Boeing Decision May Hurt Reliance Steel

Boeing Co. said it chose German steelmaker Thyssen as its sole aluminum distributor for commercial aircraft, a contract valued at $300 million over 10 years, as the world’s biggest maker of airplanes moves to cut costs. The contract will take away some business from Reliance Steel & Aluminum Co., a Los Angeles-based metals distributor that gets about 7% of its annual revenue from Boeing contracts. Earnings won’t be significantly hurt because of the phase-in period for the new Thyssen contracts, Reliance Steel President David Hannah said. “It does have a little bit of an impact on us,” he said. Reliance supplies other metals to Boeing, such as stainless steel and alloyed parts, and will continue to distribute aluminum to the company’s military aircraft plants. Although metals customers have been consolidating suppliers to cut costs, Boeing’s long-term agreement with Thyssen is “a little unusual” in length, he added. Boeing will buy aluminum directly from a fewer number of mills and provide it to Thyssen’s newly formed TMX Aerospace subsidiary for distribution to Boeing’s external suppliers and internal parts shops. In NYSE trading, Reliance shares fell 19 cents to close at $37.81, and Boeing shares rose 19 cents to $48.63.