Kaiser Aluminum focusing on aerospace, engineered products: CEO

Kaiser Aluminum is focusing on its strong markets of aerospace and general engineered heat-treat products, allowing it to make significant upgrades, said Jack Hockema, chairman, president and CEO of Kaiser Aluminum.

Speaking Tuesday during a conference call, he said Kaiser did not have a lot of room for additional contracts with its current installed capacity. As far as conducting another expansion, Hockema said Kaiser is "monitoring the situation. We have a significant of available upstream capacity. If customer demand is there, we indeed would do an additional expansion. But at this point, we are not forecasting anything like that." He explained that this additional capacity came about after Kaiser exited the can lid and tab stock market in the second quarter of 2002.

Kaiser said in August it planned an additional expansion of capacity at its Trentwood, Washington, aluminum rolling mill "in order to address the significant growth in demand for heat treat plate used in aerospace, defense and general engineering applications." The $30 million follow-on investment, when combined with a previously-announced $75 million expansion, is expected to effectively double Kaiser's plate capacity. The first phase of this project is now operating at full production. The second phase is expected to be fully operational by mid-2007, and the entire project by early 2008, said Hockema.

"The best use of the asset is to continue to grow in those areas where Trentwood always been strong," he said, adding that "if there's enough demand, we will continue to expand there."

Kaiser is seeing some softness in the automotive sector, but it is seeing a favorable environment for fabrication as well as with aerospace and other industrial markets "within the context of seasonality," said Hockema. Kaiser's percentage of bookings with the automotive transplants are in the high teens, and with additional bookings, it will be in the low 20s. "We are well positioned with competitive and financial strength," he said. "We see a strong platform for growth."

Meanwhile, Kaiser is 70-80% hedged on natural gas in the fourth quarter and 20% in Q1 2007. It also has some hedging beyond Q1 2007 into Q1 2008.