Aerospace metals suppliers refine their scope of capabilities to match higher order rates for business and regional jets

November 2014 - Outsiders might assume the duopoly of Boeing and Airbus makes or breaks aerospace metals market revenues and profits, but a flourishing trade can be found in business aviation (typically privately owned aircraft) and regional commercial jets. Manufacturers such as Bombardier, Embraer, Gulfstream and Cessna are delivering more jets each year and boosting capacity along with their order backlogs.

Based on an autumn 2014 survey of operators, Honeywell forecast up to 9,450 new business jet deliveries worth $280 billion from 2014 to 2024, up 7 percent from last year’s forecast.

Global deliveries will range from 650 to 675 new jets this year, while 2015 deliveries will rise modestly from that, “reflecting 

momentum from several new-model introductions and incremental global economic growth,” Brian Sill, president of business and general aviation at Honeywell Aerospace, said in an Oct. 21 statement.

Surveyed operators plan to make new jet purchases equivalent to about 23 percent of their fleets over the next five years to replace old equipment or expand capacity. Roughly 59 percent of projected demand comes from North American operators, while carriers in Brazil, Russia, India and China make up 29 percent of demand this year. Europe’s estimated share of global demand in the next five years hovers around 18 percent.

“We believe global business aviation growth will be aided by structural and regulatory reforms, longer-term economic growth and aircraft innovation,” Sill stated.

Deliveries, capacity expand

In July, Montreal-based Bombardier forecast global business jet deliveries between 2014 and 2033 would reach 22,000. “The market for business aviation continues to show promising signs of recovery,” stated Michael McAdoo, vice president-strategy and international development, aerospace, citing global GDP expectations. Business aircraft orders are projected to improve beginning in 2015.

Embraer broke ground Oct. 9 on a 236,000-square-foot addition to its assembly complex in Melbourne, Florida, where it will build Legacy 500 and Legacy 450 models beginning in 2016. “We are doubling the size of our executive jets campus in the United States,” stated Embraer president and CEO Frederico Fleury Curado.

Dassault Falcon Jet broke ground Sept. 2 on a $60 million, 250,000-square-foot expansion and upgrade of its Little Rock, Arkansas, plant, which builds two of the company’s latest models.

Embraer’s firm order backlog reached $22.1 billion at the end of September, the highest in the Sao Jose dos Campos, Brazil-based manufacturer’s history. It delivered 34 aircraft during third quarter. 

Gulfstream Aerospace Corp., Savannah, Georgia, delivered 108 jets in the nine-month period to Sept. 30, up from 103 planes last year. Textron, owner of Beechcraft Corp. and Cessna Aircraft Corp., reported an uptick in new aircraft order activity and views market dynamics as improving, chairman and CEO Scott Donnelly said in a mid-October earnings call.

Supply chain leadership

Two companies that are comprehensively committed and ready for climbing aircraft build rates are TW Metals, Exton, Pennsylvania; and Samuel Aerospace, Mississauga, Ontario.

“Business and regional aircraft comprise one of the largest service segments we have. We have one of our largest processing centers in Wichita, Kansas, for example,” TW Metals Sales and Marketing Vice President Bob Mraz says.

“We have a dedicated warehouse in Savannah to support Gulfstream, Cessna and Beechcraft, and we have locations in France for business jets.” In total, says Mraz, TW Metals operates 36 warehouses around the world that supply metals to airframers, including Bombardier and Embraer, and to their part and component manufacturers.

“We have long-term agreements with them,” under which the company buys and processes raw material, and machines and fabricates components (MFC).” The MFC division supplies “certified parts direct to airframers. It’s a growing part of our business right now,” Mraz says.

Using machinists approved by the OEMs, TW Metals partners with mills, parts manufacturers and the end customer in order to “provide entire kits like wings and empennage (tail assembly). Our customers made it clear they needed to shorten the supply chain and take waste out. 

