1. Boeing and the Titanium Supply
Michael Walsh
BoeingResearch Paper
May 23, 2016

2. Executive Summary
Russiaisthe source of a 2 cubic footblockof titanium.Boeingneedsa12-inchdiametercircle inthe
middle of the block.The blockcan be sentto VietnamorIndiato have the titaniummachinedandthen
sentto BoeinginSeattle,WA.The assignmentistopresenta recommendationtoBoeingasto which
countrytheyshouldchoose tomachine the titaniumpartbasedon factual research.
In thisresearchpaperI will describethe relationshipbetweenBoeingandRussia.The relationshipwent
fromexchangingideasandinformationandbloomedintoastrategicpartnershipinaerospace
technologythathasbenefitedboththe USand Russia.That partnershipalsoinvolvesaRussiansupplyof
titaniumthatBoeingusesforthe manufacture of theiraircraft.Thissupply isat riskdue to Russia
annexingCrimea,Ukraine in2014. The problemIdescribe inthe paperisthe political tensionsand
economicsanctionsthe USplacedon Russia,andhow thiseffectsBoeing’ssupplyof titaniumfrom
Russia.
I will analyze the scenarioof eachsupplychainandreportmyfindingsaccordingtoa supplychain
comingout of RussiathroughVietnamandIndiaendingupatBoeinginSeattle.Thiswill include alook
at relevanttrade agreements,titaniumindustries,andafeasibilityanalysisforeachscenariowith
benefitsandissuestobe considered.Iwill introduce NorskTitaniumasmysolutiontoBoeing’sproblem
alongwithfacts to backup my solution.MyrecommendationtoBoeingistosource the titaniumpart
fromNorskTitaniumusing theirinnovative 3Dmetal printingtechnology.The recommendationwill
include validreasonsforthisdecisionandhow the relationshipwill be mutuallybeneficial.

3. Boeingand Russia: The Beginnings
It was the late 1960’s and the ColdWar wasin full swingwhenthe USState DepartmentaskedBoeing
representativestomeetwithrepresentativesfromthe SovietUniontoexchange technical information.
The Soviet’spossessionanduse of titaniumaspartof theiraerospace programgave the countryan
advantage overthe US. Boeingwaswell aware of thisandneededthe material fortheirSSTprogramto
reach Mach 2.7 cruisingspeed.A hull made of titaniumislight,yetable towithstandthe extreme heat
of suchspeedsunlikethe commonlyusedaluminummaterial.Russia,onthe otherhand, wasinterested
inthe evolutionof the Boeing747. Russia’sengineerswantedtoknow why Boeinghaddecidedtoplace
the enginesunderthe wingsinsteadof the rearfuselage whichwasmore common. The twogroupsmet
and exchangedideasandinformation.Bothleftthe meetingsatisfied,andthiswasthe beginningof the
relationshipbetweenBoeingandRussia.
The partnershipsawthe historicUS-Sovietspace mission,Apollo -Soyuz,whenspacecraftfromboth
countriesdockedinorbitinthe 1970’s. Today theirrelationshipspansmultiple areasincludingaviation,
metal engineering,space,andIT. BoeingandRussiashare ongoinginnovation,intellectualresources,
and aerospace expertise totake onprojectssuchas the International Space Station,commercial airline
manufacturinganddesign,space exploration,anddefense.Toshow theyare committed Boeingopened
the BoeingTechnical ResearchCenterandthe BoeingDesignCenterinMoscow duringthe 1990’s so
scientistsandengineersfromthe twopartiescancollaborate andinnovate.
Boeing/VSMPORelationshipDevelopment
Boeing’s relationshipwithRussialedtothe developmentof astrategicpartnershipwith Russian
titaniumproducerVSMPO.The relationship startedin1997 witha contract to supplytitaniumfor
BoeingCommercial Airplanes.Boeingpurchases40% of itstitaniumfromthe Russiancompany. In2000,
the two companiesstartedjointR&Dventuresinnew alloydevelopmentatthe Boeing-VSMPO
Innovation Center.In2009 the companiescreatedthe jointequityventureUral BoeingManufacturing
(UBM) for the machiningof titaniumforgings. Anefficientclosed-loopsupplychainwasachievedby
recyclingall titaniumchipsandleftoverpiecesbacktoVSMPO.
