Kaiser Aluminum may not be the biggest aluminum company on the block, but it holds its own in fabricating specialty aluminum products. It operates 11 fabricated product plants in the US and one in Canada. Kaiser manufactures rolled, extruded, and drawn aluminum products to serve customers in the aerospace, automotive, general engineering, and custom industrial markets. It produces more than 560 million pounds of fabricated aluminum products annually. It also has a 49% stake in UK-based Anglesey Aluminum. Diversified metal services center Reliance Steel & Aluminum is the company's largest customer, accounting for 21% of sales, while its top five customers account for about 42%.
The company's main operations are conducted through its Fabricated Products segment, which consists of its 12 North American manufacturing facilities. Its rolled, extruded, and drawn aluminum products are used in the aerospace and defense, automotive, consumer durables, electronics, electrical, and machinery and equipment markets.
Kaiser's aerospace and high-strength products include custom-made forms manufactured for the global aerospace and defense industries and include aluminum plate, sheet, extruded shapes, and tube. The unit also makes specialized rod and bar products.
Its general engineering unit consists primarily of 6000-series alloy products, including rod, bar, tube, wire, sheet, plate, and extrusions. The products are used in many applications, including for protection of military vehicles, in the manufacturing process for LCD screens, and in vacuum chambers used to manufacture semiconductors. The unit's rods and bars are used in rivets, nails, screws, and bolts in machinery and equipment.
Automotive extrusions are used in a variety of products, including bumpers, antilock braking systems, and drawn tubes for drive shafts. Other products include extruded and drawn aluminum products for a variety of industrial applications, including consumer durables, electronics, machinery and equipment, and trucks.
The company purchases primary aluminum ingot and recycled and scrap aluminum from third-party suppliers to make its fabricated products. Some of its facilities supply billet, log, and other aluminum materials to its other plants for use in production.
Kaiser also owns a 49% stake in Anglesey Aluminum, which operates a secondary aluminum remelt and casting facility in Holyhead, Wales. Previously part of a joint venture with Rio Tinto plc, the Anglesey facility was powered by a nuclear plant that was decommissioned in 2010. The company was unable to locate an alternative source of energy for the facility and ended smelting operations there in 2009. Anglesey is decommissioning part of its site and disposing of some of its assets, but it expects to continue its secondary aluminum remelt and casting operations.
Kaiser generated $1.3 billion in net sales in fiscal 2011, compared to $1.1 billion the previous year. The 21% hike resulted from higher shipment volumes and stronger demand across all of Kaiser's market segments, reflecting improved economic conditions. Its aerospace and automotive products achieved record value-added revenue that year. Net income was $25.1 million, a 78% hike from the previous year, and included charges related to environmental expenses and expenses for property, plant, and equipment.
The company's overall revenues grew more than 9% in 2010, due primarily to increased shipments reflecting improved economic conditions and stronger demand for products across Kaiser's market segments. Kaiser's aerospace business, while generating slightly less that one-third of its total annual output, accounted for 43% of its revenues in 2010; other segments remained flat or showed moderate growth over 2009. However, net income was off 80% in 2010 due to increased environmental expenses and a non-cash impairment charge for plant and equipment expenses.
Kaiser has been pursuing a strategy of organic growth by increasing capacity and improving its product capabilities. For example, in 2011 it invested heavily in expanding its capacity and increasing its thickness capability for producing its aluminum heat treat plate for its aerospace extrusion products made in Spokane, Washington. The company also made a major investment at its Kalamazoo, Michigan, plant to improve the capabilities of its rod and bar operations and to provide more capacity for growth of its extrusion products.
The company also includes the use of key acquisitions in its strategy for growth. Its latest purchases were the Florence, Alabama, plant and assets of Nichols Wire and a manufacturing plant in Chandler, Arizona, and assets of Alexco. The Alabama plant makes alloy wire products, nails, and aluminum rods, and the Arizona plant makes hard-alloy extrusions for the aerospace industry. In 2011 Kaiser began an expansion at its Arizona plant.
Another part of Kaiser's strategy is to maintain long-standing customer relationships with blue chip companies through its major business segments. It has developed processes that provide continual quality improvements as well as the Kaiser Production System, which is designed to continually reduce its manufacturing costs. The system eliminates waste, promotes efficiency, and works to mitigate the impact of volatility in the price of its raw materials.
Kaiser operates 11 plants across the US and one in Canada. It also has a sales office in China and another sales office in France. – less
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