WEATHERSFIELD RMI, parent face uncertain times
THE VINDICATOR, YOUNSGSTOWN
Its stock tumbled along with others in commercial aerospace, but officials hope defense and oil markets will offset the damage.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WEATHERSFIELD -- RTI International Metals' fortunes tend to rise and fall with the aerospace industry, and that could mean some bleak days ahead for the Weathersfield-based company, parent of RMI Titanium.
Airlines and related industries have been hit hard since terrorists struck Washington, D.C. and New York City a week ago.
The latest blow came Wednesday when Boeing Co., the nation's largest aircraft builder and one of RMI's biggest customers, announced plans to lay off 20,000 to 30,000 workers and to reduce production proportionately.
RTI, which gets about 40 percent of its business from the aerospace industry, watched its stock tumble 14.74 percent when the New York Stock Exchange reopened Monday. By the close of business Wednesday, values had dropped another 10.71 percent to $7.50 -- less than half its mid-June peak of $17.75.
"We can theorize that the stock price is related to the other problems in the aerospace industry," said Richard Leone, an RTI spokesman.
Uncertainty: "We're in uncharted territory now. A lot of what's happening now is a reaction to the unfortunate events that occurred last week, but it may be a short-term problem."
Leone said Boeing normally buys about 10 percent of the titanium RMI produces, and officials here are counting on its plans to begin construction of a line of larger passenger planes. Titanium is used for aircraft production because of its strength, flexibility and light weight.
RMI might not be hurt by the Boeing cutbacks right away, he said.
For the past two years the aircraft manufacturer has been unable to buy the 3.25 million pounds of titanium it promised to buy in a long-term contract with RMI.
Agreement: Instead, as required under the agreement, Boeing paid RMI $6 million lump-sum settlements in 2000 and this year, and that practice will likely continue as long as the five-year contract is in place.
Leone noted that, while RMI depends heavily on commercial aerospace, it gets about 30 percent of its business from defense contracts, a market which is expected to increase in light of the nation's heightened defense position.
"I can't imagine the defense budget being cut right now," he said. "The question is, how will they spend the money. It depends on what kind of war we get in."
RMI has contracts to provide titanium components for some military F-22 fighter planes and is providing titanium for howitzer cannons for the U.S. and other governments.
Leone said the company has received no new defense-related orders since the terrorist attack last week, but the military projects the company is working on have been designated as top priority, at the government's request.
RTI is also getting into the oil and gas well drilling business. Leone said officials expect to see continued growth in that market, which could also offset losses in commercial aerospace.