Allegheny Technologies Announces Strategic Investment Program
09/18/2008 - Allegheny Technologies announces a new $1.16-billion, four-year strategic investment in its Flat-Rolled Products segment that has been approved by the company’s Board of Directors, but is subject to satisfactory resolution of several open issues.
Allegheny Technologies Inc. has announced a new strategic investment in ATI's Flat-Rolled Products segment. Estimated to cost approximately $1.16 billion and take four years to complete, the new investment program has been approved by the company’s Board of Directors, but is subject to satisfactory resolution of certain open issues.
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ATI’s Advanced Specialty Metals
Hot Rolling and Processing Facility ATI’s new Advanced Specialty Metals Hot Rolling and Processing Facility will provide:
· Unique alloy versatility
· Common facility to produce hot bands for a wide range of specialty metals and alloys
· 88.5-inch (2250-mm) hot rolling system with continuous variable crown system and a 7-stand, 4-high finishing mill
· Separating force over 3 times the current capability
· Hot bands large enough to produce up to 78.62-inch (2-meter) wide finished product
· Advanced walking beam furnace, laminar cooling, and slab and plate handling
· Fully automated facility providing safe working environment with best available controls technology and increased productivity
· Environmentally friendly production, with advanced environmental controls such as a fume collection system, low NOX furnace burners, fume suppression sprays, as well as a closed-loop water treatment plant
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The strategic investment includes the development of a new advanced specialty metals hot rolling and processing facility, and consolidation of the company’s Natrona, Pa., grain-oriented electrical steel meltshop into its Brackenridge, Pa., meltshop.
"This investment is a critical step in our ongoing transformation of ATI's Flat-Rolled Products segment into a globally-focused business capable of generating high levels of profitability and cash returns across business cycles," said L. Patrick Hassey, Chairman, President and CEO. "Our Flat-Rolled Products segment has been repositioned over the last several years with an improved cost structure and product mix and a diversified global market focus. This segment has been transformed into a profitable specialty metals business and is no longer a typical stainless steel business.
ATI has tentatively chosen to locate the advanced specialty metals hot rolling and processing facility at its Brackenridge, PA site pending resolution of certain open issues, including state and local approvals. It will be designed to produce exceptional quality, thinner and wider hot-rolled coils at reduced costs, shorter lead times, and lower working capital requirements. According to the company, this investment should be completed in 2012.
"We view this investment as a game changer for our Flat-Rolled Products segment,” commented Hassey. “It provides a quantum leap in manufacturing technology. Our new advanced hot-rolling and processing facility is designed to be the most powerful mill in the world for production of specialty metals.”
The new advanced specialty metals hot rolling and processing facility will be designed to roll and process exceptional quality hot bands of up to 78.62 inches, or 2 meters, wide. The company believes it will further improve the overall cost structure of its diversified flat-rolled products, while providing customers with a full complement of products at much shorter lead times and reducing the company’s working capital requirements.
"The new facility and enhanced capabilities are expected to create a new production model for our standard grade stainless sheet products,” explained Hassey. “By producing hot-rolled coils wider, thinner, flatter, and faster, we intend to cut our flow times in half by finishing more of our standard grade stainless sheet products through our continuous automated finishing line in Midland, Pa. This results in exceptional quality products to our customers with the shortest lead times in our industry, enabling our customers to reduce their working capital requirements. We also expect to be able to nearly double our own inventory turns on these products."
Consolidation of the company’s Natrona (grain-oriented electrical steel) meltshop into its Brackenridge meltshop is expected to improve the overall productivity of ATI's flat-rolled grain-oriented electrical steel and other stainless and specialty alloys, and reduce the cost of producing slabs and ingots. The company said this investment should also result in significant reduction of particulate emissions. This consolidation is expected to be completed in 2010.
"The initiative is expected to further enhance ATI's Flat-Rolled Products segment's competitive position in the global chemical process industry, oil and gas, electrical energy, and aerospace and defense markets as well as other durable goods and consumer markets.
"The consolidation of our grain-oriented electrical steel melt shop into our highly efficient and flexible Brackenridge, PA melt shop is expected to improve our cost structure by eliminating a plant footprint, improve our melt capacity utilization rates, increase overall productivity, and significantly reduce our particulate emissions footprint," Hassey added.
The company is estimating the project’s return on investment at more than 20% by 2014, including estimated annual cost reductions of $120 million. The project is expected to be self-funded. As a result of this strategic investment, ATI's annual capital expenditures are likely to remain in the range of $500 to $600 million for 2009 through 2012.
Allegheny Technologies Inc. is one of the largest and most diversified specialty metals producers in the world with revenues of $5.5 billion during 2007. ATI’s major markets are aerospace and defense, chemical process industry/oil and gas, electrical energy, medical, automotive, food equipment and appliance, machine and cutting tools, and construction and mining. Its products include titanium and titanium alloys, nickel-based alloys and superalloys, grain-oriented electrical steel, stainless and specialty steels, zirconium, hafnium, and niobium, tungsten materials, and forgings and castings.
