Alcoa Fastening Systems ties up with China Aircraft Manufacturer

Alcoa Fastening Systems (AFS), a unit of Alcoa, has announced a new agreement for strategic technology and commercial cooperation with Commercial Aircraft of China Ltd. (COMAC). COMAC is a manufacturer of large passenger aircraft in China and has ambitions of competing with Boeing and Airbus. The deal will help Alcoa gain a stronger foothold in the Chinese aerospace market, which is one of the world’s fastest growing markets.

Under the new agreement, AFS will provide COMAC with technical assistance in fastener and assembly tooling selection, joint design consideration and quality system management. The technical assistance will include engineering, design and training. In return, COMAC will purchase a significant chunk of its requirement for fasteners from AFS. These fasteners will be used in the production of COMAC’s C919 aircraft. AFS already has a prior technology cooperation agreement with COMAC which was signed in 2009. It aimed at examining advanced aluminum structural concepts, designs and alloys for the C919 aircraft. [1]

The deal is good news for Alcoa as AFS is part of its Engineered Products and Solutions division which focuses on value-added products to generate higher margins for the company. Building specialization in niche segments will help the company stay ahead of competition and mitigate the adverse effects of pricing volatility in the aluminum market. Alcoa’s total revenues for 2012 were $23.7 billion, of which $5.5 billion were contributed by the Engineering Products and Solutions division. Although total revenues declined in 2012 from the previous year’s figure of $24.9 billion, revenues of the Engineered Products division rose from $5.3 billion in 2011.