Boeing Halts Russian Titanium Sourcing; No Word On JV With Supplier
Boeing is no longer purchasing titanium from Russia, a move that will speed up the company’s push to diversify its supply of the raw material and could affect its partnership with major supplier VSMPO-AVISMA.
“We have suspended purchasing titanium from Russia,” Boeing said March 7, confirming a Wall Street Journal report. “Our inventory and diversity of titanium sources provide sufficient supply for airplane production, and we will continue to take the right steps to ensure long-term continuity.”
The move eliminates purchases from VSMPO, the world’s largest titanium producer and supplier of at least 25% of Boeing’s needs. It also alters a joint venture (JV) agreement with VSMPO—a Boeing supplier since 1997—that ensured the Russian company would maintain its place as Boeing’s leading supplier of titanium parts and forgings.
The Ural Boeing Manufacturing JV, formed in 2009, has been expanded several times to include manufacturing plants, supply agreements, and research and development work that has yielded multiple new alloys. The most recent expansion was announced in November 2021 at the Dubai Airshow and, among other initiatives, affirmed “that VSMPO-AVISMA will remain the largest titanium supplier for current and future Boeing commercial airplanes,” Boeing said in a press release.
VSMPO is controlled by Rostec, the Russia’s state-owned defense company, which has a 25% ownership. Rostec is led by long-time CEO Sergei Chemezov, one of the Russian nationals subject to recently issued “full-blocking sanctions” announced by the Biden administration. Rostec has been targeted by some countries, including Canada and the UK, and is subject to more stringent U.S. import and export licensing requirements including possible denials. But the company itself has not been blacklisted by the U.S.—a situation similar to what happened when Russia invaded Crimea in 2014.
Boeing has declined to discuss the VSMPO JV specifically since Russia invaded Ukraine Feb. 24—a stance it maintained following an Aviation Week query March 7.
Lauded for its light weight, load-bearing qualities as well as resistance to fatigue, corrosion, and heat, titanium is being integrated more broadly into airframe and engine designs. A recent Jefferies research note said aerospace applications account for 30-50% of all titanium sponge—the product extracted from titanium ore—annually, including both commercial and military platforms. The Boeing 787 has the highest exposure of any commercial aircraft, with titanium parts accounting for 15% of the airframe empty weight. The Airbus A350 is close behind, at 14%.
Airframe and engine manufacturers have multiple suppliers, but VSMPO is firmly established as the market leader. Beyond its long-time link with Boeing, VSMPO supplies Airbus with about half of the European manufacturer’s titanium needs.
None of the sanctions put in place by the U.S. and the European Union prevent titanium purchases from Russia or VSMPO specifically. Like Boeing, however, the European manufacturer insists it has contingency plans in place if it needs to make changes.
“Geopolitical risks are integrated into our titanium sourcing policies,” Airbus said. “We are protected in the short/medium term.”
The global slowdown in aircraft production linked to the recent downturn and acute problems on specific programs, such as Boeing’s 787 delivery halt and related production-rate slowdown—mean titanium requirements have declined in recent years.
“In commercial aerospace, I think everyone is clearly aware there is surplus titanium,” said Kevin Kramer, chief commercial and marketing officer for U.S.-based materials supplier Allegheny Technologies, during the company’s investor day Feb. 17. “The destocking will continue but at a relatively slow rate, although it will be tied to both single aisle and twin aisle build rates.”
Meanwhile, manufacturers are accelerating plans to broaden their supplier base. VSMPO is Safran’s primary titanium supplier, but the company and JV partner GE incorporated a dual-sourcing strategy at the outside of the CFM Leap program. It also has been stocking material in advance for landing gear and other parts—and will “accelerate” finding other sources, CEO Olivier Andries said on the company’s Feb. 24 earnings call.
Spirit AeroSystems, a major Boeing and Airbus supplier with roles on both the 787 and A350 programs, among others, insists that its short-term needs are covered.
“We have plenty of cover, if you will, for current requirements,” CEO Tom Gentile said during a March 2 investor day event. “But we do have to monitor it and we do have to make sure that we continue to develop new sources, particularly of titanium.”
Spirit sources about 90% of its raw materials “through the buying consortia for Boeing and Airbus,” Gentile said. “The good news is both Airbus and Boeing have been planning on this for years, and they have developed alternative sources in places in other countries ... and they also have stockpiles. So that helps and gives a cushion.”
Parts manufacturer Heico sources some of its titanium from Russia, the company’s Flight Support Group president Eric Mendelson said on a Feb. 24 earnings call. “But I think that we’ve got the ability to buy titanium in the quantities that we use it from a variety of sources,” he added.