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Boom: like a jet that breaks the sound barrier, aircraft production is booming so fast that aluminum and titanium suppliers have been jarred by the demand.

Article Excerpt
NOT ONLY ARE ALL SECTORS of the aerospace industry strong--including large commercial jets, regional jets, business jets, very light jets and defense aircraft--but they are all strong at the same time. This is highly unusual, say the experts, and highly fortuitous for suppliers of aluminum, titanium and other aerospace alloys.

"We haven't experienced an overlap of commercial and military cycles, at least to this extent, for 10 to 15 years," says Rod Hogan, manager of procurement for Lockheed Martin Aeronautics, Fort Worth, Texas. The market's strength "looks like it has some legs," adds Bill Sales, senior vice president for nonferrous operations at Reliance Steel & Aluminum Co., Los Angeles.

Due to this high-flying demand, aerospace metals--particularly titanium and certain grades of heat-treated aluminum plate--are in very tight supply. Most major mills report that they are in the process of bringing on new capacity, which should begin to ease the supply shortfall next year. With several new commercial aircraft models expected to roll out in the next few years, however, that added capacity may bring only limited relief to metal availability.

Commercial aerospace, by far the largest of all the aerospace sectors, is absolutely booming worldwide, with both Boeing and Airbus receiving more than 1,000 orders each last year, says David Napier, director of the aerospace research center at the Aerospace Industries Association of America in Arlington, Va. "They haven't had orders of that magnitude since the boom in 1998-99."

While airlines have placed about half as many orders for new planes this year, vs. 2005, 2006 will be another good year by historical standards, says consultant Richard Aboulafia, vice president of the Teal Group, Fairfax, In the first nine months of 2006, total net orders of large civil jet transport aircraft totaled 962 planes, according to AIA figures, bringing the order backlog to a very healthy 4,242 planes, up from 3,977 planes at the end of 2005.

"Airline passenger traffic has finally recovered from the decline that the Sept. 11 terrorist attacks created, as well as the economic slowdown that followed that attack," Napier says. "Now the economy is growing, and people are flying more."

Another factor boosting demand is air carriers' desire to replace aging commercial fleets with more efficient aircraft. Indeed, Napier says,...

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