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But this proved to be a mixed blessing. Over the past forty years, titanium producers have endured a series of booms and busts as demand for new aircraft fluctuates. The titanium industry enjoyed record profits in the 1990s as airlines expanded all over the world, but the choice of passenger airliners as a terrorist weapon on September 11 sent the industry into a funk that it may take years to overcome.
"After September 11, they went from full bookings to warehouses full of stuff," says Steve Stocks, a retired executive with Oregon Metallurgical Corporation (OreMet). Stocks ran OreMet's titanium plant in Albany, Oregon, for years.
"It's a boom-and-bust industry. It always has been. It's a very difficult industry to stay profitable in."
During aerospace booms, executives may become overconfident and expand too rapidly. "When you build an addition to a plant, it takes two years, and you may not be able to use it," Stocks says. "It's a very cyclical industry."
Over the years, there has been a series of buyouts and consolidations among titanium producers, he adds. OreMet was bought out by Allegheny Technologies in 1998. There are now only three titanium producers in the United States: Allegheny, RTI International Metals and Timet.
Timet moved its corporate headquarters to Denver in 1990, but its manufacturing operations -- and the bulk of its employees -- are in Nevada, Ohio and Pennsylvania. (Timet also has extensive operations in Europe.) Much of the titanium produced in the United States comes from the ore rutile, which is often found in high concentrations in beach sand. Timet, for example, imports its rutile from Australia and then processes it at its plant in Henderson, Nevada.
The past six months have been grim ones for the firm. Timet's stock price dropped from just over $10 in early September to $2.35 in the days after the terrorist attacks, and the company's backlog of orders eventually fell from $315 million to $225 million.
"We now expect sales volumes in 2002 to decline 15 percent to 20 percent compared to 2001, driven by reduced commercial aircraft production rates and the effect of excess inventory in the supply chain," Martin wrote in a letter to shareholders. "We expect 2002 sales to range from $375 million to $410 million. Unfortunately, at this level of business, we expect to report a net loss in 2002 between $35 million and $40 million."
Those who know titanium don't expect a turnaround anytime soon.
"I'd say the industry in general is very depressed," says Chris Olin, an analyst who follows the titanium industry for Cleveland-based Midwest Research. "Indications are that demand will weaken through the year."
Olin predicts that titanium sales will be slack for the next two years. He says the industry typically goes through five-year cycles of high use and profits followed by stomach-churning plunges in demand.
Timet does have several things going for it, Olin says. The company doesn't have a lot of debt and has a contract with Boeing that requires the airplane manufacturer to pay at the beginning of a given year for all of the titanium it plans to use that year. This ten-year contract with Boeing was the subject of a lawsuit filed by Timet two years ago, in which the company accused Boeing of trying to evade the agreement by demanding lower prices and the elimination of a requirement for minimum annual purchases. Timet said it would seek damages of $600 million.
Last year, the lawsuit was settled out of court. Timet agreed to hold titanium stocks for Boeing and kept the right to be paid ahead of time. Boeing also won the right to purchase up to 7.5 million pounds of titanium annually from Timet.
Olin believes that titanium could one day break free from its dependence on aerospace, but not soon enough to affect earnings in the short term.
"Titanium has enormous potential for new applications, but the problem continues to be the cost," he says. "I think five years down the road, you'll see more of those uses."
Kurt Faller's job is to put a piece of titanium inside every American's garage.
Faller is the president of Timet Automotive, a new division of the company that is charged with bringing titanium into the automotive mainstream. Based in Morgantown, Pennsylvania, Faller says Timet is determined to win over automakers.
"This is the largest effort in the titanium industry's history to focus on finding automotive uses for titanium," he says.
Titanium has already started to make inroads into the luxury-car market.
The GM Corvette Z06 has a titanium exhaust system, and Volkswagon has installed titanium suspension springs on its Lupo FSI (available only in Europe). Several Ferrari models have titanium connecting rods, as does the Porsche Carrera GT3. Most of these cars retail for more than $60,000.
The appeal is the light weight of the titanium parts. "It's a material that provides a reduction in weight of 45 percent to 50 percent compared to steel parts," says Faller. Using titanium can even allow designers to change the outline of a car, especially when it comes to suspension systems.
"The springy quality of titanium is about half that of steel, so you can reduce the size of the coils by about half," he explains. "The titanium suspension springs can end up weighing just 30 percent of what a steel suspension weighs. We can take twenty to thirty pounds off the weight of a car."