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Carpenter Technology detailed profile

Carpenter Technology Corporation : 04 November, 2004  (Company News)
Carpenter Technology Corporation is a leading international manufacturer of specialty alloys and engineered products that have been used in planes, cars and trucks, electronic equipment, medical devices and instruments, industrial fittings, sporting goods, and oil and gas exploration and processing.
Carpenter engineered materials have been used in hundreds of applications - from industrial tools to jet engines to fuel injectors and medical implants. Its engineered materials are known for their dependability, strength, toughness, corrosion resistance, and the ability to stay intact in high temperatures.

In recent years, Carpenter has expanded its product line and geographic reach. Much of this expansion has been customer-driven. Unlike most companies in the field, Carpenter not only manufactures its products, but also distributes them through its own worldwide system of service centers. This network, with its staff of metallurgists and engineers on the front lines, enables the company to work closely with its customers to find solutions for their product requirements, as well as to learn first hand which materials need to be upgraded, acquired or created. Carpenter's direct contact with its customers has given the company a unique marketing edge.

In the specialty metals industry, the Carpenter name has long been synonymous with quality. The company has more than 14,000 customers worldwide, having recently expanded its base in the United States to Europe, Asia and Mexico. And now, as Carpenter grows from a specialty metals company to a specialty materials producer, it is leading the effort to meet the challenges presented by the changing marketplace and emerging new technologies.

Carpenter was founded on June 7, 1889, as the Carpenter Steel Company in Reading, Pa. James H. Carpenter, a construction engineer whose interest in steel production led him to the study of metallurgy, wanted to test the commercial value of improvements he conceived for the manufacture of steel. He and a small group of investors leased the old Philadelphia and Reading rail mill in Reading and, 11 weeks later, began melting the company's first order for 3,000 tons of tool steel. One of his patented inventions, an air-hardening steel, was also used for knives, drills, and projectiles capable of piercing the armor on warships. In fact, Carpenter's projectiles proved to be a decisive factor in the Spanish-American War, and established the company as a steel pioneer in both the United States and Europe.

The company later was recognized as a leader in developing and producing machinable stainless steels.

Carpenter found its niche in the area of specialty metals in long product (bar, rod, wire) form, and today makes several hundred grades of stainless, tool steel, high temperature alloys, and electronic and magnetic alloys. The company is known for its technical expertise.

Carpenter also has a history of reinvesting in its business. In the mid-1990s, the company invested $500 million in melting and hot working equipment related to the production of vacuum-melted specialty alloys used by such industries as aerospace and power generation. The largest capital expenditure project during this period renewed Carpenter's manufacturing competitiveness in narrow strip products, made from a variety of specialty alloys

During this time period, Carpenter also acquired companies that expanded its engineered products portfolio to include made-to-print components from various metallic and ceramic materials, while also increasing its stainless steel manufacturing capacity and extending its global presence. Carpenter also began making titanium bar, wire and shaped products to meet the needs of aerospace, medical and consumer goods manufacturers.

Carpenter has been a public company since 1937 and trades on the New York Stock Exchange, under the ticker symbol 'CRS.' In fiscal 2003, sales were $871.1 million.

Stainless steel remains a significant part of Carpenter's product line, accounting for 45 percent of sales in fiscal 2003. During World War I, a considerable amount of academic research was done in Europe and the United States on 'rustless steel' - later called stainless steel - which was strong and resisted being deformed. Carpenter melted its first heats of stainless in 1917, and continued to contribute to its development until eventually receiving patents on the world's first free-machining stainless steel. This and subsequent breakthroughs led to a family of Carpenter machining bars known as Project 70 stainless, which set industry standards for machinability from the 1960s. Carpenter continues to set new industry standards with its latest family of stainless machining bar products. Introduced in October 2002, Project 70+ stainless, the premier stainless machining bar in the industry, machines easier and extends tool life.

Carpenter also manufactures special alloys -- products that are so highly alloyed that they are more aptly called 'specialty metals' than steels. They include electric and electronic alloys and high temperature, corrosion-resistant and other special purpose alloys. Special alloys, excluding titanium alloys, accounted for 33 percent of Carpenter's sales in fiscal 2003. Carpenter’s Dynamet unit is a leading producer of titanium bar and wire products that have been used in aircraft, medical devices and sports equipment, among other applications. The company's titanium products made up 8 percent of Carpenter's sales in fiscal 2003.

Carpenter's Engineered Products Group produces advanced engineered components from ceramic and metallic materials, which accounted for 10 percent of the company's sales in fiscal 2003. Some of Carpenter's traditional customers are using these materials as alternatives to specialty metals.

