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Owner Builds Aerospace Firm in Middle of Downturn

You might think it took meticulous planning to create a business that thrived even during a major recession in the industry where it operates. But Michel Szostak created just such a business plan over one sleepless night. Szostak’s idea, manufacturing precision fasteners, was simple enough. But these would not be just any nuts and bolts. His company would focus on critical applications situations where, if a bolt fails, lives can be lost and years of R & D; work, designing and building, not to mention millions of dollars can literally go up in flames. MS Aerospace, the company Szostak launched in 1992 in the midst of a severe downturn in the fortunes of the aerospace industry, not only survived, it has seen revenues climb in nearly all of its 15 years of operation. “Michel identified a niche, and he stayed with it,” said George F. Hill, a commissioner for the county’s office of small business and senior vice president at City National Bank, who has worked with MS Aerospace for nearly a decade. “What I’m seeing is a combination of this niche, high quality and his ability to be reliable. These are very, very important attributes in the industry, and he’s built a stellar reputation.” The Sylmar-based manufacturer now supplies such notable organizations as the U.S. Department of Defense, NASA, General Electric Co., Pratt & Whitney, Honeywell and ATK Thiokol, among others. MS Aerospace’s fasteners are used in performance racing cars, medical instruments, airplanes, missiles and rockets, even the international space station. Last year, the company built its own, 100,000-square-foot manufacturing facility, doubling its size, and MS Aerospace, with about 190 employees, expects to log revenues of $22.5 million this year. But 15 years ago, as he prepared to launch MS Aerospace, Szostak’s expectations were far more modest. In 1987 Szostak had been sent to North Hollywood to manage a fastener company his French employer had acquired. Five years later, he was planning to return to France to manage another of the conglomerate’s divisions when some customers planted a seed about remaining in the U.S. and starting his own business. “I woke up one night. I couldn’t sleep and I made up a business plan,” Szostak recalled. His hastily scribbled idea was enough to persuade a friend who was a businessman in France to invest in the startup, and together with his own life savings and a loan from his dad, who, unbeknownst to Szostak put up his own house as collateral, Szostak raised the $500,000 he needed to start the company. The year was 1992. Communism had fallen. The Cold War had ended, and the aerospace industry in Southern California was collapsing. “If the company did not work, I would have to pay debt for the rest of my life, but you don’t think about this when you believe in a startup,” Szostak said. “I knew the market very well. I knew the people who would work for me. I wasn’t thinking about failing at all.” Needing veterans Szostak recruited two industry veterans, Jim Cole, vice president and general manager, and Richard Stevens, manufacturing vice president, and he set about putting together a small company in a niche that few competitors were mining. “My knowledge, Mr. Cole and Mr. Stevens, that was the key,” Szostak said. “If one was missing, this company wouldn’t exist.” Besides, Szostak added, he had no particular aspirations to grow in any sizeable way. “Our target in the first 18 months was to get to $2 million a year,” Szostak recalled. “I knew in the kind of business we were in, we were very well known. We knew GE. We knew Pratt Whitney, so I knew I would get some business, and I said to myself I will have no problem getting to $2 million a year. If I grow beyond that, that’s fine. If I don’t, that’s fine too because I don’t have a big corporation.” With a focus on devising fasteners that customers could trust to perform in extreme conditions, MS Aerospace broke even within its first year of operation. Then the Northridge Earthquake struck, and the roof of the company’s building collapsed. Fortunately, the machinery was not badly damaged, but Szostak knew that if he didn’t get the equipment out before the inspectors arrived, he may not get another opportunity for weeks. Within hours he solicited the help of friends with a forklift, lifted the roof and removed all the MS Aerospace equipment to the parking lot, and a few weeks later, MS Aerospace was relocated to a new facility in Burbank. “And the company just grew, year after year,” Szostak said. “We just targeted a niche. My focus was zero defect, price and delivery, but marketing, I didn’t care.” Between 1992 and 1999, MS Aerospace operated with one sales manager, who also did all the costing work. “He asked me will I be able to hire some people, and I said, ‘certainly not,’ Szostak recalled. “Our marketing tool was our manufacturing. If it was good quality, very fast, and we shipped on time, this is the best marketing we can have.” Even today, MS Aerospace runs with a staff of only four sales people in its headquarters and another in a Baltimore office opened three years ago to provide local service to the aerospace companies in that region. “If I bring in a force of 10 more sales people, I can double revenue, but if you ask me if I’m interested in doubling my revenue, the answer is no,” said Szostak. “We focus on the right product, the right cost. If I have too many sales people I will lose control of this because their target is to bring in as much business as they can.” Revenues have climbed steadily throughout MS Aerospace’s 15-years of operation except for the period between 1998 and 2000 when the company’s sales dipped to $14.1 million from $16.9 million. Some layoffs followed, but Szostak said the slowdown provided an opportunity to clean house, and the way he sees it, “We never had a bad year. “We had some recession (in the industry) so our revenue was flat, but that’s not our motivation,” Szostak said. Even today, while Szostak plans for the company’s growth, he still keeps his eye focused on manufacturing above all else. “Our target is to have revenues of $30 million to $35 million a year and 250 employees,” Szostak said. “But I have time for this. If it happens in one year, fine. If it happens in 10 years, fine.”

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