With 4,000 staff in 14 countries, turnover well north of $1 billion and a blue chip list of airline and aerospace customers, US engine components repair and manufacturing specialist Chromalloy should be better known.
Fixing that is one of the tasks occupying Armand Lauzon, appointed by private equity giant Carlyle as chief executive of Chromalloy parent Sequa a year after it acquired the underperforming engineering group in 2007. It is his third company stewardship under Carlyle.
Interviewed at the MRO Americas convention in Dallas, Lauzon made it clear he had found a workforce largely relieved at the change in culture under Carlyle after some unhappy times.
NOT SO HARD
"On a scale of one to 10, with 10 being hard, it has been about a three or four. They have embraced it with no resistance," he says.
"Chromalloy was 29 profit and loss centres, with 41 individual locations, 92 specific addresses and a bunch of websites. The way the company had been run was to keep them in silos and it didn't want them talking to each other because they were worried about unionisation and eventually some people were worried about a mutiny. We are knocking down the walls as fast as we can."
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At the same time Lauzon has been focused on talking to customers and Federal Aviation Administration regulators, who play a critical role in issuing the parts manufacturing approvals (PMA) that account for 10% of revenues. The remainder comes from component repairs.
"The customer-based relationships are generally working well. They say the product is outstanding, but across the board the feedback comes back that we are too slow with deliveries and too slow in development.
"Historically the company ignored that feedback. I have a fiduciary responsibility to look at the company through the customer's eyes," Lauzon says.
He is working on that but has also acted to satisfy FAA concerns by recruiting a former member of the agency to open an office in Burlington, Massachusetts from where the FAA handles Chromalloy's PMA approvals.
Another concrete move is the just-announced $16 million investment in creating a casting capability at the Tampa plant. "If we could not make our own castings then we would have a hard time. The fact that we can make our own is, if not the number one differentiator for us, then the number two," says Lauzon.
In the steadily growing PMA sector Chromalloy has more than 370 approved components, mostly hot-section, and boasts of never having had an airworthiness directive issued on any of them.
Lauzon says: "I can be critical of Chromalloy in that they were not aggressive enough in going to the market on the newer engines. We have accelerated that exponentially in the last seven months on newer model engines that will completely change our profile.
"The propaganda that the OEMs will put into the marketplace is that with PMA you may lose performance. And the new argument is that you will get less money for [the engine].
"It is just propaganda and Belac [the joint venture between Chromalloy, Lufthansa Technik, United Airlines and Alitalia] will refute that until the day is long. They see no price differential between PMA and non-PMA. We are trying to dump water on some of the fires that the OEMs start."
Carlyle's heavyweight industry contacts have gained Chromalloy a hearing in the big operating lessors that historically have presented a wall of resistance to PMA parts because of the fears about residual values. "We're seeing cracks," says Lauzon "Only small cracks, but cracks."
MORE DIFFICULT
Some other areas of the business are more questionable. Lauzon says: "One or two of our joint ventures I have a hard time trying to get my head around. We will meet and see if maybe we can do something with them or maybe we will have an amicable divorce."
The San Antonio auxiliary power unit overhaul business is also under the spotlight. "I'm not sure if we can drive enough volume through that to make it viable in the long term. Over the next three months we will decide."
Source: Flight International