“Sometimes we deliver parts just in time, sometimes completed wings, everything except the engines. But we also supply to General Electric and Pratt & Whitney and all the component suppliers to make the engines, the landing gear, the galleys. We are all over that plane,” Mraz says.

Supplier certifications

Quality (ISO) and aerospace standard (AS) certifications are required for this business, atop which each OEM has its own specifications and trains all the suppliers on its qualified producer list to follow them.

“For virtually every customer, we have individual certifications and, in some cases, we have to certify certain people,” according to Mraz, which means TW Metals workers will receive the same training that the customer’s employees undergo. These trained individuals become integral to the production process, attending meetings with the customers, sales, marketing, quality and inspection teams. This close involvement ensures TW Metals understands the customers’ issues.

“The more you add value, the less total cost there is for the customer,” says Mraz. “We are now exporting a large number of components that we place together in a box, so that when the box arrives, the customer merely has to assemble the components and voila, there’s a landing gear.”

Investments count

Roughly 15 percent of Samuel Aerospace Metals’ business is concentrated on regional and business jets, managing director Paul Sutcliffe says.

This division of Samuel, Son & Co. Ltd. specializes in aluminum plate and sheet, while such materials as titanium alloy and stainless steels are stocked as required in support of customers’ evolving needs.

“We provide plate sawing and waterjet cutting. We invested in five new aluminum plate saws since 2010. We added equipment in dedicated facilities throughout our distribution network. We recently opened a plate processing and distribution center in Chengdu, China,” says Sutcliffe. “That was for a specific negotiation with one of our aerospace customers. We also manage services performed by outside processors.”

Due to this dedicated model, Samuel Aerospace can deliver raw material same or the next day. “We have several customers we provide material to on a daily basis,” he says. If the material must be sawed, it can be delivered in 24 to 48 hours. Waterjet cutting orders will be processed in as little as seven days.

Samuel works with a mix of tier I and tier II contract and transactional customers. “We certify aerospace locations through AS 9120,” he says, followed by regular audits. Like at TW Metals, Samuel employees are trained to run equipment and manage material at a “skill level required to support the aerospace business.”

To date, Samuel Aerospace has dedicated eight facilities to meet aerospace material standards. “We are getting more international and we are projecting really robust growth in the coming years,” Sutcliffe says.

Mill supply

Metal producers have also offered rosy forecasts for the aircraft industry in the past few weeks. “Demand for our aerospace products will continue to gain strength,” Jack Hockema, president and CEO of Kaiser Aluminum Corp., said during an Oct. 21 earnings call. “Backlogs continue to be robust. We’re seeing growth in builds across the board—single aisles as well as twin aisles.”

Allegheny Technologies Inc. says defense and aerospace comprises its largest consuming market at 34 percent of sales. “We recently completed three major strategic long-term agreements [LTAs] that secures significant content for our mill products, forgings and investment castings on next generation and legacy single-aisle jet engines,” Chairman, President and CEO Rich Harshman told shareholders Oct. 21. “We expect commercial aerospace will be a significant driver of our profitable growth over the next five years.”

The Pittsburgh-based company is hammering out “several other jet engine and airframe LTAs,” he said.

Adaptation

TW Metals adds roughly three new alloys a year to its program sales offerings, says Mraz. “Whatever the customer needs, we’ll get it and stock it. Customers are always refining what they’re doing. Engines are running hotter and faster. Planes are getting lighter and using new materials like composites. 

“If [an airframe builder] designs something in, we design the channel for the material,” he continues. “Aluminum lithium, for example, is a mill-direct product only, not a distribution product. We are actively trying to find a role for distribution. We are now adding powder metal to support additive manufacturing, as GE and others are big into that. It’s an emerging opportunity for us to expand our presence with primes and shops doing that.”

Altogether, says Mraz, “we see a beautiful future in business and regional jets. The sky is the limit for growth.” MM