The aerospace industry may be in a decline, but it's far from moribund.
Sheffield Manufacturing Inc., a Los Angeles precision machining products maker, announced late last month the $16 million acquisition of a pair of longtime aerospace suppliers.
In an effort to increase its customer base and product lines, the company bought Her-mach Machine Inc., a 52-year-old Torrance manufacturer of machine parts and assemblies, and Fortune Manufacturing Inc., a 29-year-old Chino component parts maker for military and commercial aircraft.
"We share many of the same customers and we will now be in a position to better service our aerospace customers across a broad line of products made by Sheffield, Hermach and Fortune," Sheffield President Margarita DeWitt said in a statement.
The acquisitions speak to a larger trend of consolidation in the aerospace industry that has been going on for a number of years among both large manufacturers and smaller suppliers, said Leib Orlanski, a partner with Kirkpatrick & Lockhart Preston Gates Ellis LLP, which represented Sheffield in the acquisitions.
"You've got only one major airframe manufacturer left in the United States," Orlanski said. "All you have in the United States is Boeing and all you have in Europe is Airbus."
Now, smaller manufacturers are consolidating as well, Orlanski said, as shown by the Sheffield acquisitions and another set of rollups he is working on in Arizona.
Sheffield was started in 1951 and provides precision machining, sheet metal and welding services. Its primary customers include Boeing Co. and Northrop Grumman Corp.
Consolidation is not the only trend afoot in the aerospace world. Outsourcing has been and continues to be a popular option for local manufacturers looking to cut costs.
Ducommun Inc., a 158-year-old Carson-based aerospace supplier, just announced that it has established a new manufacturing facility in Guaymas, Mexico. The announcement comes about a year after the company opened a similar facility in Saraburi, Thailand.
"The focus was to shift labor-intensive production to a lower-cost region to help stave off price increases in the United States," said Michael Lewis, an analyst with BB & T; Capital Markets. "The trend in the global aerospace industry is toward outsourcing these labor intensive portions of the contracts to lower cost areas of the world."
Lewis said it is unclear what impact the moves will have on local manufacturing operations, but he is not forecasting significant layoffs.
The Mexican facility, which was established under the Ducommun AeroStructures subsidiary name, will be used for the production of structural components and subassemblies of commercial aircraft. Production is expected to start at the facility in the fourth quarter.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Reliance Steel & Aluminum Uncoils Purchase of Encore
- Plastic Pipe Manufacturer JM Eagle Lands in Los Angeles
- Reliance Buys Midwest Company
- Reliance Steels for Growth as Lifting of Tariffs Drives Shares
- Reliance Steel Buys Tennessee Plant
- Connecticut's Yarde Metals is Latest Reliance Steel Acquisition
- Reliance Steel Buys Best Manufacturing Inc.
- Aerospace Sector Soars With Deal for Parts Maker