Carpenter Technology Corporation announced a $115 million expansion of its premium melt capacity. The expansion of melt capacity and related infrastructure at the Company's Reading, PA facilities is part of approximately $200 million in capital expenditures the Company will make over the next four years under the strategic plan it announced last September.
The premium melt expansion will allow the Company to meet the demand expected over the next several years from its key end use markets, including aerospace, energy, medical, and specialty applications in automotive and truck. Carpenter believes that more than $500 million of organic growth opportunities in its highest margin business exist in these markets over the next several years. These markets require high performance products made to exacting specifications for critical applications that cannot be easily substituted.
"This expansion of our premium melt capacity reflects the increasing demand for premium alloy materials that is at the heart of Carpenter's growth plan," said Anne Stevens, chairman, president and chief executive officer. "The investment is a continuation of our strategy to focus on higher value materials that have applications in niche markets."
Stevens said, "The growth over the next several years for Carpenter's high-margin products is the result of increased needs for the more specialized products manufactured by the Company's aerospace, energy, medical, automotive and truck customers. However, these growing opportunities can only be captured by the timely strategic deployment of adequate capacity and technical resources that meet both the current and future demands of these key end-market customers."
Dennis M. Oates, senior vice president of the Specialty Alloys Operations added, "Our decision to make this significant investment reflects not only our confidence in the markets but also our confidence in our workforce in Reading and at our other supporting operations. Our highly skilled and dedicated employees will ensure the success of this project."
The Company expects that the investment will generate approximately $150 million of additional revenue from the sale of higher value products by fiscal year 2010 (ending June 30) and provide significant returns on the capital invested.
At the core of the Company's premium melt capacity expansion program will be an approximate 40 percent increase in its vacuum induction melting (VIM) capacity. VIM furnaces are typically used in the first melting step to produce materials for demanding applications such as high temperature and highly corrosive environments, high purity alloys for medical procedures, and specialty applications in automotive and truck.
The expansion program also includes four vacuum arc remelting (VAR) furnaces and two electro-slag remelting (ESR) furnaces. These furnaces are used in the production of higher margin products for critical end applications such as rotating aircraft engine parts, high performance automotive and truck engine parts and medical devices. These furnaces will augment the Company's existing 27 VAR and ESR furnaces, two of which were added in December.
The expansion program will also include related annealing, homogenization and other process machinery; associated testing equipment, raw materials management systems, and information technology infrastructure. Construction is expected to begin in late fiscal year 2007 and be completed by mid-fiscal year 2009.
The premium melt expansion will complement Carpenter's existing state-of-the-art melting, forging and finishing operations. These operations are being enhanced with laser technology welding for strip finishing and centerless turning equipment for bar finishing.
The expansion project is expected to add up to 100 new employees to the Company's Reading operations, which currently employ 1,896.