Aerospace Metals Outlook Surprisingly Uplifting
By Myra Pinkham, Contributing Editor
Despite the poor economy and much-publicized delays in major aircraft development programs, demand for aluminum, titanium and other aircraft metals remains promising.
The aerospace market has held up better than most experts anticipated. In fact, despite a couple of weak spots, predominantly in business and regional jets, it could be considered one of the best sectors of the current economy.
“Aerospace has been shockingly strong given the rest of the economy,” says Richard Aboulafia, vice president of The Teal Group, Fairfax, Va. He expects demand for materials to hold up well, which is good news for producers and distributors of aluminum, titanium, stainless and superalloys.
Suppliers to aircraft manufacturers could use some good news, as many are still working through the buildup of inventories resulting from the weak global economy and delays in major aircraft programs.
|Is Aluminum Gaining Ground in the Race with Composites?
Development of the Boeing 787 Dreamliner, touted for its use high of new light-but-strong composites, has faced one technical delay after another for three years, and counting. Which begs the question: will this slow the trend toward more composites in commercial aircraft as major airframe manufacturers stick with aluminum and other more conventional materials?
Composite use will continue to grow once the current production problems with the 787 are straightened out, says Bill Chadwick, research director for the Aerospace Industries Association of America, Arlington, Va.
“Composites allow newer planes to be lighter, more fuel efficient and more maintenance free,” says Richard Leone, a spokesman for RTI International Metals Inc., Pittsburgh. “We’ve never seen any new aircraft, military or commercial, come online on schedule. Once Boeing gets the bugs out of the 787, it should be fine. It is just the nature of the beast. Military aircraft have been using composites for a long time. It’s not composite use that is the issue, but the complexity of the production process.”
While he agrees there will be long-term use of composites in commercial airliners, Richard Aboulafia vice president of the Teal Group, Fairfax, Va., says adoption of new applications for composites in big aircraft may take longer.
“While the choice of material ultimately belongs to airframe manufacturers, the recent trend shows that tomorrow’s aircraft will surely be a hybrid,” says Christophe Villemin, president of Alcan Global Aerospace. “Each material has its place on the aerostructure, and the best choice will be the combination of intrinsic properties, design and manufacturability.”
Kevin Lowery, spokesman for Alcoa Inc., Pittsburgh, expects more companies to make the decision to use aluminum, as well as composites. “I think that aircraft manufacturers will take a multi-material approach for many years.” He adds, “Aluminum has been used for 100 years in flight and is likely to be used for the next 100 years as well.”
“Due to what is happening with the 787, some airframe manufacturers, particularly those of business jets and regional jets, have reconsidered the amount of composites they plan to use for future aircraft, proving that there is still a place for aluminum,” says Bob Mraz, vice president of sales and marketing for TW Metals Inc., Exton, Pa.
About a year ago, Mitsubishi Aircraft Corp. announced it had rethought the materials it would use for its new MRJ aircraft, including using an aluminum wing box instead of a composite one. The airframe is expected to be about 80 percent aluminum, 10 percent titanium and 10 percent composite, compared with its original plan for 60 percent aluminum, 30 percent composite and 10 percent titanium.
Likewise, Gulfstream Aerospace Corp., Savannah, Ga., announced in March that its next generation G650 aircraft would be using aluminum, not composites, for most of its fuselage and wing.
RTI’s Leone observes that use of composites is not as big an issue for smaller aircraft, which are relatively light already. “We could, however, see the use of composites on the next generation of single-aisle planes if they work for the jumbos. We have to wait and see.”
The jury is still out about that, according to Aboulafia, who says that many people are watching Montreal-based Bombardier’s new CSeries aircraft, which will have composite wings and use Alcan’s AIRWARE advanced aluminum lithium alloy in its primary structure.
Also, Alcoa has signed a memorandum of understanding with Commercial Aircraft Corp. of China Ltd. to jointly explore technology solutions for the design and development of Comac’s new C919 190-seat single-aisle airliner, Lowery says.
“We are bullish about the growth in demand for aluminum in aerospace,” says Keith Harvey, vice president of sales and marketing for aerospace and general engineering products for Kaiser Aluminum Corp., Foothill Ranch, Calif. “The aluminum industry isn’t sitting on its laurels, but working on both the development of new manufacturing technologies and new alloys to ensure that aluminum continues to be the material of choice for the whole spectrum of aircraft.”