RostecVSMPOBoeing
In 2013, Boeingsignedanagreementof understandingwithRostec,aRussianstate corporation,tobuild
a newUBM facilityinthe TitaniumValleyinUrals,Russia. Thiswill double UBMscapacityto build
commercial airplanes. In2014, a cross-functional teamof overadozen membersfromengineering,
finance,procurement,sales,andleanmanagementfromBoeingmetwiththeirpeersfrom VSMPOfor5
daysin a cooperationeffortforthe developmentof future projects andcommitments.CurrentlyBoeing
isin the thirdyear of a long-termagreementforthe supplyof titaniumproductsuntil 2022.
Political Tensions
On March 18, 2014 the internationallyrecognizedterritoryof Crimea,Ukraine wasannexedbythe
RussianFederation. Thiseventwascondemnedbymanyworldleadersasillegal andaviolationof
Ukraine’sterritorial integrity.The UnitedNationsdoesnotrecognize the annexation,while the US,EU,
Canada,Japan,and Australiaamongothershave introducedsanctionsagainstRussia. The USpassedand
signedintolawthe Ukraine FreedomSupportActof 2014. The US governmenthasfrozenthe assetsof
keyRussianbusinessmenandlegislatureswithclose tiestothe Kremlin.Some Russiancompaniesare

4. prohibitedfromengaginginfinancialtransactionswithUSindividualsandentities. Rostecismentioned
as one of them.Rostecisthe parentcompanyof Boeing’stitaniumsupplierVSMPO. The sanctionsare
aimedtoweakenthe Russianeconomy.The combinedeffectof the sanctionsandthe decline of oil
priceshas loweredthe valueof the ruble andsentRussiaintoa recession.
In response,Russiahasthreatenedtobanthe exportof RussianRD-180 rocketenginestothe US.
Currently,Boeingisamemberof the UnitedLaunchAlliance andtheyneed these enginesto power
rocketscarryingUS militarysatellitesintospace. The combinationof economicsanctionsplacedon
Russiaand the unrestin Ukraine has promptedconcernfromBoeingaboutthe future supplyof
titanium. Thisputssupplierriskatcritical.There isa risk of the unavailabilityof future titaniumsourced
fromVSMPO due to the political tensionsandsanctionsbetweenthe twocountries.Boeing’sresponse
has beentostockpile titaniumpartsincase tensionsescalate. VSMPOhasbeenstockpilingtitanium
concentrateswhichitsourcesfromUkraine.NotonlyisBoeing’sconnectionwithVSMPOatrisk,butthe
annexinghasputVSMPO’sabilitytosource concentratesfromUkraine injeopardyaswell.
Boeing’sResponse:SafetyStock
Boeinghastakenno actionsto replace the source as theyaccumulate safetystockinventoriesof
titaniumrawmaterialsandfinishedproductsattheirwarehouses. AccordingtoBoeing’s10KReport,
“investmentingrossinventoriesincreased$7.6Bin2014” (39).This isthe year Boeingbegantostockpile
titaniumintheirwarehousesinresponsetopolitical tensions. The companyhasupto six monthsof
additional supplyof titaniumparts tomaintaintheirproductionlines. There isatangledsupplywiththe
RussiantitaniumproducerVSMPO,of whichUkraine providesthe titaniumconcentratesusedto
produce the titanium,andBoeing’suse of titaniumpartsontheiraircraft. Boeingcouldlookelsewhere
for a suppliertomeetatemporaryincrease indemandif VSMPObecomesunavailable. Some of the
forgingandmachiningof titaniumislikelytoshifttoanothermajorsupplieraspart of a riskmitigation
plan.There are three in the US: AlleghenyTechnologies,PrecisionCastparts,andRTI.
Problem: Boeing is at risk of losing 40% of their titanium supply due to political tensions and
economic sanctions against Russia.
VSMPOVietnamBoeing Scenario
Russia/VietnamRelations
Russiaand Vietnamare allies. Bilateral trade existsbetweenthem withRussiaexportingmetalsand
machineryandinreturnVietnamexportstextilesandrice.The cooperationextendstothe military
where Russia’s Navyhasa base inVietnamesewatersandinreturnRussiaprovidesprotectiontothe
country.RussianandVietnamesebusinessorganizationsworktogethertodevelopenergyfieldsoff the
coast of Vietnam.Theyhave ahighlevel of cooperationinthe military,energy,anddefense industries.
