Alcoa (AA) is investing $190 million at its Davenport Works, IA, plant which will enable it to beef up its product range for aerospace and industrial markets. The investment will be made to install new manufacturing technology, enabling the plant to make the biggest high-strength monolithic wing ribs in the industry.
Alcoa is installing manufacturing technology to boost the performance of thick aluminum and aluminum-lithium plate in a number of applications including wing ribs. The company will install a very thick plate stretcher at the Davenport facility. Construction is expected to start in 2015 with first production expected in 2017.
Aluminum plates from the stretcher will allow Alcoa to produce thicker wing ribs for installation inside airplane wings. The stretching process minimizes stress introduced into the plates, leading to production of parts that can be more easily machined and processed.
The expansion project will allow Alcoa to cater the existing aerospace plate market while helping airframe makers to produce large wing ribs and fuselage frames utilizing the company’s thick aluminum plates. These plates also have applications in other industries including electronics and semiconductor.
The investment is in sync with Alcoa’s strategy to profitably grow its aerospace business. The company is witnessing healthy airline fundamentals. It has backed its global growth expectations of 8%–9% in the aerospace sector for 2014 on the back of strong demand for both large commercial aircraft and regional jets.
Alcoa has been actively focused on expanding its aerospace business lately. The move to buy U.K.-based leading jet engine components maker Firth Rixson represents a significant milestone in Alcoa’s portfolio transformation strategy. The $2.85 billion acquisition will further strengthen Alcoa’s robust aerospace portfolio, enabling it to achieve additional aerospace growth with a broader range of multi-material, value-added jet engine components.
Alcoa also announced two multi-year contracts worth more than $2 billion with Boeing (BA) and Pratt & Whitney in the third quarter of 2014. The deal with Boeing makes Alcoa the sole supplier of wing skins on all of the former’s metallic structure airplanes.
Alcoa is a Zacks Rank #2 (Buy).
Other mining companies worth a look include Solitario Exploration & Royalty Corp. (XPL) and Thompson Creek Metals Company Inc. (TC). While Solitario holds a Zacks Rank #1 (Strong Buy), Thompson Creek retains a Zacks Rank #2 (Buy).
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