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Aerospace production rates could be slowed by processing capacity issues

At Pacific Northwest Aerospace Alliance’s April Breakfast Meeting, JC Hall, Vice President of Sales for Esterline Hytek Finishes painted a sobering picture of how combined OEM build rate increases of 55% for 2015, and proposed regulatory changes affecting industry mainstays like cadmium and chromium could affect the capacity of the Metal Finishing Industry, leading to production slowdowns for Boeing, Airbus and others. Hall, who has over 40 years of aerospace experience, presented this troublesome news and ways to minimize the effects to approximately 40 aerospace executives at PNAA’s Bellevue meeting. According to Hall, changes in regulatory climates here and in Europe, ownership patterns, European re- sourcing efforts and combined aerospace production rates are creating the “perfect storm” that is leaving some aerospace procurement executives “panic stricken.” The metal finishing base that the aerospace industry relies on to strengthen and protect metal parts on planes is not expanding. In fact, according to Hall, it’s shrinking due in part to costly environmental regulations, corporate acquisitions and the inability of small and midsized facilities to acquire financing. Proposed EPA regulations could require businesses to carry insurance to finance potential environmental cleanups. Hall says, “That would prove too costly for many businesses, and it would likely force many finishing facilities to close.” A natural response to the news has been to purchase capacity. Finishers have resisted this approach and it has proven problematic for customers. Recently, several prominent finishers have been purchased through corporate acquisitions in order to guarantee capacity. “We’re dropping like flies,” Hall said. The acquisitions have resulted in corporate prioritization of work, exposure of work statements to competitors and a number of cost impacts. According to Hall, there are only a handful of large metal finishers left in the region. While much of the news was troublesome, Hall emphasized that there are ways to minimize the effects by planning for problems now and allowing extra time when working with finishers. He stressed the importance of identifying and creating relationships with processors. “It’s a marriage, and like a marriage it is dependent on communication, patience and fidelity.”

Other things companies can do to minimize slowdowns are: - Understand the importance of information “flowdown” and provide clear instructions to finishers

- Submit complete purchase orders and required drawings with each order

- Lobby for science-based environmental regulation

- Partner and cooperate to reduce costs

Press release issued by PNAA Pacific Northwest Aerospace Alliance on April 8, 2013


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