Trade betweenthe twonationsexceeded$3.5B lastyear.
Vietnam/USARelations
These countrieshave aBilateral Trade AgreementwhichwentintoeffectonDecember10, 2001. There
isa commitmentonbothsidestocreate the necessaryconditionstohave fairaccessto compete inone
another’smarket. Total bilateral trade betweenthe twoin2015 wasover$20B. Otheragreements

5. betweentheminclude the Trade andInvestmentFrameworkAgreementandthe Trans-Pacific
Partnershipforadvancingthe economicinterestsof the USand Vietnaminthe Asia-Pacificregion.
VietnamTitanium Industry
Vietnamhasthe fifthlargesttitaniumreserve atanestimated650Mtons. About50% of the country’s
processedtitaniumproductsare exportedtoChina,andthe restare shippedtothe US, Japan,and South
Korea. Constructionanddevelopmentof the titaniumindustryhasbeentakingplace inVietnamover
the last several years. In2013, the prime ministervowedtopave the wayfor businessestoinvestinto
the industrybyzoningoff areasfor the exploitationandproductionof the material. The countryhasfour
titaniumproducingareasthatsupplyraw materialsformanufacturingplantsin Thai Nguyen,HaTinh,
Thua Thien-Hue,QuangNam,BinhDinh,PhuYen,NinhThuan,andBinhThuan.There are currently17
titaniumprocessingprojectsatdifferentlevelsof development.Withalarge titaniumreserve and
political support,more investorsare expectedto enterVietnam’stitaniumprocessingindustry. One of
themisBoeing’sRussiantitaniumsupplierVSMPO.
The VietnamNational Coal andMineral Group,or Vinacomin,andVSMPOhave signedanagreement
and setup a jointventure focusedonprocessingtitaniummineralsintovalue-addedproducts. There is
no informationavailable as tothe status of the jointventure todate.The informationthatisavailable
describesanindustrythatisstill indevelopmentandhasseensome setbacksdespite the amountof
titaniumunderthe ground.The VietnamTitaniumAssociationreportedthatfallingexportpricesof
titaniumprocessedproductshave causedmanyplantstoshutdownoperations. Manyplantworkers
have lostjobs.The plantsthat have remainedopenhave beenhithardwithhighinventories,toomuch
capacity,and fallingdemand.Despiteapledge tosupportthe titaniumindustryfromthe country’s
prime minister,titaniumfirmsare requiredtopaymultipletaxesandfees,includingavalue-addedtax
rate of 10%, resource tax of 16%, exporttax of 30%, corporate income tax of 25%, mineral exploitation
fee of 5%, and an undisclosedenvironmental fee. These taxesaccountfor50-60% of productioncosts,
and there are no tax incentivesinsightcomingfromthe prime minister’soffice.
Environmental and Social Effects
Withall the titanium reservesunderground,thereare social andenvironmental consequencestomining
that affectsthe local people andthe forests. Mosttitaniumminesare locatedinthe coastal districts
PHU My and PhuCat situatedinthe province capital of QuyNhoCity.More than 30 companieshave
beengrantedlicensestodigandextract nomore than650 tonsof titaniumperyear. Investorshave
arrivedwithlicensesinhandtoexploitthe resourcesundergroundresultingindeforestationand
pollution. Large machinespump waterandsandup frombelow the surface toexploittitaniumleaving
wellsdryor muddied.Familieshave losttheirsource of foodandincome since there isnowaterleftfor
cultivation.The richmineral regions where the peopleonce enjoyedagoodlife have beenreducedto
livesof povertydue tothe mining’seffectsonthe landandforests. Local authorities have respondedby
endingthe extensionof licensestoinvestorsandhave demandedthe titaniumenterprisesreturnthe
forestsandlandas it was before theyarrivedwithinthreeyearstoease the painof the locals.
EquipmentRequirements
Accordingto the 2015 WorldConference onTitanium, the equipmentrequiredtodrill afootdiameter
hole through2 cubic feet of titaniumwithprecisionaccuracyis a hydraulicpress. The requiredsize of

6. the pressdependsonthe scale of production. The total numberof pressesinthe worldusedforlarge
forgingof titaniumalloyisapproximately30. There are no hydraulicpressescapableof sucha job
locatedinVietnamasof 2015. A VietnamMetalworkingSupportingIndustryStudyinMay2014 stated,
“pressure technologyinVietnamisconsideredunderdevelopedasitisnot fullyequippedwithuniform
toolsand doesnotapplyadvancedtechnologyandautomationappropriatelytoprovide higheroutput
and productivity.The equipmentisnotrenewedormaintainedasnecessaryanddoesnotexploitoverall
capacityof equipment”(19).