This includes increased use of monolithic design of aerospace components, which, along with the sheer size of the aircraft, has allowed the 787 to use as much aluminum plate as was used on the 747-400 plane.
The industry continues to develop new alloys to meet the needs of OEMs and their customers. AIRWARE is one example of this, Villemin says, as it features a much lower density, higher stiffness and better damage tolerance. When combined with advanced welding and high-performance redesign of aircraft aerostructures, it can deliver a minimum of 20 percent weight reduction.
Another example is KaiserSelect aerospace plate, Harvey says, which delivers lower residual stress, exceptional flatness, lot-to-lot consistency and superior machining performance.
“I expect there to be a healthy contest between us and other materials,” he says. “Aluminum isn’t lying down, nor are other materials. We are all investing in the future.”
Most notable among them is Boeing’s 787 Dreamliner jumbo jet. Its build schedule has been delayed nearly three years so far, in large part due to engineering issues related to its use of new lightweight composite materials. The airframe maker is hoping to make up some of this lost time when its second 787 production line in North Charleston, S.C., comes on line in July 2011. The first plane from that line is scheduled for delivery in the first quarter of 2012. At full production, three 787s will be assembled and delivered from the South Carolina plant each month, complementing those produced at its current assembly plant in Everett, Wash.
Boeing is currently producing about two 787s a month, but expects to increase that to 10 by late 2013. While the aircraft’s high composite content has been widely publicized—its airframe is 50 percent composite by weight—20 percent is aluminum, 15 percent titanium and 10 percent steel, says Bill Chadwick, research director for the Aerospace Industries Association of America in Arlington, Va. By comparison, the Boeing 777 is 50 percent aluminum and 12 percent composites.
Once its problems are ironed out and the global economy recovers, the 787 will take the titanium industry to a new level, says Jeff Wise, vice president of sales and marketing for Titanium Industries Inc., Rockaway, N.J. Commercial aircraft historically have contained only about 5 percent titanium by weight, notes Richard Leone, spokesman for RTI International Metals Inc., Pittsburgh.
Not resting on its laurels, the aluminum industry is determined to maintain its place as the material of choice for aircraft construction and has been actively developing new alloys and manufacturing technologies. Future aircraft will very likely remain hybrids of materials, says Christophe Villemin, president of Alcan Global Aerospace.
Aerospace metals demand has grown steadily quarter to quarter, but with areas of weakness, including the business jet segment, says Bob Mraz, vice president of sales and marketing for TW Metals Inc., Exton, Pa.
According to the AIAA, aerospace orders plummeted by nearly 34 percent in 2009 vs. 2008, but have rebounded by more than 27 percent so far this year. “When we did our year-end forecast, we were a little worried that the market would be weaker this year and continue to go down next year. But it is going better than we expected. Now it seems there will be more of a flattening than a dip this year, with orders moving up a bit in 2011 before really strengthening in 2012,” Chadwick says.
Meanwhile, order backlogs, as long as six years for some aircraft, continue to act as a cushion. Industry backlogs fell sharply to $371 billion in 2009 from $417 billion in 2008 and are now about $370 billion, which is still strong historically, Chadwick notes. In 2005, the industry had $199 billion in backlogs.
“There has been a solid rebound in orders this year, which is a good indication there is still strong demand,” says Keith Harvey, vice president of sales and marketing of aerospace and general engineering products for Kaiser Aluminum Corp., Foothill Ranch, Calif. He expects demand to remain solid for the long-term, pointing to airframe makers’ forecasts for 5 to 6 percent annual growth over the next 20 years.
“Commercial aerospace has held up better than many of us expected,” agrees Bill Sales, vice president for nonferrous operations at Reliance Steel & Aluminum Co., Los Angeles.
Commercial aerospace passenger miles went through an “ugly trough” in 2009, says Aboulafia, “but this year we are seeing a strong, double-digit comeback, especially for cargo shipments, which were awful last year.”
Some of the comeback has been led by the jet engine market, which took off about a year ago, says Michael Hajost, vice president and treasurer of Carpenter Technology Corp., Wyomissing, Pa. Demand for metals used in engines, including high-temperature nickel superalloys, tends to lead metals used in airframes by about six months, he notes.
