate $800 million in revenue over 10 years, RTI will produce forging-quality billet, bloom and flat-rolled products.
Also, Rupert said Airbus may participate in paying for the expansion. He said details have not been worked out, but Airbus' involvement could range anywhere from a loan to an equity interest.
The second project, totaling about $43 million, will support RTI's growing value-added opportunities, including recently announced contracts to supply machined components to Kawasaki Heavy Industries and Fuji Heavy Industries for their portion of the Boeing 787 program, Rupert said.
What's expected
Investments will include expanded conditioning and machining capabilities in RTI's extrusion operations. Both of these projects will begin immediately and are expected to be available for production by the end of 2007.
"The expansions reflect RTI's positive outlook for future growth and result from our success in landing a number of long-term aerospace contracts for increased mill product sales and value-added products from our fabrication and distribution businesses.
"Once in full swing, we expect these contracts to generate $100 million to $150 million in revenue annually," Rupert said.
RTI, through its various subsidiaries, manufactures and distributes titanium products for the aerospace, industrial, defense, energy and chemical industries.
The company has two business groups, the Titanium Group and the Fabrication & amp; Distribution Group, made up of 1,200 workers at 18 locations in the U.S., Canada, Europe and Asia.
alcorn@vindy.com