VSMPOIndiaBoeing Scenario
Russia/India Relations
There iscooperationinalmostall areasof thisrelationshipincludingpolitics,security,trade,economics,
defense,science andtechnology,andculture. Atthe 15th
Annual Summitthe twoleaderssetatargetof
$30B inbilateral trade by2025. In 2014, bilateral trade amountedto$9.5B withIndianexporttoRussia
totaling$3.2B andIndianimportfromRussiatotaling$6.3B. ImportingtitaniumintoIndiacomeswitha
10% dutytax,no salestax,and additional dutiesandfeestotaling16.5%.
India/USA Relations
Bilateral relationsbetweenthe nationshave developedintoastrategicpartnershipbasedonshared
democraticvaluesandglobal interests.India-USA cooperationcoverstrade andinvestment,defense
and security,education,science andtechnology,nuclearenergy,aerospace,the environment,and
health.In2013, trade reacheda total of $64B withIndianexportsaccountingfor$42B and importsfrom
US $22B. Taxesforthe importof forgedtitaniuminto the UShas no dutytax, a merchandise fee,andis
subjecttoWashingtonstate tax regulations.
Indian Titanium Industry
There isa large titaniumreserve inIndia.The problemsare there isalackof national policy ontitanium,
unavailable technologythatisheldbythe few,environmental concernsandlandavailability.Reserves
are mostlylocatedinthe coastal regionsof southIndiaandin the forestedareaof Tamil Nadu.Both
areas are inhabitedbylocal people. The bigplayersinthe areaare the Steel Authorityof IndiaLtd(SAIL),
KeralaState Industrial DevelopmentCorporation (KSIDC),andKeralaMineralsandMetals Ltd(KMML).
There is360M tons of titaniumreserve mostlylocated inthe coastal Indianstatesof Tamil Nadu,Andhra
Pradesh,andOrissa. Overthe past decade manycompanieshave setouttomine forthe metal buthave
faileddue totechnologicalandenvironmental reasons.June2015, the AndhraPradeshMineral
DevelopmentCorporation,APMDC,helda pre-bidmeetingtodevelopthe titaniumreservesalongthe
coast attendedbydomesticandforeigninvestors. The investorwouldhave majoritystake,butmore
than half of the representativesinattendancewere fromlocal companies.The reasonmaybe the high
level of uncertainty. Currently,95%of the titaniumminedisusedinthe paint, paper,andplastic
industries.The restisprocessedintohighgrade titaniumusedinthe aerospace anddefense sectors.
Reasonsforsuch a small amountishighcost of productionandlackof technology.Itcosts$6 per
kilogramtoprocesshighgrade titaniumandabout $1.50 for steel and$2 for aluminum.Indianmetal
corporationshave attemptedtoobtain the technologyfrom global manufacturers,butwere notbeen
successful.

7. Technological Breakthrough
Withsuch a large titanium reserve itwas essentialtoensure the optimal utilizationof these resources
withlarge investmentsin R&Dand cooperationamongstate-runorganizationsandcompanies.In2011,
the large investmentsinR&Dpaidoff as the technologywasdevelopedbyDefense Metallurgical
ResearchLaboratory to produce titaniumsponge underthe directionof the Indiangovernment.The
cooperationwasprovidedbythe local organizationsSAIL,KSIDC, andKMML who signedajoint
agreementtobuilda$458M facilitycapable of producingtitaniumsponge,one of the few inthe world
withthat capability. Since Chinahashistoricallydominatedthe productionanduse of titanium, the new
plantgave Indiamore credibilityandleverage increasingtheirregional influence.The IndianSpace
ResearchOrganization,ISRO, hadalwaysdependedonforeignmarketstosource titaniumsponge,but
nowcan source itwithintheirbordersgivingthemmore control overthe qualityandprotectionagainst
price fluctuations.