Tool steels and other steels
Carpenter initially produced steels for virtually every tooling application. The company went on to develop and patent a complete line of tool steels, five of which are among the most frequently used grades today. Carpenter also offers a line of powder high speed steels used to make precision cutting tools and gears. In fiscal 2003, tool and other steel accounted for 4 percent of sales.

The more than 14,000 customers who depend on Carpenter products range from global corporations (such as General Electric, Eaton, Texas Instruments, Rolls Royce, Robert Bosch and Westinghouse) to machine shops, forgers and parts makers. Consumers, retailers, and manufacturers around the world depend on properties that Carpenter materials impart to such products as structural fasteners in aircraft, golf clubs, anti-theft devices, hip implants, pumps, valves and fittings and car fuel injection systems.

Today Carpenter has about 4,100 employees, with about half of them working in the company's headquarters or largest plant in the Reading, PA., area. The company's main operating groups are Specialty Alloys Operations, Dynamet, Engineered Products Group companies, and Carpenter Powder Products.

Carpenter Powder Products make specialty alloy powder using a gas atomization process.

Specialty Alloys Operations is Carpenter's largest division. It produces more than 22,000 products in hundreds of grades of stainless steel and specialty metals.

Engineered Products Group companies - mostly composed of companies acquired in the 1990s by Carpenter - that produce engineered components from a range of ceramic and metallic materials. Carpenter's engineered products have been used to cast turbine blades for jet engines and industrial gas turbines, and to create nuclear fuel channels, medical instruments, automotive parts, pumps, valves, oil drilling parts, and firearms, just to name a few applications.

Dynamet is a leading producer of titanium bar and wire. These products can be found in aircraft, medical devices, sports equipment, automotive springs and related applications, and industrial products.

Unlike many other specialty steel producers, Carpenter operates its own worldwide network of service/distribution centers. These service centers, located in the United States, Canada, Mexico and Europe, allow the company to work more closely with customers and to offer various Just-in-Time stocking programs. As a result, Carpenter often serves as a technical partner in customizing specialty metals or developing new ones. Carpenter Service Centers also offer conversion and other value-added services, including cutting, grinding, and special packaging, and electronic data interchange (EDI) programs.

In an effort to increase revenue and profits, Carpenter has increased its presence in fast-growing international markets.

In recent years, the company has expanded its sales and marketing efforts in Europe, Asia, and North America. European headquarters are based in Brussels, with Asian sales directed from Singapore. Outside the United States, company-owned distribution facilities are located in Mexico, Canada, the United Kingdom, Belgium and India. In addition to the United States, the company has manufacturing facilities in the United Kingdom, Sweden, Australia and India.

As a result of those efforts, sales of Carpenter products outside the United States were $217.9 million in fiscal year 2003, or 25 percent of sales.

Carpenter's strong commitment to setting new industry standards is evidenced by its Specialty Alloys Research and Development center, where teams work in such areas as physical metallurgy, analytical chemistry, materials characterization and process and systems development. Over the years, Carpenter has been issued more than 140 patents. One of them, AerMet® 100 alloy, a super-strong alloy developed as a candidate for naval aircraft landing gear in 1992, was named one of the top material advances of the decade by the National Association for Science, Technology and Society. Engineered Products Operations, including Dynamet, also operates small R&D facilities.

Carpenter has adopted the Six Sigma variation reduction methodology, aimed at lowering costs and improving product quality. Our goal is to reduce defects to Six Sigma levels: 3.4 defects per million opportunities (DPMO). About 500 employees today use six sigma methodologies to improve quality levels and lower costs. For example, a variation reduction team of six employees improved the processes used to remelt critical new alloys, saving Carpenter about $1 million annually.

Carpenter employs sophisticated, state-of-the-art manufacturing equipment to melt, press, anneal, roll, draw, mold, shave, cut, grind, coat, clean and trepan specialty materials. The company's installations use statistical process controls to help make consistent products to exacting tolerances. That Carpenter is the premier specialty alloy manufacturer of long products in the United States speaks to the reinvestment the company has made through the decades in manufacturing technology.

To allow the company to continue to meet customer needs, Carpenter recently completed a five-year, $500 million capital investment program. Projects were aimed at increasing manufacturing capacity and modernizing operations in growth areas of the company's business.

The largest expenditures occurred in Specialty Alloys Operations where the projects included:

An $80 million modernization of narrow strip finishing operations.
Additions to premium melting, which cost $43 million.
Installation of a new, 4,500-ton forging press for $42 million.
$22 million in wire finishing improvements.
$16 million in new annealing furnaces.
A $27 million manufacturing expansion at the company's Talley Metals stainless steel plant.
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