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Enterprise — BFGoodrich Breathes New Life Into Waning Aerospace Industry

Thirty months have passed since a $1.3 billion stock transaction folded Rohr, a Chula Vista-based aerospace contractor, into a much bigger company, BFGoodrich.

Rohr is now the Aerostructures Group, a division of BFGoodrich Aerospace. And in the months since the December 1997 merger, BFGoodrich has made the place its own.

Though BFGoodrich manufactures everything from landing gear to polymeric emulsifiers to high-horsepower diesel engines, officials of the Charlotte, N.C.-based company elected to put an image of a Chula Vista worker, framed in a jet engine housing, on the cover of its 1999 annual report. It hints at the BFGoodrich strategy of acquiring businesses making products that complement an existing line of work. Company officials call such acquisitions “bolt-ons.”

Now, say local BFGoodrich officials, the former Rohr is standing on the shoulders of BFGoodrich, and its financial resources are helping to remake the Chula Vista plant. Bud Wetzler, a Rohr veteran who is now president of BFGoodrich’s Aerostructures and Aviation Services Group, says BFGoodrich’s size is helping the former Rohr win contracts.

The Aerostructures Group is poised to announce a new project, perhaps this week during England’s Farnborough International Air Show. Wetzler declined to give any contract details, saying only that it is “a very important win.”

Major Contract

That follows news from the beginning of June, when the Aerostructures Group received a $300 million contract to supply pylons to the U.S. Air Force to retrofit its fleet of C-5 military transports. Pylons, in aircraft terms, are the structures that attach the jet engine to the aircraft’s wing.

The Air Force has yet to decide what brand of jet engines to put on the ends of those pylons; Wetzler said if it chooses GE or Pratt & Whitney, the Aerostructures Group will likely make the nacelles, or housings, for those engines.

Over the last year, the Air Force has awarded Aerostructures some $18 million worth of contracts to make new parts , wing tips and vertical forward box assemblies , for the F-15 Eagle fighter.

Meanwhile, work for Lockheed Martin on a heat shield system for NASA’s X-33 launch vehicle is on hold, said company spokesman Jeff Hulewicz. The unmanned X-33 is meant to demonstrate technologies for a new generation of reusable launch vehicles.

Currently, the Aerostructures Group is doing four months worth of shell design work for Lockheed Martin on Lockheed’s entry in the X-38 design competition. NASA envisions the X-38 as a sort of lifeboat which could get people back to Earth safely.

While Aerostructures Group officials are looking to increase their work in military and space markets, they are expressing hopes for work on commercial, “super jumbo” jets.

Airbus Industrie, the European consortium, is working on its A3XX, a double-decked jetliner that would hold 550 or even 650 passengers and may go into service by late 2005. Wetzler said his company is working on a proposal for nacelle and thrust-reverser work, which is due in mid-September. The Aerostructures Group will not know whether it gets the work until 2001.

Boeing may respond to Airbus with a larger version of its 747. If so, Aerostructures executives hope to find work there as well.

“We do believe it will (contain) new engines, which means it will be new opportunities for nacelles and reversers,” Wetzler said, “as opposed to derivative engines which may not change any of that work.”

Retaining Talent

If Aerostructures gets the contract for the A3XX nacelles, engineering work could come to Chula Vista in 2001. Wetzler called new contracts of that kind important for retaining engineering and other development talent.

Other manufacturers now competing for nacelle business include Boeing and several European firms.

New contracts did not exactly pile up on Rohr’s doorstep in its waning days.

“We went through a period where we did not win anything new for several years,” Wetzler recalled.

The problem, he said, seemed to be the company’s size.

“In spite of the fact that our customers felt we did pretty good work, had pretty good engineering capability and manufacturing capability, (potential customers) were always concerned about our financial strength and our staying power in a consolidating industry,” Wetzler said. “So whenever they looked at us for bigger, strategic kinds of opportunities, we tended to fall out for the sole reason of just financial strength, if you will.

“The BFGoodrich merger has taken that negative away, because we’re part of a much larger corporation.”

BFGoodrich reported $5.54 billion in sales in 1999, up from $5.45 billion in 1998.

By comparison, Wetzler said, Rohr’s yearly sales bobbed between $1 billion and “maybe $100 million.”

Substantial Contribution

The Chula Vista-based Aerostructures Group accounted for $1.14 billion of BFGoodrich’s sales during 1999. The number was down $5.1 million, or 0.4 percent, from 1998.

During 1999, some 65 percent of BFGoodrich’s total sales , amounting to $3.62 billion , were in its aerospace segment. On top of sales from the locally based Aerostructures Group, a Landing and Safety Systems Group generated $1.03 billion, a Sensors and Integrated Systems Group generated $938 million and a Maintenance, Repair and Overhaul Group generated $507 million.

