Chromalloy, a $1 billion-plus revenue company that provides turbine engine part repairs, coatings and manufacturer approval (PMA) replacement parts, says it has "right-sized" organisationally since private equity investor Carlyle Group took over its parent, Sequa, more than two years ago.
At a recent Carlyle investors meeting, Chromalloy president Armand Lauzon said that the New York-based company was "on the 50-yard line" - halfway to its intended goal line of an ideal company positioning. The first 50 yards saw a downsizing of Sequa.
Lauzon cut the number of profit and loss centres from 26 to 19, decreasing the company's footprint while increasing efficiency and capability.
Along with Chromalloy - the business unit Lauzon says was "the impetus behind [Carlyle] buying Sequa" - the company has retained its automotive and coating divisions. Three other divisions, including the auxiliary power unit business, were sold in March 2009.
BETTER BALANCE
Better defining the core products and lining up a balanced portfolio of long-term customers is Lauzon's near-term goal. Today the company's work is split between military (10-15%), commercial aviation (75-80%) and energy sectors (10%), with 60% of revenue in any given month coming from repairs and 15-20% coming from PMA parts sales.
Lauzon is looking to better balance the three customer sectors, introducing more PMAs and designated engineering representative (DER)-approved repairs for the military and energy markets where there's "no FAA tollgate". The US Federal Aviation Administration over the past two years has tightened rules for companies providing DERs and PMAs.
"It's more requirements on us, but I think it will make the industry better," says Lauzon. "It's a recognition from the FAA that the PMA opportunity is growing. They're making sure vendors have the right understanding and guidance." Chromalloy's 14 designated engineering representatives generate about 200 DER-approved repairs per year, largely of hot section components.
To better comply with the new guidance, Chromalloy opened an office of airworthiness close to the FAA, formed a turbine design analysis design group (TDAG) with 12 engineers on staff, and hired former NTSB chairman Mark Rosenker.
Rosenker, who is now a board member of Sequa, works 45-60 days per year to help Chromalloy gain approvals with the FAA, European and Japanese regulatory agencies.
Lessons from the energy sector could help the company's airline business as well. Chromalloy has engineers in two manufacturing locations of Solar Turbines, a company that builds terrestrial gas turbine generators.
Their job is to look at turbine parts when engines are disassembled in order to develop better replacement parts. "We want to use that as model to grow and put service centres in with airlines," says Lauzon.
For an airline, Chromalloy can analyse scrap bins or maintenance review board holding areas to determine what parts can be repaired through the DER process. That work is then a natural segue for Chromalloy's engineers to suggest Chromalloy coatings and to offer new and improved PMA parts. "I have 40 locations targeted for service locations," says Lauzon. "The market is ideal to make entry on the repairs side."
PARTS FRICTION
Of course developing longer-lasting, lower-cost replacement parts could make a company unpopular with original equipment manufacturers who make their bread and butter on replacement parts.
Over the past year, PMA companies have noted an increase in reports of an OEM warning some customers of unknown effects, aka "systems effects", that they say could occur with using FAA-approved PMAs or DERs in their engines.
An OEM could refuse to troubleshoot an engine repaired with third party components.
Although Chromalloy doubts there is evidence supporting the notion of unknown effects, it is testing with two "key airline partners" a new, beta programme to help customers who end up in such a conundrum.
The free programme makes Chromalloy engineers available for real-time product support for parts issues in tandem with any OEM which refuses to provide support.
Source: Flight International
