Aircraft And Engine Suppliers Are Replacing Russian Titanium
The push by Western manufacturers to lessen their reliance on Russian-supplied titanium is bearing fruit, with little evidence of major disruptions to manufacturing or delivery schedules.
- Vendors see uptick in aerospace business
- Parts qualification is considered a pacing item
“The situation in Ukraine has focused the industry on shifting aerospace titanium purchases to Western sources,” Robert Wetherbee, president and CEO of titanium supplier Allegheny Technologies Inc. (ATI), said on a recent earnings call. “Customer discussions on the subject are pervasive, active and lively.”
Suppliers such as ATI and Howmet Aerospace have the bandwidth to take on new aerospace customers or added business from existing ones. The tipping point often secures enough work to justify any required investment, particularly when supplying complex forgings and castings.
In the aircraft-production world, build rates of 75 units per month are considered significant. But they pale in comparison to those generated by other needs, such as producing truck wheels, that metal parts specialists also satisfy.
“We’re disciplined in our response,” Wetherbee said. “We’re balancing the need to help our customers in repositioning their supply chain with our commitment to benefit our shareholders at the same time, balancing short-term and long-term interests of both.”
The approach is yielding new business.
ATI recently announced a deal that will see it supply “the majority share” of titanium plates and sheets for GKN Aerospace.
Howmet said it is adding $20 million to projected fourth-quarter sales based on recent deals with several new, unnamed airframe and engine customers.
“We’ve begun to book orders with them,” Howmet CEO John Plant said on a recent earnings call. “We’re still working elsewhere with other manufacturers. . . so [there’s] still a lot to play for.”
The Russian invasion of Ukraine in February prompted the titanium supply-chain shuffling (AW&ST April 18-May 1, p. 50). Before the war, Western aerospace suppliers tapped Russian sources—notably VSMPO-Avisma, the world’s largest titanium producer and part of a joint venture with Boeing—for material critical to everything from brackets and engine parts to landing gear. The metal’s importance to aerospace and other major industries has prevented the issuance of sanctions against VSMPO. But many companies are lessening or eliminating their reliance on Russian suppliers.
Embraer is working on replacing VSMPO, which specializes in raw materials and forgings. The company currently sources 60% of its titanium from VSMPO, down from 85%, Chief Financial Officer Antonio Carlos Garcia told analysts on a recent earnings call. “Our plan is to try to eliminate this source of raw material,” he added.
Airbus is part of a group that purchased metallurgy specialist Aubert & Duval earlier this year, but continues to source from Russia (AW&ST July 11-24, p. 80). The European Union in late July backed off on plans to put limited sanctions on VSMPO, fearing retaliation that could hamper titanium sales to Airbus and other European civil aerospace manufacturers, The Wall Street Journal reported.
The changes translate into opportunities for Western suppliers that extend beyond commercial aerospace.
“I think most of us who are in this position will qualify, and we will win some share,” Wetherbee said. “I do think the [aerospace] industry is repositioning itself, not 100%, but significantly.”
Safran, a 50-50 partner with GE Aviation in narrowbody engine-maker CFM International and a major landing gear supplier, is among those minimizing—but not eliminating—its reliance on Russia.
“We still receive titanium from our Russian sources, but we have now managed to get alternative sources,” CEO Olivier Andries said. “We are protected.”
Rolls-Royce also recently tapped a U.S.-based supplier, the company says. Spirit AeroSystems, a major subassembly supplier to Airbus and Boeing, has been ramping up its titanium inventory as well.
Raytheon Technologies, which counts engine-maker Pratt & Whitney among its subsidiaries, is also expanding its titanium supply base. While it has made progress in finding new vendors, the time required for qualification—ensuring vendors can produce parts to the required specifications—is affecting some program schedules.
“The issue simply is getting the parts qualified,” Raytheon Chairman and CEO Greg Hayes said on a late July earnings call. “You’ve got to go through a first article. You’ve got to go through the metallurgical analysis. You’ve got to make sure that the composition of material is exactly the same as what it was. And then you’ve got to get the parts certified. So that’s the part that takes time. It’s not actually identifying the suppliers. We’ve done that.”
Raytheon’s shift away from Russian titanium suppliers is hitting its Pratt & Whitney Canada (P&WC) executive jet and small-aircraft-engine business hardest. Hayes cautioned in April that finding alternatives for some P&WC castings would “take some time” and result in late deliveries—a fact he reiterated on the July call.
“[We’re] talking five to 10 airplanes at these customers that are going to be without engines because we don’t have the titanium forgings that we had expected to get this year,” Hayes said. “This will recover sometime in the middle of next year, but there’s still a lot of work to do to get these suppliers requalified.”
Hayes did not name affected customers. P&WC supplies engines to a number of Cessna light and midsize business jets. Scott Donnelly, CEO of Cessna parent Textron, recently cautioned that the company will likely see “a relatively small number” of scheduled 2022 aircraft deliveries slide into 2023 due to “some particular supplier issues” that include engines. Cessna declined to provide details on the affected aircraft types.
Hayes expressed confidence that Raytheon’s titanium-related challenges will be short-lived.
“People are stepping up,” Hayes said. “People understand this is a long-term business, and I think the suppliers of titanium see this as a big opportunity to take share. So we’ll work through it, but it’s not going to be without a little bit of pain to our customers.”