After it reported 1999 results, BFGoodrich Aerospace reorganized its businesses into a new quartet of groups. The new configuration pairs Aerostructures with Aviation Services. The four aerospace groups oversee facilities in the Midwest and all four corners of the continental United States.

Stepping outside the aerospace world, BFGoodrich in 1999 made $1.22 billion (or 22 percent of its sales) in its Performance Materials Segment. Among other things, the segment manufactures pharmaceutical ingredients, plastics, coatings and chemicals used to treat textiles.

BFGoodrich made $702 million (or 13 percent of its sales) from its Engineered Industrial Products Segment, which manufactures items such as industrial seals, gaskets and bearings as well as engines, pumps and related items.

The company does not make tires. BFGoodrich sold its tire business to Michelin in 1986. Consumers get mixed messages, though, since tires are still marketed under the BFGoodrich name. (The evolving BFGoodrich Co. has contemplated a name change. For a while, Inrich was the preferred moniker.)

Old Ties, New Philosophies

Within this environment of diverse businesses, Aerostructures Group publicists said the old Rohr still operates fairly autonomously.

Wetzler said many successes in the Aerostructures Group can be attributed to Robert Rau, the Rohr president and CEO who retired as Aerostructures president in 1998. Wetzler also spoke of a good employee-management relationship.

Union employees and management “have found shared objectives,” Wetzler said.

One shared objective is the Aerostructures Group’s lean manufacturing philosophy, also known as the Toyota Production System, which is an effort to identify and eliminate wasteful production processes.

In the past, Wetzler acknowledged, competitors have offered more attractive prices to contractors and gained the contracts local executives had hoped to bring home. Wetzler said improvements made through the lean manufacturing initiative will allow Aerostructures “to be a bit more aggressive in our bidding on future contracts.”

Aerostructures also is in the middle of a program to consolidate its Chula Vista facility north of H Street. Publicists said the move may be finished by late 2002. A three-way deal between the San Diego Unified Port District, the city of Chula Vista and the Aerostructures Group has the company transferring 38 acres of inland property to the Port District, and the port transferring some 26 acres north of H Street to the Aerostructures Group.

A reconfiguration of the Chula Vista plant will let Aerostructures better use its assets, Wetzler said, which is another aim of lean manufacturing.

The BFGoodrich board of trustees set aside nearly $50 million to rework the Chula Vista site. The price “probably would have been a bit stiff for the old Rohr to have come up with,” Wetzler said. “Certainly that’s a place where the financial strength paid off.”

The Aerostructures Group also has facilities in Riverside; Foley, Ala.; San Marcos, Texas; Arkadelphia, Ark.; Toulouse, France; and Hamburg, Germany.

In the future, BFGoodrich will look for more bolt-on companies, Wetzler said. It may look at companies producing complementary product lines, and more: “We may look at some companies that have overlapping product lines, which would allow us to then absorb that work into our existing factories,” he said.

In the spring, BFGoodrich announced its decision to shed its Performance Materials, or chemicals, segment. That would generate around $1.5 billion, Wetzler said. The money could be used several ways, he said, but he acknowledged it could go for another acquisition.


Sprint Expands Internet-Access Service to Southwestern U.S. Markets

Sprint is expanding its consumer Sprint ION service to San Diego and three other new markets in the southwestern United States: Los Angeles, Orange County and Phoenix.

The unique broadband product goes beyond simple high-speed Internet access to allow families and home-based businesses simultaneous use of multiple telephone lines, videoconferencing, super high-speed Internet connections and both local and long-distance service over a single, existing connection to the home, said Donovan Roche, spokesman for Sprint.

The new markets join Austin, Dallas and Fort Worth in Texas; and Denver, Seattle, and Kansas City, Mo., as the first 10 metropolitan areas nationwide to receive the “all-in-one” voice and data service , the only one of its kind to integrate high-speed Internet access with long-distance calling services on a single network, Roche said.

The simultaneous use of multiple voice and data services frees families from having to fight for time online or to use the phone. Also, Sprint ION’s integrated design lets consumers manage and control their services to best suit their individual household needs, he said.

Sprint ION provides Internet access with download speeds up to 8Mbps , considerably faster than typical DSL or cable modem speeds. Sprint ION also includes up to four voice/fax lines (each with advanced features such as Caller ID and voice mail), unlimited local calling and 750 minutes of domestic long-distance service for $159 per month. For more information, log on to (www.sprintion.com) or call Sprint ION toll free at 1-8-SPRINT-ION.

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