Top 100: Precision routes to recovery yield rise in rankings

"For us, calendar 2010 really saw the beginnings of the recovery in our aerospace business," says Precision Castparts' director of communications Dwight Weber.

Portland, Oregon, US-based Precision makes a wide range of complex castings, forgings and fasteners for the aerospace industry, with many of those products ending up in powerplants on Boeing, Airbus, Bombardier and Embraer aircraft.

"We're like a big job shop. We make parts to customers' design specs," says Weber. Precision felt the effect of the global economic downturn significantly.

In contrast to early 2008, when its ultimate major customers - Boeing and Airbus - were anticipating a 10-15% increase in output in 2009-10, the combination of the 2008 Boeing machinists' strike and the recession took their toll.


© Boeing Despite steady Boeing output, Precision was hit hard by the downturn

© Boeing

Despite steady Boeing output, Precision was hit hard by the downturn

"The question turned from by how much Boeing and Airbus were going to increase their rates to whether they would be able to maintain them."

In fact, those rates were indeed maintained, but with the supply chain full of materials, Precision had to rein in production to adjust to reduced demand. "From the aerospace side of the business, in 2010 we began to see a recovery in our casting and forging businesses because eventually that inventory was depleted."

On the fasteners side, demand remained low because one major distributor of Precision's products bought a competitor, resulting in a continuing surplus of parts. Despite the lengthy process of recovery, Precision Castparts rose from the 32 spot to 28 in 2010's Top 100.

Like many companies, it used the recession to look closely at costs. The workforce was trimmed and better use was made of remaining, highly skilled personnel. Productivity increased "markedly" as a result, says Weber.

"In our forgings business, where 60% of our cost is metal, we concentrated on getting better yields and better reverts [shavings and other waste that can be re-melted]. Fasteners had never been through a downturn with us before, as we acquired the main business in 2003, so we engaged in having them work out a new cost structure in each of their facilities."

Precision at least did not have the added problem of excessive competition, particularly from low-cost nations: its products are sufficiently complex for a limited number of companies to be able to produce them, while many of the processes it uses are destined also to produce components for military aircraft, and are thus non-exportable.

Weber is confident that Precision has a lead of some years over competitors: "By the time they get there, we'll be somewhere else."

AT A GLANCE