Universal Stainless & Alloy Products Inc. has an agreement to buy the Patriot Special Metals greenfield forging project for $104.5 million, expanding its production capacity and increasing its product range. The project was estimated at $60-70 million when it was announced three years ago. The specialty steelmaker said the purchase would close later this month.
The plant in North Jackson, OH, is “substantially completed” and includes a radial forge, said to be in startup phase, and a vacuum induction melting (VIM) installation that Universal intends to complete for production in early 2012.
The acquisition also includes two vacuum arc remelt (VAR) furnaces that would start operation later this year, heat treating operations, and a selection of long-products finishing equipment. Universal’s directors approved a $6-million capital expenditure to add an electro-slag remelt (ESR) furnace at North Jackson.
Republic Special Metals Inc. is a Canton, OH, subsidiary of Patriot Forge that supplies ingots and billets to forgers and other hot-working operations. It also forges VAR and ESR ingots on a 3,700-ton press. It announced the 200,000-ft
2 Patriot Special Metals plant on a 180-acre site near Youngstown in September 2008.
Universal said the purchase would broaden its product range, adding “higher-margin products” and giving it access to new markets. “Specifically, the addition of the largest hydraulic radial forge in the Western Hemisphere will expand the company's products to include large and long forged squares, rounds, bars, and custom shapes for aerospace, power generation, petrochemical, and general industrial tool steel and shafting applications,” it stated.
Universal Stainless & Alloy Products manufactures semi-finished and finished stainless steel, tool steel and other alloyed steel products for aerospace, power generation, petrochemical, and heavy equipment manufacturing.
It said the radial forge will improve its customer service by reducing cycle and lead times, and allow it to process larger, longer pieces with high cross-sectional integrity. In addition, it said the new forge would increase capacity utilization at its Bridgeville, PA, melt shop. And, it raised the possibility of offering hot-working services to other specialty metal producers, using the radial forge.
Universal also said adding VIM/VAR capability will give it access to high-nickel alloy and superalloy markets for aerospace parts, landing gear, helicopter rotor masts and gears, and non-magnetic drill collars for oil-and-gas exploration.
Universal chairman, president and CEO Dennis Oates commented: "This acquisition will significantly strengthen our industry position, enabling Universal to respond better to the needs of customers and to seize additional global opportunities in the Aerospace, power generation, petrochemical and heavy industrial markets. We expect that with the addition of the North Jackson facility, the company will substantially increase revenues and more than double net income by 2014. This is a transformative step that will fast-track the execution of our strategy to accelerate growth and increase shareholder value."