Growth through acquisition often results in a hodgepodge of spare parts that don’t fit. In 1998, Watts Water Technology spun off its specialty industrial, oil and gas fluid control businesses as CIRCOR International, Inc. However, the new enterprise remained a collection of companies with individual identities not always operating in tandem or as part of a market-focused corporation.
“Growth strategy at Watts had always been to carve out market share through acquisition, but without really integrating the businesses from an operational or market viewpoint,” explains Chris Celtruda, CIRCOR Aerospace’s group vice president and general manager. “CIRCOR’s creation, and the subsequent investment and changes, enabled us to build an organization focused on customer needs and being a world class manufacturer.”
CIRCOR started as a collection of about 20 companies with separate legacy brands doing similar things within duplicate facilities and all of the cost inefficiencies that entailed. Continues Celtruda: “To achieve a robust global identity, we needed not just to re-brand ourselves under the CIRCOR nameplate but also to operate as a single company with a common culture. That is CIRCOR.”
CIRCOR Aerospace’s creation combines legacy manufacturing brands that provided custom and catalog fluid control components found on nearly every aircraft, military vessel and space vehicle in operation today. “We had a number of tasks to establish CIRCOR Aerospace as a single entity,” Celtruda points out.
First, the company integrated its internal operations, which eliminated redundancies and led to efficiencies in scale. This also involved a cultural shift that established corporate-wide policies and procedures. “This helped our people identify themselves as part of CIRCOR,” emphasizes Celtruda.
Second, the company integrated these new processes with its suppliers. “Third, we evolved customer relationships from that of a parts supplier to a bundled solutions partner they can rely on to provide solutions that effectively integrate with their products and needs,” says Celtruda.
The latter was crucial to CIRCOR’s future. “Today, larger aerospace industry players aren’t interested in dealing with a multitude of small companies to supply individual components,” Celtruda explains. “Rather, it’s more cost-efficient and easier to deal with a systems integrator that will provide a complete system or subsystem. That’s why we became a more cohesive, single entity and positioned ourselves differently in the value chain. We still supply some products directly to the OEMs, but it’s becoming more common for us to partner with the systems integrators. The more actively we act as a partner and provide solutions, the more likely we’re going to be chosen by the systems integrators to partner with them.”
That can only be accomplished with a unified manufacturing process coupled with a corporate culture that fosters employee contribution. “Our employees think of themselves as critical contributors to a partnership,” describes Celtruda.
How does this proceed? “Price is just the first step to the party; delivering total value is what gets you beyond the invitation list,” answers Celtruda.
With headquarters currently in Corona, Calif., and three manufacturing facilities in Southern California, and additional plants in Hauppauge, N.Y. and Dayton, Ohio – as well as in France, Morocco and China – CIRCOR Aerospace successfully achieved tremendous strides toward achieving its vision as a single, fully integrated company.
However, Celtruda notes, as the company has come a long way – in terms of geography and success – it remains focused on continuous improvement. “How do we capture new technology, and then achieve economies of scale in expanding capacity with high-volume products, and, most importantly, partner with customers to add value in developing the best solutions in terms of cost, quality and on-time delivery,” he proposes. “We’ll always be tweaking that.”
A pillar that supports continuous improvement is manufacturing competency. “As we acquire and consolidate companies, we have opportunities to increase our capabilities and leverage corporate investment,” Celtruda says. “We take advantage of offshore manufacturing to reduce components costs and, at the same time, more efficiently serve our international customers. With the recently acquired Moroccan facility we’re looking to increase our manufacturing base in India.”
CIRCOR is a strong advocate of lean manufacturing and Six Sigma practices that add value to every step of value creation. “We’re at the point now where lean manufacturing principles are so ingrained in our thinking that while we don’t necessarily follow all the textbook disciplines, we’re achieving the necessary results,” Celtruda says. “In fact, our best reward is that a few years ago we were inviting consultants in to help us with our processes; today, we’re setting the benchmarks that other companies follow.”
The company’s Kaizen events attendance and facility visit requests have become increasingly popular for it customers and partner businesses, providing them with an opportunity to improve their own production flows, he indicates. “Our factories have become our best sales tool, convincing current customers that we have made the necessary investment to ensure that their needs are achieved and assuring new customers that we will execute on whatever challenge they bring us.”
