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ATI Reorganizes, Sells, Closes in Strategic Review

Oct. 15, 2013
New EVP for high-performance forging, etc. Organizational changes designed for efficiency, profitability “Global economic uncertainties” impact earnings
Allegheny Technologies Inc. named John D. Sims as its executive vice president for High Performance Forgings and Castings, Primary Titanium Operations, and Engineered Alloys. Sims also will be president of the ATI Ladish business unit.

Allegheny Technologies Inc. is restructuring its Engineered Products division, an effort that involves reorganizing the management of some forging operations. It also means that an ATI iron foundry is being offered for sale; the group’s tungsten materials business has been sold, to Kennametal Corp.; the fabricated components business has been closed; and the titanium and specialty alloy flat-products finishing operations have been “integrated” into the ATI Allegheny Ludlum specialty plate business.

The Pittsburgh-based specialty metals business started a strategic review of its operations more than a year ago.  Recently, ATI named John D. Sims as its executive vice president for High Performance Forgings and Castings, Primary Titanium Operations, and Engineered Alloys. Sims also will be president of the ATI Ladish business unit, replacing Gary J. Vroman.

The forging realignment involves placing ATI Portland Forge – a closed-die carbon and alloy steel forging business in Portland, IN, and Lebanon, KY – within the ATI Ladish business structure. ATI Ladish, in Cudahy, WI, produces large-dimension and isothermal forgings for aerospace structures.

In addition to these forging operations, ATI has the ATI Chen-Tech Forging operation in Irvine, CA, that produces near-net-shape forgings in aerospace-grade materials; and ATI ZKM Forging in Stalowa Wola, Poland, which produces aerospace and general industrial forgings.

The foundry to be sold is ATI Casting Service in Laporte, IN, which produces gray and ductile iron castings from 500 to 200,000 lb., for manufacturers of wind turbines, industrial gas turbines, railroad structures, and machine tools.

Pittsburgh-based ATI did not indicate any potential buyers for the foundry. It will retain two other metalcasting operations in its portfolio: ATI Pacific Cast Technologies, Portland, OR, which produces nonferrous investment castings for aircraft OEMs; and ATI Wah Chang, Albany, OR, which manufactures corrosion-resistant rammed graphite castings for chemical processing, oil-and-gas, aerospace, nuclear, and power-generation industries.

"These strategic actions are designed to position ATI for improved financial performance in 2014 and beyond, simplify capital allocation decisions, and enhance our focus on ATI's strategic businesses," stated chairman, president, and CEO Rich Harshman.

Difficult 3Q for Costs, Shipments, Income

Most of the changes were announced in coordination with Allegheny Technologies third-quarter earnings statement. The company expects 3Q 2013 sales of approximately $970 million and total segment operating profit of $25 million-$30 million.

“Third quarter results continued to be negatively impacted by lower shipments associated with many high-value and standard products, lower base-selling prices for many products, and the impact of higher raw material input costs for products with longer manufacturing cycle times not aligned with falling raw material sales indices and surcharges, which continue to negatively impact raw materials cost recovery,” according to the company’s announcement.

Harshman described “expected, challenging conditions” that continued to frame ATI’s financial performance during the recent order: "Jet engine destocking at OEMs, while beginning to show signs of stabilizing, continued to impact shipments of both mill products and forged and machined components in our High Performance Metals segment,” he stated.

“Global economic uncertainties impacted project-related demand for our Flat-Rolled Products segment industrial titanium and nickel-based and specialty alloy sheet and plate products.”

ATI forecast a 3Q 2013 loss from continuing operations to be approximately $(0.27) to $(0.30) per share.