Every titanium company in the world was vying for the contract, RTI's president said.
THE VINDICATOR, YOUNGSTOWN
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WEATHERSFIELD -- Furloughed workers at RMI Titanium will have a new, multimillion-dollar titanium contract to fulfill when they return to work next month.
RTI International Metals, parent company of Weathersfield-based RMI, has been chosen to supply a million pounds of a titanium alloy for a $1.4 billion nickel-cobalt mining project on New Caledonia, an island in the South Pacific Ocean, just east of Australia.
The nickel-mining project is being developed by Inco Ltd., a Toronto, Canada, company that calls itself the world's second-largest producer of nickel.
Tim Rupert, RTI president and chief executive, would not divulge the contract value. However, RTI's second-quarter report released Tuesday said RMI has been selling titanium at an average price of $14.94 per pound, so the pact is likely worth close to $15 million.
"This is a big thrill," Rupert said. "It's a very, very large order, and the biggest order for this alloy ever. I would go out on a limb to say that every titanium company in the world was trying to get this."
Rupert said RTI researchers developed the special, highly corrosion-resistant alloy containing the metal ruthenium when it pioneered the use of titanium for deep underwater oil well drilling.
The company's expertise in the design and production of the alloy helped it to clinch the new agreement.
Rupert said Inco needs the titanium alloy to withstand the high temperatures and pressure demands of the heat exchanger system it will use in a pressure-acid-leach process to recover nickel from laterite ore.
RMI produced 2.8 million pounds of titanium in its second quarter, and the new contract represents more than a third of that quarterly total.
The company plans to produce the metal in the third and fourth quarters.
RMI has been idle and about 300 hourly workers have been laid off for four weeks this month as part of a cost-cutting effort.
Richard Vandegriff, vice president of operations, said workers will be called back one department at a time starting July 29 in the order in which they were furloughed. He expects to have all the employees back to work by mid-August.
Discussing RTI's second-quarter results in a telephone conference with analysts and news reporters Tuesday, Rupert said the New Caledonia project will help, but it may not be enough to offset the effects of the sluggish commercial aerospace market.
Aircraft orders have dropped 30 percent to 35 percent since Sept. 11, he said, and titanium orders have fallen between 20 and 25 percent. Traditionally, commercial aerospace provides about 40 percent of RMI's business.
Rupert said the company expects its titanium group to experience reduced earning, and possibly losses, in the second half due to the sluggish commercial aerospace market.
"Airlines are losing money, and when that happens, they stop buying airplanes, and that means they stop buying from us," he explained.
Orders have been picking up in the military aerospace category, however. He said RMI is producing titanium for 13 Air Force F-22 fighter jets per year and is competing for other defense contracts.
RTI's Houston-based fabricating and distribution groups are also expected to be profitable in the third and fourth quarters, he said.
The company reported second-quarter profits of $3.5 million, or 17 cents per share, and earnings of $11.5 million on sales of $138.6 million in the first six months of this year.