Teksid Continues North American Cast Aluminum Engine Expansion

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Teksid Aluminum Components, a division of TK Aluminum Limited is proceeding with expansion of its Sylacauga aluminum foundry. An investment group acquired the Teksid Aluminum business unit from Teksid S.p.A., a subsidiary of Fiat, and created TK Aluminum Limited late in 2002. The investment group is headed by Questor Management Company (Southfield Michigan); JPMorgan Partners, the private equity arm of J.P. Morgan Chase & Co.; Private Equity Partners, S.p.A.; and funds managed by a subsidiary of American International Group (AIG). Robert Shields, chief operating officer of Questor Management Company, is the chairman of the board of directors of TK Aluminum Limited. The company's corporate office and engineering expertise are still located in Carmagnola, Italy.

Teksid Aluminum Components began operation of its first foundry in April of 2001. The $95 million foundry, TAC I was built on 110 acres in Sylacauga, Alabama and is totally dedicated to production of aluminum cylinder heads & cylinder blocks for North American OEM customers. The first foundry has a covered manufacturing area of 220,000 square feet and uses the "lost foam" casting technology to produce over 300,000 sets of heads & blocks a year for the Saturn Division of General Motors (NYSE:GM)(Detroit, Michigan) in Tennessee.

A $41 million expansion was originally announced in early 2001. The second foundry, TAC II is 70,000 square feet and was completed in early 2003. It supplies V-6 cylinder blocks to Nissan produced in high-pressure die-casting. Annual cylinder block production is expected to be over 300,000 units.

During 2002, Teksid began studies to construct TAC III, a $30 million third foundry that would have supplied Ford Motor Company (NYSE:F)(Dearborn, Michigan) with V-6 cylinder blocks. That project has not yet materialized, but the company recently began construction of an $18 million foundry addition and hopes to be operational by early in 2004. Teksid will start producing prototypes for Hyundai in mid 2004 and begin full production in 2005.

The company is also spending $9 million to add equipment at its Dickson, Tennessee aluminum foundry. The new equipment will produce additional cylinder heads for Hyundai.

The current Sylacauga expansion will make engine component castings for Hyundai's new assembly plant in Montgomery Alabama. Cylinder blocks will be produced for Hyundai's Sonata and Santa Fe vehicles. The general contractor is Dunn Building Company LLC, a subsidiary of Dunn Construction Company Incorporated (Birmingham, Alabama).

Teksid Aluminum Components currently employs 456 people in Sylacauga. The latest expansion will add another 100 employees in 2004.

Since 2002, Teksid has shipped more than 400,000 engine blocks, 340,000 aluminum cylinder heads and 35,000 manifolds from castings produced at the two Sylacauga foundries. This represents 34.8 million pounds of aluminum.

Teksid is riding a wave of growth for North American cast aluminum automotive component manufacturing, which according to Aluminum Association (Washington, DC) figures (See related article: North American Aluminum Industry Trends Upward After Tough 2001) experienced an 11.8 percent increase in aluminum casting ingot production in 2002.

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