Bharat Forge Limitedand ‘Make inIndia’
Boeinghasalreadymade Indiaa part of itsglobal supplychainstrategy.Boeinghasa partnershipwith
an Indiantitaniumforgingsupplier,BharatForge Ltd., to supplyroughmachinedforgingsaspartof the
wingof theiraircraft.Once the parts are receivedtheyare putthrougha finishmachiningprocessatthe
BoeingFabricationDivisionplantinPortland,OR,andthenshippedtoRenton,WA forassembly.The
forgingswill be partof Boeing’snewline of jets,the 777-8Xand 777-9X, withdeliveryscheduledfor
2020.
ThisrelationshipgivesIndia’stitaniumindustryandBharatForge credibilityfortheircapabilitytocreate
highprecisionmachine partsforthe aerospace sector. Thissuccesswill alsogive aboostto the Modi
government’s‘Make inIndia’initiative.The prime minister’sgoal istocrack the WorldBank’stop 50
ease of businessindex.Indiaiscurrentlyranked134, because of the legal andinfrastructure hurdlesto
doingbusinessthere.Contractenforcementtakesover4yearsand there are 12 proceduresforstarting
a businessthattakesroughlyamonth tocomplete. Thiscombinedwithinefficienttransportnetworks
makesitdifficultforcompaniestoachieve JITdeliveries.The ‘Make inIndia’initiative wasdesignedto
cut paperworkandremove infrastructure hurdlestodoingbusiness.
There are 29 statesand 2 territorieswithelectedgovernmentofficials.India’sgovernmentisledby
NarendraModi of the HindunationalistBharatiyaJanataParty,or BJP.The priorityof the party is rapid
economicgrowth. Since takingoffice,Modi hastouredthe worldwiththe message thatIndiaisopenfor
business.Hispolicies towardsnon-Hinduminorities andhealthcare risk losingdomesticandglobal
credibility. InSeptember2015, he failedtoreactappropriatelyafteraMuslimman washungafter he
was wrongfullyaccusedof storingbeef.Hindusconsidercowsassacred andtheirslaughterisoutlawed
inmany states. UnderModi’sleadershipithasbeenreportedinThe Economistthere have beencutsin
healthcare spendingalongwiththe suppression of nutritioninformation. The National Nutrition
MonitoringBureauhave conductedsurveysuncoveringhighratesof childmalnutrition andpoor
healthcare inGujarat,while Modi governedthe state.

8. Terrorism
Terroristattacks are a realityinIndia asa resultof disputedborderswithPakistaninthe Kashmirarea.In
July2015 terroristsattackeda police stationin the Indianstate of Punjab.Thiscame aftera peaceful
meetingwithPakistan’sleaderNawazSharif,atasummitinRussia. The attack was blamedonagentsof
the Pakistani state. EarlierthisyearinJanuary,twoseparate attackskillingIndiansoldiersandcivilians
were blamedonPakistan’smilitaryspyagency.
NuclearAmbitions
Indiahas builtanuclearpoweredsubmarine armedwithwarheadmissiles. Theywanttoshow China
theirsupremacyinlocal waters.Indiabelieves amarine strategycapable of nuclearretaliationisvital in
orderto respondto a nuclearattack againstthe country. Some believethismove will promotepeace
since itacts as a deterrentmakingthe otherafraidtostrike first. However,these ambitionsmaytrigger
an arms race withChina, Pakistan,andNorthKorea.Thisisparticularlydangeroussince these countries
lack the trainingandadequate systemstotestanddeploynuclearmissiles. NorthKorea’smissileshave a
historyof inaccuracy,and Pakistan’sweaponsare protectedbylow rankingsoldierswhose loyalties
couldbe swayedbyextremists.
Vietnam’s Feasibility Analysis
In thisscenario, Russiawill deliverthe raw titaniumtoVietnam.There the titaniumwill be machined
and forgedintohighprecisionmachinedparts withdimensions of 2cubic feetand a 12-inch diameter
circle drilledinthe centerof the block.The finishedpartwill thenbe deliveredtoBoeinginSeattle,WA
USA. AccordingtoVietnam’simportandexportregulationsthisactivityfallsunderVietnamstax exempt
policy,since the titaniumwouldbe importedtoVietnamforprocessingfora foreignpartnerandthen
exportedtothe US.