Mraz says that with the recent development of new, more efficient engine technology, the aerospace industry is looking to build new, more efficient planes, which will help drive new aerospace metals demand.
The strongest demand has been for such single-aisle planes as the Boeing 737 and the Airbus 320, considered the workhorses of the commercial aerospace industry because they are used by large traditional airlines (for hub feeder or short range connections), regional airlines and low-cost carriers. Single-aisle planes account for about 55 percent of the commercial airliner market with the remaining 45 percent being wide body aircraft.
Aircraft replacement has been a big driver, says Sales at Reliance. “Some aging aircraft, such as MD-80s and 737s, need to be replaced. A lot of airlines kept planes longer than usual, but are now replacing them with more fuel-efficient aircraft.”
Forecasts for increased energy prices are further driving demand for more fuel-efficient aircraft, says Wise at Titanium Industries, not just single-aisle planes, but also the new generation of jumbo jets, such as the 787 and A380.
Delays in Boeing’s 787 program have pushed back deliveries and caused supplier inventories to swell. “In 2010 there was some destocking, and I expect to see more in 2011 and 2012,” says Kaiser’s Harvey. While most of the inventory buildup was at Boeing, material stocks also bulged at Airbus.
The titanium industry was hard hit by this inventory overhang, as well, but Wise says it is hard to determine how much was due to the economic downturn and how much to the 787’s delays.
Clearly, the 787 is a big user of titanium, as well as composites, observes RTI’s Leone, who says that for each 787 that it builds, Boeing has to purchase 250,000 pounds of titanium. Unlike aluminum, titanium and composites work well together because they expand and contract at the same rate, and there is no corrosive reaction when they contact each other.
“I think the worst is behind us,” says Leone. “This has been a difficult year for the titanium industry (which sells about 50 percent of its product into the aerospace market), but we are starting to turn the corner. Hopefully, by the second quarter of next year we will see a ramp-up,” he says.
Commercial airframe builders expect good activity in 2012-13, says Mraz. Demand could even be better than anticipated given recent airline profit estimates by the International Air Transport Association. In March, the IATA projected that global airlines would lose about $2.8 billion this year on top of $10 billion in losses last year. Recently revised projections estimate an $8.9 billion profit for the industry this year.
Aboulafia is projecting that orders for large jetliners will decline about 3.8 percent this year vs. 2009, but that they will grow by a compound annual growth rate of 2.4 percent through 2015.
Some observers see recent hints of improvement in the regional jet sector, too. Wise thinks the uptick has some staying power. “They are being helped by the ‘hub and spoke’ concept as major airlines take passengers hub to hub while the spokes are served by regional airlines.”
It all depends on the size of the regional jet, says Harvey. Sales of aircraft with 50 to 70 seats remain sluggish, while demand for 70- to 90-seat aircraft is improving. Certain regional jet manufacturers, such as Bombardier with its new C Series jet, are looking to the 120- to 150-seat market, which is close to the size of some single-aisle commercial airliners that are currently in strong demand.
Aboulafia sees sales of regional jets bottoming out this year after a decline of 21.7 percent. But he forecasts a compound annual growth rate of 4.6 percent for the sector through 2015.
Demand for business jets, particularly the bottom half of the market, has been devastated by the recession, Chadwick says. Even after the economy improves, business jet orders will take awhile to rebound. After falling about 25 percent last year, they could decline another 15 to 20 percent this year and 5 to 10 percent next year before resuming growth in 2012.
Military aerospace spending has held up well, says Harvey. Demand for transports and fighters continues to be strong, and the Joint Strike Fighter program is still alive, although it has slowed due to budgetary concerns.
“Since 9/11 there has been a relative feeding frenzy as far as the Defense budget with very few constraints,” says Mraz. “Everything else has been playing second fiddle to national security.” The rising call for fiscal austerity may affect military spending in the future, experts agree.
Overall, industry observers are optimistic about the future of the aerospace industry. “We are seeing some absolutely great numbers,” Aboulafia says. “While it won’t grow like it did from 2003 through 2009, it will stay near the high point. It is doing better than any other segment in the economy.” n