REMMELE ENGINEERING, INC.

RTI International Metals wants manufacturers seeking a lightweight yet tougher-than-nails material to have titanium on the cranium. Through its Titanium Group the company produces ingots, bars, plates, sheets, strips, pipes, wire, and welded tubing, used primarily by the aerospace industry to make bulkheads, tail sections, engine components, and wing supports. Fabrication and Distribution groups operate through subsidiary RTI Energy Systems, making pipe and tubing for offshore oil and gas exploration and production, as well as geothermal energy production. RTI caters to commercial aerospace and defense industries, which represent almost 80% of sales, and a growing number of industrial and consumer customers.

Historically, the aviation industry has been the biggest end-user of titanium, but that is changing. The metal has high strength, but low weight, is capable of withstanding high temperatures, and is corrosion and erosion resistant, making it perfect for use in chemical processing, defense (for vehicle and artillery armoring), oil and gas exploration, and medical applications; additionally, it is used in sporting goods, such as golf clubs and bicycle frames.

One of these markets may mitigate for the other down the line (as the market fluctuates), but for now, the aviation industry generates the lion's share of business. Unfortunately, the aviation industry is cyclical and prone to the backlash of a volatile market, which was the case in 2009, especially for its commercial aviation sector -- air travel was down and so was aircraft production. All of RTI's groups took a massive hit in 2009, and units plummeted: Titanium revenues dropped 47%, Fabrication 28%, and Distribution 26%. Much of this was due to lower-than-normal commercial aircraft production based on the economic crisis, as well as the drop in oil prices, which curbed the demand for RTI's oil and gas extraction products.

But with 2010 came economic recovery, and analysts predict that as the aviation industry rebounds, so will the demand for titanium. Recovery is gradual; however, both RTI's Titanium and Fabrication units experienced a slight increase in sales in 2010, while Distribution faltered (showing a decrease of about 20%) due to the overstock that built up during the period of low demand. Even as the economy recovers, the company expects its Titanium group to produce less than 50% of capacity until late 2011, as it waits for commercial aviation to catch up.

The segments work together symbiotically. For example: the Titanium group will supply Fabrication with metal parts, which in turn will produce extrusions, hot-formed parts or machined components that will ultimately be packaged and distributed to a customer for final assembly. Almost 40% of the Titanium group's sales are generated by Fabrication and Distribution.

The analysts also predict that the aerospace industry will pick up in emerging countries like China, India, as well as the Middle East regions. Closer to home, RTI has long-term contracts with aviation heavy hitters such as AirbusBoeing, and Pratt & Whitney to supply metal products for aircraft structures, as well as aircraft engines. The company's contract to supply titanium mill (approximately 8 million pounds annually) products (sheet, plate, and billet) to Lockheed Martin for its F-35 Joint Strike Fighter (JSF) is good through 2020. The JSF has been deemed the fighter for the 21st century, and Lockheed Martin expects to build 3,000 of the aircraft over the life of the program. Because of this program, RTI is investing about $140 million to build new titanium forging, rolling, and melting facilities in Virginia and Ohio.

The company is further heartened by the increase in fuel prices. As odd as it sounds, rising fuel prices are actually beneficial to RTI International. As fuel prices go up, many commercial airlines opt to update their fleets with new airplanes. Aircraft manufacturers Boeing and Airbus are building lighter-weight, more fuel-efficient planes designed to incur lower operating costs. Boeing and Airbus between them have hefty aircraft order backlogs; this combined with a demand for lightweight components is great news for RTI International Metals.

In 2012 RTI acquired Remmele Engineering from private-equity firm Goldner Hawn Johnson & Morrison for about $182 million. Remmele provides precision machining and collaborative engineering for the aerospace, defense, and medical device industries. The acquisition will help RTI become a supplier of advanced titanium components through the entire supply chain.

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REMMELE ENGINEERING, INC.


10 Old Highway 8 Sw
Saint Paul, MN 55112-7706
Phone: 1 (651) 635-4100
Fax: 1 (651) 6354170
www.remmele.com

STATS


  • Employer Type: Unknown
  • Chief Operating Officer: John Bowden
  • Cio: Mark Munich
  • Pres: Richard Pogue

Major Office Locations

  • Saint Paul, MN

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