Vietnamhasa large reserve of 650M tons of titanium. There isanindustrypresenttomine andprocess
the metal exportingtitaniumtoChina,US,Japan,and SouthKorea. Russiantitaniumproducer, VSMPO,
recognizesthe untappedpotentialandhassignedabusinessagreementwiththe VietnamNational Coal
and Mineral Group. The companyisundoubtedlylookingfor new waystosource titaniumconcentrates
since RussiaannexedCrimea.Nothingmore aboutthe agreementanditscurrentstatusisavailable.This
may be due to the challengescompaniesface mining titaniuminthe country.
Issues
The firstissue is the mining’seffectonthe local citizensandthe environment.The titaniumislocatedin
populatedareasalongthe coastand inforestedareas.Miningcompanies withunsustainablestrategies
arrive and pollute the water,cutdownall the trees,andleave ahuge messforthe localstolive with.
Thishas broughtpovertyto regionswhere peopleonce enjoyedagoodlife.
The secondissue isthe country’stax regulationsandpolicies. Prime MinisterTanDungvowedtomake it
easyto do businessinthe country,butthe miningcompaniesthatpurchasedlicensesandsetupshop
there are beingforcedto shutdownoperationsdue toa drop indemandandhightaxesand feesthat
account for50% of productioncosts.

9. The third andmost importantissue facingVietnamasa supplierforBoeingisthe lackof equipmentand
know-howtomachine ahighprecisiontitaniumpart.Accordingtothe 2015 WorldConference on
Titanium,Vietnamdoesnothave ahydraulicpresscapable of forgingthe specifiedpart (32).Large
investmentswouldhave tobe made onequipmentinordertoachieve productionof scale andquality.
India’s Feasibility Analysis
In thisscenario, Russiawill deliverthe raw titaniumtoIndia.There the titaniumwill be machinedand
forgedintohighprecisionmachinedpartswithdimensionsof 2 cubicfeetanda 12-inchdiametercircle
drilledinthe centerof the block.The finishedpartwill thenbe deliveredtoBoeinginSeattle,WA USA.
To importthe blockintoIndiafrom Russia wouldcome witha10% dutytax alongwithanother16.5%
for additional dutiesandfeestotaling26.5%.To importthe finishedpart intothe US fromIndiaisduty-
free,butitis subjecttoa merchandise feeandWashingtonstate tax regulations.
There isan estimated360M ton titaniumreserveinIndia.The commitmentispresentwithcooperation
amonglocal organizationsSAIL,KSIDC,KMML investing$458M to buildafacility withthe technological
capabilitiesnecessaryfortitaniumsponge production.The in-houseproductionhasgivenIndia’sspace
program a boostand giventhe countrymore credibility andregional influence.Boeinghastakennotice
and made Indiaa partnersupplyingroughmachinedwingpartsfora new line of jetstobe releasedin
2020.
The Modi government’s‘Make inIndia”initiative isintendedtoencourage businesstothrive inthe
countryby removinginfrastructure hurdlesandcuttingpaperwork.Modi hastraveledthe world
recruitingcompaniestodobusinessin hiscountry.Hispartyisfocusedon economicgrowth,butthe
countrylacks a national policyontitanium.Thisisnecessaryforthe countrytobenefitfromthe
resourcestheypossess.Otherquestionsremainabouthistoleranceof non-Hinduminorities andhis
viewstowardshealthcare.
Issues
There are twomainissueswithformingasupplierrelationshipwithIndia.The firstone isthe threatof
terror.Border disputeswithPakistanbringsattacksintothe country.There are groupsfrom Pakistan
that do notwant to see peace amongthe two.Each time one steptowardsdiplomacyis reached a
terroristattack setsthe progressback again. The second issue isthe nuclearambitionsinthe region.
Indiawantsto showChinaitsnuclearcapabilitiesbyestablishingnucleararmedvesselsinlocal waters.
Thismay provoke Chinatostepup itsnuclearprogram andthe same goesfor Pakistanand North Korea.
Innovation Solution: 3D Metal Printing
Norsk Titanium,orNTi,is a manufacturerof aerospace-grade titaniumcomponents (Management
SystemCertificate No:193963-2016-AQ-NOR-ANAB) usingDirectMetal Depositionadditive
manufacturingtechnologyandRapidPlasmaDeposition3Dprintingtechnology.Raw ore isrefinedinto
pure titaniumwire.The wire ismeltedinacloudof argon gas and builtupinlayers requiringverylittle
finishmachining.Productioncostis50% lessthanforgingandbilletmanufacturingbecause itisalean
processusinglesswaste andmachine energy.Norskproducesprecision,corrosion-resistantpartsfrom

10. conceptto reality75% fasterthanlegacymanufacturingwhile preservingenergyandnatural resources.
