Boeing’s Russian Titanium Deals

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New planes need titanium. Its exceptional strength and low weight help military aircraft offer better performance, and civilian aircraft offer better operating costs. Unsurprisingly, the use of titanium and composite materials has skyrocketed in new military and civilian aircraft. It’s a big opportunity for aircraft manufacturers, who want civil customers to recapitalize their existing fleets, in exchange for lower operating costs. It’s also a big headache, as they look to firm up key sources of supply, and build their engineering and manufacturing expertise with this difficult metal.

Russia is the world’s largest supplier of titanium, but American military aircraft are restricted by law from using it. On the civil side, however, Boeing can do what it likes. In order to secure its civil supply, build it manufacturing expertise, and break into a modernizing Russian market, Boeing signed deals with Russia’s state firm Rosoboronexport, and established a joint venture. That endeavor could produce up to $4 billion in parts orders from Boeing from 2007-2017; plus up to $18 billion in contracts for Russian titanium products, and $5 billion on Russian engineering services, by 2030. On the plus side, it led to Russian aircraft orders, as well as engineering innovations that could find military uses on both sides of the ocean.

Rapid Fire Dec. 6, 2012: OK, OK, We’ll Plan for Bad

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  • After recoiling for months from planning for sequestration for fear of triggering a self-fulfilling prophecy, the Pentagon has now started doing so, or at least admitting that they do. AP.

  • The Aerospace Industries Association (AIA) published its 2012 review/forecast [PDF]: “The U.S. military aircraft sector continues to contract, falling 2.4% over last year and will further decline by more than 10% in 2013.” But with a backlog edging close to the 2008 peak above half a trillion dollars, the overall aerospace industry still has plenty of work ahead thanks to global civilian orders.

  • Rolls Royce announced they are under investigation by the UK’s Serious Fraud Office for allegations of bribery in China and Indonesia. The company’s internal inquiry acknowledges “matters of concern.” This must be for civil aerospace or energy products, given the destination countries.
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