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Improved Aerospace Industry Boosts Manufacturers

Improved Aerospace Industry Boosts Manufacturers By SLAV KANDYBA Staff Reporter Valley aerospace-related manufacturers are churning out more parts these days at faster rates and many report revenues are returning to levels not seen since before the events of Sept. 11 dragged the industry down. The rebound is attributed to both a pickup in commercial airline services and the ongoing military operations in Iraq. Replacement parts are needed for military planes now in use, while new parts are in order for new aircraft, such as the F/A-22 Raptor fighter jet, said John Anderson, an aerospace industry consultant with the Gardena-based California Manufacturing Technology Center (www.cmtc.com). Further, because “the amount of passenger traffic is up,” Anderson said, “there aren’t as many planes sitting around (in hangars), and with Boeing starting to look like they’re going to get more commercial work, they’re gearing up more for what’s coming.” That certainly holds true for Riggins Engineering Inc., a Van Nuys-based manufacturer of components for hydraulic pumps in airplanes. There, business volume increased about 15 percent in the first quarter of 2004, said Joe Grossnickle, a general manager at the company. “That’s substantial, I would have expected a something between five and 10 percent,” Grossnickle said. “That’s historically what we’ve seen.” Grossnickle said Riggins has had a pickup in replacement orders due to the Iraq conflict. While that has been a substantial part of business, however, he said Riggins is “seeing an increase in the volume of new aircraft” as well. Prior to the war, Riggins had about 60 percent of work from the commercial sector, and 40 percent from the military. “Now it’s the other way around,” Grossnickle said. The increase in business has meant Riggins’ 24 employees have had to shoulder more work. The company employed 40 before 9/11, but had to lay off 16 due to the poor business after that date. The employees that remain now work between 50 and 55 hours per week and some even more. “Some guys are working 60 to 65 hours now,” Grossnickle said. Commercial increases Excel Manufacturing in Valencia also has seen drastic improvement. In fact, in only six to seven months orders picked up 30 to 35 percent mostly due to commercial airlines doing better. “Our shipments have gone up to what they were before Sept. 11,” said Walter Halliday, the company’s president. Orders are also picking up for airplane windshields, the main products made by Sierracin Corp., a 500-employee company based in Sylmar. The improvement is coming in both the military and the commercial sector, and is to the tune of about 10 percent, said Shiu-ming Ellis, the company’s CFO. “I think that number will reflect the whole year,” Ellis said. Sierracin is seeking to add an additional 40 employees, most of them production workers, to accommodate the increasing business, Ellis said. “If people are traveling, they’re flying the aircraft more and that helps with our business,” Ellis said. Passenger traffic at LAX during the first quarter of 2004 was comparable to the quarter before the terrorist attacks. From January through March, 13.6 million people passed through the airport, a 6 percent increase from the same period in 2003, according to statistics. Also, airlines are adding more new flights to meet demand, while discount airlines such as AirTran Airways and JetBlue are helping smaller local airports return to pre-9/11 levels by adding new flights and expanding service. Valencia-based EFS Aerospace, a division of Philadelphia-based Triumph Group, is also reporting growth. The manufacturer of hydraulic components for military and commercial aircraft has 175 employees working in a 50,000-square-foot facility. Immediately after Sept. 11, the company’s revenues declined 30 percent, said Brian Barrett, EFS president. The company was producing about 55 percent of its parts for the commercial side of the aerospace market, and 45 percent for the military. “The commercial business shrunk significantly (while) military stayed stable,” Barrett said. The recovery started about six months ago, he said, when Boeing Co. increased the rate of airplanes it was making per month. The defense contractor was making 28 planes per month before Sept. 11, and that production was sliced in half afterward. Now, Boeing is back up a notch, making some 17 planes per month. About a quarter of the parts produced by EFS are for Boeing’s 737 commercial jet, and in the recent months, that part of the business has picked up 6 percent, Barrett said. Similar to Sierracin, EFS is expecting that figure to hold up through 2004 and perhaps beyond. “In the year we’re in now we expect a six percent increase,” Barrett said. Still cautious Although EFS and the other companies are riding an improved economy and getting more business, they’re cautious. Barrett, for one, is not quite a believer that business will return to what it was before Sept. 11 anytime soon. “It will take quite a few more years before we can return to the pre-9/11 levels,” Barrett said. He targets 2007 as the likely year when that will happen without any interruptions – and it will be because of increases at Boeing and other opportunities the company is pursuing. Barrett also said he believes the Valley’s aerospace industry will be well despite well-publicized issues such as high business taxes and workers comp. “One thing that’s keeping business here is the wide diversity of small shops,” he said. “That’s the one anchor that keeps all of the companies here.” According to Jack Kyser, chief economist at the Los Angeles County Economic Development Corporation, the ballooning federal defense budget is largely responsible for the increase in the Valley’s aerospace business. The contracts awarded to L.A. County companies from the Defense Department topped $10.6 billion in 2003, up from $9.1 billion in 2002, Kyser said. Further, there are the so-called black programs highly secretive research and development operations conducted by some companies throughout the Antelope Valley, Kyser said. Kyser said Boeing expects more business as it continues with work on the new 7E7 jet. “The Valley is protected by its capabilities in high-tech aerospace manufacturing,” Kyser said. “This can’t go offshore, either because of security reasons or because of the high tolerances that are required.”

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