Norskparts enable rapidprototypingandshortenedleadtimesresultingincompetitiveadvantage in
speedandinnovation.
Production and InventoryCost Reduction
The rapid depositiontechnologywill lowerBoeing’sexistingtitaniumcostsandhere’show:Boeing’s
aircraft feature titaniumproducts.The Boeing787 is roughly 15% titaniumandNorskestimates154K
lbs.of titaniumscrap isgeneratedduringproduction.Norskindustrial scale,ultra-leanRPDprocesshas
the potential tosave Boeingover$2M peraircraft while reducingleadtimes,waste,andenergyuse.
Inventorycostwill be reducedaswell.AccordingtoBoeing’s10K Report,“investmentingross
inventoriesincreased$7.6Bin 2014” (39). Thisisthe yearBoeingbegantostockpile titaniumintheir
warehousesinresponsetopolitical tensions. A partnershipwithNorskwill alleviate the needto
stockpile titaniumfreeingupcashflowandwarehouse space.
Testedand Approved
The Federal AviationAdministrationlaunchedaplanto testthe technology’sreadiness.Thistestis
recognizedbyNASA and US Departmentof Defense asthe standardmeasurementof material
capabilities.After1300 titaniumaircraftpartswere putunderan array of fatigue testsNorskreceived
the highestlevelonNASA’sTechnologyReadinessLevelsTest.NorskTitanium’sRPDprocessisreadyfor
commercial aviation.
Strategic Integration:(Alcoa, RTI, PrecisionHoldings)NorskBoeing
To supportdemandforthese parts,Norskhas developedstrategicpartnerships inthe US withAlcoaand
PrecisionHoldings.Precision Holdings servesthe aerospaceindustrywithmachining,assembly,
fabrication,and3D metal printing. Theyhave more than300K square feetof manufacturingspace in
Connecticutwiththe capacitytoproduce a full range of components. The partnershipwillsupportthe
productionof RPD to meetthe demandof Boeing.
Alcoahas beena global leaderinlightweightmetalstechnology,engineering,andmanufacturingfor
over125 years. Theyhave beenusing3D printingtechnologyinthe manufacture of jetenginepartssoit
makessense forAlcoaandNorsk tocooperate and innovate. Togethertheylaunchedthe Joint
TechnologyandIndustrial Cooperationprogram.The programwill leverageAlcoa’smetallurgical know-
howand aerospace relationshipswithNorsk’s3Dprintingtechnology.Itwill focusonservingthe needs
of aerospace anddefense customers. The programwill alsogive Norskthe opportunitytoleverage their
connectionwithRTI International Metals,one of the 3largestUS titaniumproducers, since theywere
acquired byAlcoaTitaniumandEngineeredProducts inJuly 2015. ThisrelationshipgivesNorsk a
verticallyintegratedglobaltitaniumsupply chain.
Norsksigneda$125M deal withthe state of New Yorkto construct an industrial scale 3Dprintingfacility
inPlattsburg,NY.Thiswill expandtheirmarketreachinthe US and allow themto increase the
productionof titaniumcomponentsusingDirectMetal DepositionandRapidPlasmaDeposition3D
printingtechnology. WithNASA,USDoD,US AirForce,and several governmentsaroundthe world
heavilyinvestedin3D printingtechnologyitislikelytoplaya significantrole inthe future of travel.

11. Onshore Outsourcing Advantages
Withindustrial scale manufacturingfacilitieslocatedinConnecticutandPlattsburg,NY,Boeingwill not
have to offshore outsource the productiontoIndiaorVietnam.The integratedglobalsupplychain
developedbyNorskwill ensure areliabletitaniumsource tomeetthe demandforpartsand innovation.
Thissourcingstrategywill provide Boeing shorterlead timesandjust-in-timereplenishmentdeliveries
for the 2 cubicfoottitaniumblockparts.
Recommendation: Source the titanium part from Norsk Titanium using their vertically
integrated global titanium supply chain capabilities and additive manufacturing innovation.
