News from the Tennessee Valley Business

Most of Hexcel’s revenue generated in Decatur

Picture Hexcel Corp. as an upside down pyramid, with its customers at the top. Supporting the pyramid weight is a point, and that point is in Decatur.

Most of Hexcel’s revenue, it revealed in an annual report released Thursday, comes from carbon fiber applications. The precursor to carbon fiber is PAN, and Hexcel’s sole PAN production facility is the recently expanded Decatur plant.

PAN is humble in appearance — it looks like giant spools of white thread — but mighty in technological significance. After being shipped to Salt Lake City, where Hexcel converts it to carbon fiber, it ends up in commercial and military aircraft, space launch vehicles and satellites, body armor, wind turbine blades, bicycles and skis.

Boeing’s 787 Dreamliner passenger jet will have a content of 50 percent or more composite material by weight, as will the planned Airbus A350 XWB. The Airbus 380, plagued by delays and a lack of orders, has only 23 percent carbon fiber content. That fact more than any other explains its competitive problems with the Dreamliner.

In 2006, 52 percent of Hexcel’s sales came from the commercial aerospace industry. Its revenue in that sector has increased by a third in the last two years.

Hexcel relies more heavily on Airbus sales than Boeing sales in the commercial aircraft segment, but carbon fiber supply is so tight that it doesn’t much matter. The company sells as much as it can make, which is why its Decatur plant is operating 24/7.

Decatur is all over Boeing’s demand for carbon fiber, anyway. Down the street from Hexcel is its main worldwide competitor in the composite materials business, Toray Carbon Fiber.

Toray is the sole supplier of carbon fiber reinforced plastics for the jets’ primary structures and is generating billions of dollars from the deal. It is in the midst of a major expansion of its Decatur plant.

Boeing has for years complained of the unfair advantage Airbus enjoys by virtue of governmental subsidies. Airbus’ parent is owned by France and several European companies that are under tight German control.

The irony was therefore rich when Airbus last week had to cancel a previously scheduled news conference at which it planned to announce massive layoffs. Germany halted the conference, saying Airbus was laying off too many German workers.

The downside of governmental subsidies, it seems, is governmental control. As a European Union official put it, Airbus is “paying the high price of bad governance.”

Even as the EU urged less state interference, France promised $132 million in financial support for the company. Of significance to Hexcel, France earmarked that money to fund carbon-fiber technologies.

President Bush’s proposed budget was disastrous for social programs in Alabama, but should prove excellent for Decatur’s United Launch Alliance plant, the sole producer of launch rockets for governmental satellites.

The big winners in the budget included Global Positioning Satellite systems, a satellite-based system to warn of ballistic missile attacks and a satellite-based communications system.

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Eric Fleischauer
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