RIGHT TOOLS, RIGHT PEOPLE
He adds: “The key to continuous improvement is to have the right tools and the right people. I like to joke that you don’t need a jackhammer to peel a grapefruit. Sometimes, simpler gets the job done. And, of course, no technology or process works by itself. You need people who are involved and take responsibility for making the technology happen.”
That is integral to the company’s culture change – to get people excited about what it does as an enterprise and provide them with a feeling of investment that they make a difference. “This is more than a job turning out a commodity,” says Celtruda. “This is about making sure that the people who defend our country can safely accomplish their mission and it’s helping families fly safely. There’s a larger sense of accomplishment.”
CIRCOR Aerospace employs about a thousand total people, while the parent CIRCOR International – which boasts more than 9,000 customers in more than 100 countries – employees 3,000 worldwide. The parent company provides similar mission-critical fluid control technology to the energy, utility and industrial markets.
In addition, just as CIRCOR partners with its customers to develop the best product solutions, it partners with leading universities to find and hire the talent required to produce those solutions.
“We have a number of channels to find the best and brightest and attract them to CIRCOR,” Celtruda says. “One we’ve been very successful with is an outreach program with California Polytechnic University Pomona, one of the country’s better engineering schools, that helps us find people with the right skill sets who might be predisposed to work with us. It’s a way for us to ‘test drive’ people and for them to do the same with us, to see if they fit in with our culture. It’s a year-round program that students can work around their school schedule. Whatever blocks of time they may have, we can offer some kind of internship with hands-on training to complement their studies. We are also very active on campus. We sponsor student Baja and Formula car design efforts, participate in department panels and judge student design efforts. In fact, it has worked out so well for us and the students that we’re going to do a similar program on the East Coast, at Stony Brook University in New York.”
Another recruiting channel is retired military personnel, Celtruda notes. “The military is a significant segment within the aerospace industry, so it’s always helpful to us to bring on talented people with that kind of background. We employ them both at the command level, where someone who was an officer knows how the military works, and at the operational level, where former military maintenance people can use their skills to do similar things in manufacturing CIRCOR products and systems.”
Celtruda says that even during the economic downturn, CIRCOR has managed to weather the storm. “We were able to adopt processes to improve the profitability of products we were making, and use those profits to invest in design and manufacturing capacity to better position ourselves for the next upturn in the cycle,” he points out. “There aren’t many companies that have had the ability to do this during the recession without a significant drag on their capital resources. So, with a number of new programs we see coming on-line in the next one to three years, we’re in pretty good shape to move forward.”
LANDING NEW CONTRACTS
Of particular significance are recent contracts for landing gear components and fluid controls systems with France’s Airbus for the new A350 XWB long-range aircraft, in addition to new technology for the Lockheed F-35 Lightning II Joint Strike Fighter and on Goodrich’s High Lift System for regional jet aircraft.
Celtruda also points to Europe and other global regions as particularly promising markets. “We maintain a strong presence in France to ensure that Airbus, Eurocopter and Dassualt receive high service levels, and we have continued to put more manufacturing resources overseas to address the emerging international opportunities,” he says.
Celtruda adds that the growing trend is more toward electrical-based technology than mechanical and fluid based controls. “Just like in the automotive industry, people are designing aircraft to be lighter and more fuel efficient, with electro-mechanical systems having many advantages relative to traditional hydraulic control systems. Conventional motion controls aren’t going away by any means, but the technology trend leans more toward electrical and our research and development is more focused on that.”
That’s not to say that CIRCOR has abandoned the strategy of acquiring companies to gain technologies and market share – case in point: the recent purchase of privately held Castle Precision Industries, a Southern California manufacturer of landing gear components, landing gear and actuation systems, and a provider of maintenance and repair services to the commercial and military aircraft markets.
“Our ground rules for any acquisition require it to add value to our company and our customers at less cost than if we were to develop a technology on our own,” Celtruda says. “We also want to be sure that there is a manufacturing competency that we can easily incorporate into our own and leverage our investment into higher production volumes, and that the new employees will be able to adapt to our culture.”
That’s how CIRCOR Aerospace has re-geared its business for success and is on a flight plan to land future opportunities.