Economic Development Incentives and Factories and Job Creation and Manufacturers and Government & Economic Development and Economic Development and Manufacturing & Technology

UPDATE: Manufacturer plans $110M expansion, 329 jobs

May 29, 2014

Gov. Mike Pence is traveling to northern Indiana for what his office calls an economic development announcement involving hundreds of jobs.

The announcement involves the Alcoa Howmet factory in LaPorte, which makes castings for the aerospace and industrial gas turbine industries in a plant about 150 miles north of Indianapolis. Greater LaPorte Economic Development Corp. Executive Director Bert Cook told The Times of Munster that the announcement involves a previously reported expansion plan by the company.

Cook said the investment is expected to result in 329 new jobs and $23 million in additional payroll.

The LaPorte City Council in February approved a 10-year tax abatement for Alcoa Howmet, which had plans to invest $110 million into its 200,000-square-foot manufacturing plant.

Company officials said the plant would make nickel-based engine parts for commercial airliners. Alcoa already makes the same components — in smaller sizes — for engines that go on business jets and planes flown by regional airlines.

Boeing and Airbus are stepping up production as airlines order new, more fuel-efficient planes. Asian airlines in particular are expected to grow rapidly as a booming middle class yearns to travel.

"This is a massive growth market, more than 8 years of backlog," CEO Klaus Kleinfeld said. Alcoa expects aluminum demand from aerospace companies to rise 9 percent this year.

Airlines have long gone through a boom-and-bust cycle, but Kleinfeld said he wasn't worried about that. He said smarter management and Asia's changing demographics will help the airlines.

The Indiana plant will make parts that form the rib cage around a jet engine's vital parts, so its customers are likely to be the big engine manufacturers such as GE and Rolls Royce. Alcoa wouldn't disclose customers, but said it has enough long-term contracts to support the facility, which is due to be completed late next year.

Alcoa said it could get up to $4 million in state tax credits for job creation and another $7.1 million in city tax incentives over 10 years.

The plant is part of Alcoa Inc.'s strategy to downplay its roots as a mining and aluminum-smelting company. Aluminum prices haven't recovered from the deep recession in 2008, and Alcoa has been idling smelters to reduce capacity and cut costs.

The company has been increasing its focus on producing finished aluminum products for aerospace, autos and other industries. Those segments account for more than half of the company's revenue and three-quarters of its after-tax operating income.

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