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Commercial aviation seems on the rebound. More than 8-percent of all aircraft are more than 10 years old, and more than 40 percent are over 20 years old, according to the Academic Center for Aging Aircraft. And with the war on terror, military contracts continue flowing.
The bottom line: Despite production delays, downsizing and airline bankruptcies, planes are full, and the government, for now, is committed to building its arsenal against global threats. Translation: It's good to be in the aerospace business, if you can weather the competition.
For proof, just look at AIMCO Precision Inc., a National Tooling and Machining Association member based in Phoenix. In 2005, the shop moved from 16,500 square feet into a newly purchased 42,000 square-foot facility, using 25,000 square feat and leasing the remaining 17,000. This year, the lease is up—and it is not being renewed. The shop is moving into all 42,000 square feet.
In two years, the shop more than doubled in size.
Company President and CEO Maxine Jones knows such growth isn't typical, and it hasn't come without some pains. The aerospace field isn't for everyone. More than other sectors, aerospace requires technical knowledge of complex materials and machining capabilities. Combine this with intense competition and contracts that require reducing pricing year over year, and one could see the aerospace sector as a formidable—though rewarding—mountain to climb.
As a contract manufacturer for aerospace, "you've got to constantly look at ways to improve," Maxine says. Like elsewhere in manufacturing, "customers are constantly going overseas," she says, "and you've got to stay ahead of that." The company takes full advantage of continuous-improvement, a philosophy aerospace OEMs have come to expect from contractors.
Today Jones has 42 employees and is still hiring—and therein lies the greatest hurdle for the business: finding skilled labor. Jones stays highly involved with local and national manufacturing groups to attract talent. She is president of the Arizona Manufacturing Network and stays involved with the Greater Phoenix Chamber of Commerce and the Arizona Tooling and Machining Association. She also has a comprehensive in-house apprenticeship program—but finding qualified people still remains top-of-mind
The same could be said of fellow NTMA-member-company Fredon Corporation, Mentor, Ohio. Moreover, say company managers, the skilled-labor issue doesn't reside solely at Fredon's tier in the supply chain.
The contract shop has been in business since 1969, has 60 employees, and gets roughly 20 percent of its business from aerospace clients. Like all U.S. manufacturing, the aerospace business has fewer people as talent retires. "This country has a lot of people who are very smart, very computer literate," says Rich Ditto, Fredon's vice president of operations. "But how do you teach someone 20 to 30 years of experience?"
When Fredon entered the aerospace sector 17 years ago, aerospace clients would decide what they needed when. This has changed immensely.
"The big companies decided to become lean by, in part, passing on buying responsibilities to the little guys like us," says Ditto. Clients show a system and describes its usage, and Fredon handles the "what-is-needed-when" part of the transaction. "Clients put in a blanket purchase order, and we become, in essence, their supply-chain manager."
This doesn't bother Ditto, though, who says such practices help solidify tighter client relationships and assist strategic planning.
In hindsight, Jones and Ditto both say they underestimated the impact of manufacturing technology. "I would have bought newer machines faster," says Ditto.
Says Jones, "I would have been more aggressive moving the company forward with new technology and continuous improvement.
"It was a culture change," she concludes, "and it remains a culture change for everyone in this industry to this day."
Editor's Note: Over the following months, Fabricating & Metalworking, in partnership with the National Tooling & Machining Association, will delve into market trends in metal manufacturing. The chart titled "Aerospace Machining and Fabrication" is from NTMA's winter Business/Customer Forecast Report. Constant $ bars reflect values after stripping away the effects of inflation. Constant values are indexed as if there were no inflation or disinflation.
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