According to its annual report, Ladish Co., Inc., headquartered in Cudahy, Wis., “makes hundreds of different parts for just about everything that flies.” Indeed, more than 80% of the company’s business is devoted to jet engines and other aerospace applications. The remaining portion of its business is devoted to general industrial markets. Though the company offers casting and machining technologies in its product portfolio, its staple is the forging process.
Taking advantage of the millennium’s slow economic start, Ladish prepared for the aerospace industry’s resurgence, which began in earnest in 2005. Now well under way, this upswing is a time when OEMs count on the support of key suppliers to capitalize on strong and sustained demand. Ladish is using today’s booming markets in aerospace – and general industrial forging – to strengthen ties with customers. Their customer support has taken the form of a range of expenditures and initiatives designed to help the company keep pace with orders.
CAPITAL INVESTMENTSLadish currently operates the world’s largest isothermal press, rated at 10,000 tons. Projections for sustained commercial-transport production, based on the company’s unprecedented backlog (currently at more than a half-billion dollars), provided the justification for Ladish to begin construction of a 12,500-ton isothermal press. When finished next year, this resource will redefine what constitutes “largest” in the world of isothermal presses.
According to Kerry L. Woody, Ladish’s CEO since 1998, airlines are demanding jet engines for new aircraft that can deliver significantly improved fuel efficiency, lower emissions and less noise. In turn, jet-engine manufacturers are demanding that suppliers provide components that measure up to the aggressive performance targets of their newest engine designs. Suppliers like Ladish can only meet the most ambitious of those performance challenges by using advanced, nickel-based superalloys forged on an isothermal press.
“Because the new engines operate at higher temperatures, many of the engine parts manufactured for these engines can only meet expectations when forged isothermally. These performance requirements play to Ladish’s strength in materials technology. We plan to maintain our special position in the supply chain for highly engineered jet-engine components by adding to our ability to provide parts that take advantage of the most advanced isothermal forging technology,” says Woody.
Ladish began site preparation for the new press immediately following last year’s announcement that they were going to invest in it. “We are now working closely with the suppliers who are building the press and support furnaces to our design requirements,” says Woody. “We expect to have the new press production-ready in 2008.”
Woody says the 12,500-ton isothermal press will add significantly to Ladish’s capacity, and it will give the company production advantages and increased operational flexibility when it is commissioned for service. The press will be located with the company’s two existing isothermal presses in Cudahy, Wis.
“The new press will perfectly position the company to forge larger-diameter products for the big jet engines now being built and will be able to accommodate requirements for even larger future engines,” says Woody.
In addition to capital investments in the Cudahy forging operations, Ladish has made investments during the last five years in Pacific Cast Technologies, the company’s titanium investment-casting operation located in Albany, Ore., and in its precision machine shop, Stowe Machine, located in Windsor, Conn. These investments have not only taken the form of new equipment, but also training in the methodologies of lean manufacturing, Kaizen techniques and other process improvements. Additional investments include the hiring of people with specialized skills, such as those in the areas of continuous improvement and information technology, which are needed to compete in today’s aerospace marketplace.
BUSINESS STABILITYA number of other factors will enable Ladish to concentrate on the important task of meeting customer demand for timely delivery and quality parts. First, they have completed a round of LTA (Long Term Agreement) negotiations with major customers.
“Our LTAs typically have three-to-five-year durations – although some are longer. These give suppliers and customers a sufficient span of time to work together to address a variety of end-user demands effectively,” says Woody. “Also, we’ve done something we’ve never done before. Ladish has concluded six-year labor agreements.”
The most recent was the company’s negotiations with Local #1509, the Boilermaker-Blacksmiths union. Earlier in 2006, the company concluded an agreement with the International Association of Machinists and Aerospace Workers. These agreements are with the two largest of seven unions in the Cudahy facility, and they cover approximately 375 employees. In both instances, the new six-year contracts replaced the previous three-year agreements.
According to Woody: “We believe the six-year agreement with the Boilermaker-Blacksmiths is a significant event that will benefit both the company and its employees. The agreement follows the pattern established in other agreements this year and reaffirms the commitment of Ladish employees to support the company’s major customers. Long-term agreements for jet-engine forgings with major customers such as Rolls-Royce, General Electric and Pratt & Whitney have provided a foundation for six-year labor agreements. Ladish and its employees jointly recognize the importance of improving efficiency and productivity. Management and the workforce are mutually committed to that goal.”
ACQUISITIONSLadish acquired Zaklad Kuznia Matrycowa (ZKM), located in Stalowa Wola, Poland, in late 2005. Bringing ZKM into the fold expanded the company’s ability to serve customers globally and created a production base for Ladish in the European Union. In addition to increasing overall sales in 2006, the acquisition diversified the company by gaining access to established customer relationships in more than a dozen European and global industry segments. Further, the ZKM acquisition laid the foundation for expanding production into multiple industry segments in central Europe. To support the goal of expansion, Ladish began making capital investments to drive process equipment improvements.
Further supporting the expansion effort, ZKM earned AS9100 certification in February 2007, paving the way for it to begin bidding on technically sophisticated aerospace-component work globally as well as in Poland’s Aviation Valley, where the forging facility is located. Aviation Valley is an emerging center of excellence, where a number of other global aerospace companies, such as Goodrich, Kennametal, Hispano-Suiza, Pratt & Whitney and Snecma, have put down roots and are forming or participating in new, central European-based supply chains.
Capping the year-long initiative that saw an upgrade to the plant’s quality system and the awarding of a key aerospace quality certification, ZKM has received its first aerospace order to produce an airframe component for the Airbus A320. This aerospace launch order is expected to generate in excess of $1 million of revenue over the life of the contract.
Jozef Burdzy, president of ZKM’s management board and general director, said: “The market for aerospace forgings is strong in central Europe right now. We expect it to remain so for a number of years. Major North American and European aerospace OEMs are looking for suppliers in central Europe that have the capability to deliver high-quality components on time. ZKM has been gearing up over the past year to participate in this booming market as well as maintain our share in general industrial markets we have served for decades.”
According to Ray Knutilla, managing director of Ladish’s European operations: “This launch order gives us a chance to show our capabilities in the European aerospace sector. As we have completed installation of a new ERP system, expanded our visual manufacturing techniques and improved operational performance using lean-manufacturing techniques, we have now positioned ZKM to expand aerospace production.”
A second acquisition in early 2006 – Valley Machining in La Crosse, Wis. – is another part of the company’s strategy to align its production resources with sustained customer demand. Since joining the Ladish group, Valley Machining has supported the Cudahy forging operation by stepping in to help trim manufacturing cycle times on high-volume components as well as shorten and streamline the routing for many other parts.
According to Woody: “Our oft-stated business philosophy and long-term operating strategy has always been to manage the business in step with the industry’s historical cycles. That doesn’t simply mean soldiering through the lean times without losing money, it also means responding aggressively during up-cycles to make the changes and investments that further strengthen relationships with customers and the market position of the company.”
Commenting on the two latest acquisitions, Woody says, “Ladish is always in the market for acquiring companies where the strategic fit with our business is apparent and the potential financial value of the acquisition can be clearly defined. We are particularly interested in acquisitions that will support our objective of keeping pace with customer demand and enhancing our core competencies in our businesses. From our perspective, this is a watershed moment in a sustainable, strong market. We want to use this moment to improve our ability to align company-wide resources with customer needs. Our latest two acquisitions are a key part of that alignment.”