Kaiser Aluminum Corp. expects market trends in the aerospace and automotive industries to contribute greatly to company growth over the next 15 years.
Emerging trends in both industries—core markets for Foothill Ranch, Calif.-based Kaiser—position the company for sustained growth and expansion, executive vice president and chief financial officer Daniel Rinkenberger told attendees at Jefferies & Co. Inc.’s Global Industrial and Aerospace and Defense Conference in New York.
Rinkenberger cited increased production of fuel-efficient aircraft spurred by escalating jet fuel costs, as well as an increase in large double-aisle planes such as the A380, as factors that will increase demand for aluminum plate. In July, analysts predicted a 62.5-percent increase in aircraft aluminum plate demand—a compound annual growth rate of 10 percent—through 2017.
Rinkenberger said Kaiser also is positioning itself for increased aluminum-lithium alloy demand, with the lighter material offering a "higher-efficiency, less labor-intensive" option for aerospace applications. He added that the company has reached record build rates and airframe backlogs, despite experiencing inventory overhangs that have affected most products besides plate.
In the automotive sector, Kaiser expects automobile aluminum extrusion content to nearly double to 51 pounds per vehicle by 2025, up from 26 pounds last year, Rinkenberger said. The company announced in April it would spend $15 million to boost automotive extrusion capabilities at several of facilities. Rinkenberger said this would include a new rod and bar facility at the company’s Kalamazoo, Mich., plant.
Kaiser has invested more than $400 million in capital projects since 2006, with $80 million invested this year alone. Along with expanding automotive extrusion capabilities, the company allotted $45 million to increase heat-treat plate capacity at its Trentwood, Wash., facility by roughly 10 percent. A $35-million casting unit in Trentwood is slated for completion next year.
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