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Expanding in a Low-Growth Economy: A High-Flying Success Story

Q&A With Jeff Hynes President, Composites Horizons, LLC. (CH)

Composites Horizons is a key player in the global aerospace and defense industry. CH’s Jeff Hynes recently talked about operating in a low-growth economy, the challenges of finding skilled employees, and unexpected benefits of financing through GE Capital. 

Key Takeaways
  • Success is really about providing excellence. When that happens, you know it and your customers know it and good things will follow.

Q. CH has grown steadily since its founding in 1974, but you’ve seen significant growth in the past 2-3 years. How have you managed that growth?

A. We were fortunate to have landed our two largest contracts in 2010, one to make a component for the Boeing 787, and a second to make a key component on the F-18 engine. We added another 40,000 square feet to our facilities so we now have space totaling 91,000 sq. ft. in Covina, CA. Due to the new contract, we’ve invested in two mid-sized five axis computer numerical control (CNC) mills, a large high temperature autoclave, a large oven and five presses.

A High-Flying Success Story

Q. Have there been other growing pains, such as the need to find new employees to take on the workload?

A. The company overall has about 900 employees. We’ve added about 60 people to [our California] facility in the last one-and-a-half years and we’re looking to add more. Most of the recently hired folks had never worked in our industry and…it’s a challenge to find people who can learn the technology. These CNC machine tools — which are controlled by computer programs — have revolutionized the manufacturing industry but it takes a certain amount of training to learn how to program them.

We’re also hiring for a small number of engineering jobs. It’s really tough to find the skill set we look for. They have to have a basic knowledge of composites, work well with others, like a challenge, and not mind getting into the shop to oversee our first builds. Generally, once we find the right person, they usually stick. Although we’ve had tremendous growth over the last few years and we participate in some of the industry’s largest programs, we still retain a small business atmosphere.

Q. CH was an early adopter of Lean manufacturing principles. Is continuous improvement still important to you today?

A. We’ve used [Lean principles] since the late 1990s. Like many aerospace suppliers, we hit a big down cycle in 1998. After a large industry consolidation, we lost our largest aerospace customer and had to re-create our business model. [Previously], our aerospace business was primarily focused on aerostructures. For a number of years, we had been involved in high temperature composites for the gas turbine engine market, but we decided [to] focus on this market as a niche. This market was attractive [because] very few companies [are] able to produce this hardware due to the demanding tolerances and quality requirements.

In 1999, we invested in the internal processes that we needed to be successful. We initiated our ISO 9001 process, converted from an old accounting system to a full ERP, and engaged with a Lean manufacturing consultant. It was a busy few years but it really set the stage for where we are today. We use value stream mapping, Kaizen events, statistical process control (SPC) tracking and Six Sigma tools to improve every aspect of our business. We continue to see tremendous gains each year.

“If you cannot be smarter in how you do things, it’s only a matter of time before you’ll lose out to lower costs overseas.”
Q. The aerospace industry tends to be extremely cyclical. How do you manage your business to take that into account?

A. Diversification. Even within our rather narrow niche of high temperature composites, we’re able to diversify across platforms and industries. When the entire commercial aerospace industry slumps, we’ll feel the effect, but being on multiple commercial platforms has proven to reduce this effect. Our medical business has always been a valuable hedge to the ups and downs of the aerospace business.

Q. You’re based in the greater Los Angeles area of California. What are your thoughts on being a U.S.-based manufacturer?

A. Clearly, for any U.S.-based manufacturing company, if you cannot be smarter in how you do things. It’s only a matter of time before you’ll lose out to lower costs overseas. This is what drives many of our continuous improvement events. Being smarter doesn’t just mean using fewer hours to build things. For example, we’re constantly looking for better ways to build and design the items we make. If we come up with a better idea, we’re happy to share that with our customer and we both benefit from the savings associated with the change.

Q. What’s your relationship with GE Aviation, GE Healthcare and GE Capital?

A. We provide multiple components to GE aviation for the F-18, F-16, Boeing 777 and 787 programs. These are high temperature composites used in the hot sections of these engines. For the last two-and-a-half years, we have worked with GE Capital to finance the purchase of our new manufacturing equipment.

In addition, we’ve found that GE Capital can provide us with assistance in other parts of our business. For example, we commit to long-term agreements that have productivity improvements built into them. Last year, we needed to increase production of a particularly complex component that provides very high-end performance for gas turbine engines, and we had to reduce our costs to manage a cost reduction we had offered to our customer. GE Capital’s Access GE team studied our process and helped us completely reconfigure our production line. We went from making seven units each month to 10. Since then, we’ve been able to increase our productivity to 14 a month. We’re meeting our contract demands and providing buffer stock for the U.S. military. Basically, we were able to double production with the insights from Access GE.

Q. As the leader of a successful mid-market company, what advice can you give to other business leaders who are looking to expand in a low-growth economy?

A. For our team, it was really all about recognizing what it was we were really good at, planning for it and remaining focused. It’s really tempting as you are growing a business to jump at every opportunity that contributes to the top line. It may look good to have your hands in a number of different industries and products, but it’s really tough to be the best in all of them. Success is really about providing excellence. When that happens, you know it and your customers know it and good things will follow. You can sell yourself into anything, but if you don’t provide excellence, it’ll be short lived — and that’ll probably disrupt you from doing what you’re really good at.

Composites Horizons manufactures advanced aerospace composites, composite aircraft structures and assemblies for use in commercial and military airframes and aerostructures. The company is a key participant in many of the critical advances on the B-2, F-22 and F-35, as well as unmanned programs. In fact, it has been has been involved in every major military fighter program since the 1970s. CH also provides products to the gas turbine engine, space vehicle and medical equipment markets. CH is part of AIP Aerospace LLC, based in Irving, TX.