Arconic Cleveland 50K press Alcoa
Arconic produces lightweight forged parts, rolled-rings, and castings for aerospace, automotive, and defense markets. The 50,000-ton press it operates in Cleveland is among the largest in the U.S., and was fully rebuilt in a three-year, $100-million program completed by Alcoa in 2012.

Arconic to Split Forming and Rolling Operations

Aluminum and titanium forging operations will be a core element of one standalone business

Just over two years since its establishment, Arconic Inc. will split into two separate businesses, Engineered Products & Forgings and Global Rolled Products. The decision by company directors, along with a cost-cutting initiative, both announced together with Arconic’s 2018 results, follows a tense period during which the group considered and then rejected an attempt by investors to privatize the aluminum and titanium products business.

Arconic was formed in 2016 in a similar break-up of Alcoa Inc.: that group’s mining, refining, and primary aluminum production remained in one portfolio (the current Alcoa), and the rolled products, engineered products, transportation, and construction product lines formed the new business. Via its forging, ring rolling, casting, additive manufacturing, and other manufacturing capabilities, Arconic is a significant supplier of lightweight components for aerospace, automotive, commercial transportation, and defense markets.

In January, Arconic directors voted down a $10.7-billion deal offered by Apollo Global Management that would have represented the largest industrial privatization in recent history. Like other large engineering and industrial businesses, the organization has been under investor pressure to maximize shareholders’ returns.

Newly appointed Arconic chairman and CEO John Plant said: “After a rigorous and comprehensive process, we did not receive a proposal for a full-company transaction that we believe was in the best interests of our shareholders. The board sees more shareholder-value creation through a restructuring of the company.

“As part of the strategy and portfolio review, we have determined to separate the portfolio into Engineered Products & Forgings and Global Rolled Products,” Plant continued. “In addition, we will also explore the potential sale of businesses that do not best fit into Engineered Products & Forgings and Global Rolled Products.”

The company has not defined the process or set a schedule for separating the two divisions. Together with the separation strategy, Arconic initiated plans to reduce operating costs by approximately $200 million this year.

During Q4 2018, Arconic closed the sale of an idled rolling mill in Texarkana, TX, to Ta Chen International Inc.; and of its Eger, Hungary, forging business to Angstrom Automotive Group LLC.

Arconic reported 2018 Q4 revenues of $3.5 billion, up 6% year-over-year, and full-year 2018 revenue of $14.0 billion, up 8% year-over-year.

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