Eufaula manufacturing CEO sees time of opportunity for aerospace, defense industries
Published: Tuesday, January 03, 2012, 12:58 PM
By Budd McLaughlin, The Huntsville Time
HUNTSVILLE, Alabama -- Of all the industries to be strongly affected by the economy - i.e., budget cuts - the defense and aerospace sector may be catching the most flak.
And, they make up the backbone of the Huntsville economy.
"Business is not going to be the same, certainly not in our industry, where we have had a growth for the past 12 years in aerospace and defense."
Those are the words of Chad White, whose Eufaula-based company - JKM Manufacturing - is an aerospace and defense subcontractor.
Despite the angst over federal spending locally, White said this is a time for opportunity in the industry.
"I see the trend is opportunity," he said. "In any volatile market, it's not business as it was. The leaders and the laggards can switch places very quickly."
JKM builds products used on guided missiles, military aircraft, flight simulators, helicopters, tanks, industrial robots and sonar test equipment.
White said he also sees change in the industry, to go along with the chance for opportunities.
"Right now, there is a lot of uncertainty and fear; what that leads to is volatility," he said. "The last defense military vehicle show I went to was in Detroit, where there were a lot of primes (contractors) that weren't there. What that means from my perspective is businesses will be reduced.
"It's going to change our industry."
And part of the change will come in the ways that companies sell themselves, as well as their products.
White said there is pressure now on companies to make those products affordable, as opposed to the cost-plus style of bidding.
"Historically, we have been a cost-plus industry: Whatever it costs, you just tack on a reasonable fee or profit," he said. "But now, with the pressure on affordability, the companies that will survive and thrive will be those that can adapt quickly and come up with new ways to add value for their customers."
He said that he believes that manufacturing will be the key player in bringing the economy back.
"I believe we have gone through periods where it's been a service-based economy," he said. "I am committed to manufacturing. I know that creates jobs, and that is what is going to bring the economy back."
White also said that it's smart for companies - and communities - to be diverse and not reliant on one product or industry to survive.
He said that surviving is different for some aerospace and defense companies because of contracting - especially nowadays.
"It's really about just being smart and knowing your business and what you offer," White said. "The contracting is difficult; and there is a reason why our backlog is balanced between the prime manufacturers and direct government contractors."
And, to survive, he said companies need to be innovative.
"I think you've got to be creative and think of new ways to add value to your customers," he said. "There is a creativity component, which goes back to leaders and laggards.
"If the mindset is 'this is the way we have done it for the last 20 years,' I can tell you where you are going to end up."