Boeing’sabilitytodeliverproductsthatsatisfycustomerrequirementsdependsonthe performance of
theirsuppliers,andthe availabilityof raw materials.Theyhave aheavyrelianceonsourcing 40% of their
titaniumfromRussia.BoeinghasapartnershipwithRussiantitaniumproducerVSMPO,andeachside is
heavilyinvestedinthe relationship.Boeingopenedthe BoeingTechnical ResearchCenterandthe
BoeingDesignCenterinMoscowduringthe 1990’s. Jointequityventureshave producedthe Ural Boeing
Manufacturingfacilities inRussiaforthe machiningof titaniumparts. Theyhave beenworkingonjoint
R&D projectsfor newalloydevelopmentsince 2000 at the Boeing-VSMPOInnovationCenter.
Recentpolitical tensionshave putBoeing’ssupplyof Russiantitaniumatrisk.AsBoeingandVSMPOare
verticallyintegratedonalarge scale Boeingneedstomitigate titaniumsupplyrisk.Whilewe are
committedtoour relationshipwithVSMPOitisimportanttoexplore new opportunitiesandinnovations
to ensure productionanddeliveries.Itistime todevelopanew relationshipwithNorskTitaniumto
manufacture the partsfor thisproject.
MutuallyBeneficial
Norsk parts have beentestedandapprovedbythe FAA andmeetthe qualitystandardsof NASA andthe
Departmentof Defense. Theyhave the innovationtoreduce waste andtime usingDMD andRPD
additive manufacturingtechniques. Theyhave the capacitytomeetBoeing’sdemandforpartswith
large scale manufacturingfacilitiesinPlattsburg,NYandConnecticut bothsupportingNorsk’s3Dmetal
printingtechnology.ConvenientlylocatedNorskhasthe potential toprovide shorterleadtimes,lower
deliverycosts,andreduce the complexity of the supplychain.Norskhasa verticallyintegratedglobal
titaniumsupplychainthroughtheirpartnershipwithAlcoaandthe JointTechnologyandIndustrial
Cooperationprogram. Boeing’slarge scale demandandneedforinnovationwill benefitNorskallowing
the companyto meetcapacityand rapidprototyping iterationcapabilities. Norskwill gaincredibilityin
the industrybydoingbusinesswith Boeingdue tothe aircraftmanufacturer’sreputationforhighquality
standards.
Achieve
Withthe supportof top management,Boeingwillsend across-functional teamof membersfrom
engineering,finance,procurement,sales, andleanmanagementto meetwiththeirpeersfromNorsk
Titaniumina cooperationeffortforthe developmentof future projectsandcommitments. Boeingwill
achieve competitiveadvantagesinnovationand speed throughamutuallybeneficial strategic
partnershipwithNorskTitanium.Itistime forkaizeninleanprocesses movingawayfromlegacyforging
and billetmanufacturingtowardsadditivemanufacturingtoreduce waste andmachiningenergy.

12. Conclusion
BoeingandVSMPOare deeplyintegratedintheirpartnershipforinnovation,R&D,andmanufacturing.
The political tension,the heavyreliance onRussiantitanium, the economicsanctions,andthe resulting
inventorycostare factors that were consideredwhendecidingtomove awayfromVSMPOfor this
particularproject.The needtomitigate the riskof losinga majorsource of titaniumsupplyforthe
companyledto an explorationof anewsupplierforthe partwhile keepingthe deeplyintegrated
relationshipwithVSMPOunchanged.
Vietnam’stitaniumindustryisunderdeveloped.Irresponsible miningcompaniesare damagingthe
environment,andthe prime ministeristaxingthose companiessoheavilytheyare unable tostayin
business. India’titaniumindustryismore developed.Theyhave alegitimatespace programand
technologytoproduce titaniumsponge whichgivesthemcredibility.However,thereistoomuch
violence inthe regionandthe potentialforasupplydisruptionishigh.
NorskTitaniumprovidesthe solutionprovidingcuttingedge technology,potential costreductions,and
convenientlylocatedfacilitiesinConnecticutandNew York.Theyalsoprovide asupplychainnetwork
that can be beneficial toBoeinginthe future if thingsworkoutwiththisproject.Thisrelationshiphas
great potential forfuture success,sinceNorskiscapable of providingBoeingthe innovationitneedsand
Boeingiscapable of givingNorskthe credibilityitneedstojumpstartthe company.