Airline woes don’t stop Rock River Valley manufacturing sector from taking off

By Nate Legue

BusinessRockford.com

Local manufacturers are placing big bets on the aerospace industry, even as domestic airlines struggle to stay afloat amid skyrocketing jet fuel prices.

Earlier this month, Woodward Governor Co. launched a $50 million buildout of its Loves Park facility to add more manufacturing and testing space.

Acument Global Technologies launched an aerospace fastener division earlier this year, resurrecting the Camcar name and refurbishing its 18th Avenue plant.

And Hamilton Sundstrand is in the midst of a massive deal with Boeing to help build and test its 787 Dreamliner.

At the same time, U.S. airlines are losing money. United Airlines posted a $2.7 billion loss in the second quarter. US Airways began charging customers for checked luggage and in-flight drinks. Nearly all have cut flights, citing the cost of fuel.

But the source of the airlines’ problems — petroleum costs — are also the key to the local aerospace boom. Major airplane makers have seen greater demand for fuel-efficient jets and are investing in lighter materials and energy conserving systems.

In March, the backlog for civil aircraft and parts was $298 billion, up 40 percent compared with the previous year, according to the Aerospace Industry Association.

“The U.S. airline market may be softening a bit, but Boeing and Airbus and others continue to have significant production backlogs for worldwide customers,” said Michael Epling, general manager for electric systems and commercial systems enterprise at Hamilton Sundstrand, in an e-mail. “Although the aerospace business is cyclical, in the long term it delivers remarkably consistent growth that’s hard to match in other industries.”

The bet is paying off for Hamilton Sundstrand. Thanks to its $50 million investment in a test lab that integrates dozens of 787 systems for Boeing, Hamilton Sundstrand has gained the know-how to build similar systems projects for others, Epling said. It recently won contracts for seven systems on Mitsubishi’s newest regional jet, he said. Last week, Hamilton Sundstrand announced plans to build the electrical distribution system on Boeing rival Airbus’ A350, a billion-dollar contract.

And even as U.S. airlines struggle, their counterparts in Asia and the Middle East are snatching up airplanes as their increasingly affluent populations demand air travel. The U.S. has 8,000 aircraft to serve 300 million people, but China has only 1,100 aircraft to serve 1.3 billion. India has about 350 aircraft and 1.1 billion potential customers.

The global demand is reflected in a record trade imbalance for aerospace products — in favor of the U.S. While the U.S. imported $36 billion in aircraft and parts in 2007, it exported $92.5 billion.

All that growth translates into jobs here. Acument’s Camcar Aerospace division has 25 workers now, but just got permission to hire another 29, said Tim McGuire, executive director. Over the next three years, the company expects to grow its work force to more than 140.

“We are as committed to expanding our aerospace presence in Rockford today as we were in March when we announce plans to start up our new Camcar Aerospace facility here,” said Randy Aardema, general manager of Acument Aerospace. “Potential and existing customers want our products and are eager to see us ramp up production locally to meet their demand.”

Reach staff writer Nate Legue at 815-987-1346 or nlegue@rrstar.com.

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Major local investments in aerospace industry
• Earlier this month, Woodward Governor Co. started work on a $50 million expansion to build a new testing facility and transform its existing cafeteria into more manufacturing space.

• Acument Global Technologies named Rockford its aerospace headquarters in June after acquiring a California specialty fastener company. In March, the company announced its new Camcar Aerospace division, which is building specialized nuts and bolts for airplanes.

• In 2006, Ingenium Testing spun off from engineering-services firm Ingenium Technologies and started building a 84,000-square-foot testing facility in southwest Rockford. The new firm specializes in electromagnetic testing of airplane systems.

• Hamilton Sundstrand Co. unveiled its $50 million test lab for the 787 Boeing Dreamliner in October 2006, an investment the company estimated would reap $8 billion over the life of its contracts with the airplane maker.

 

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