- “Streamlining” to address reduced demand
- LMI aggressively reducing costs
- Larger plants with the right equipment
St. Louis-based LMI Aerospace Inc., which produces structural assemblies and components to aerospace and defense manufacturers, is closing a machining subsidiary. Precise Machine Co., in Fort Worth, Tex., will be shuttered over the course of the next several months, owing to its declining contribution to the LMI organization.
The decision was announced in the context of an organizational “streamlining” effort, to integrate recent acquisitions.
"Precise Machine was LMI's first acquisition fifteen years ago, and the work force has been very reliable, growing its capability and capacity," according to CEO Ron Saks. "However, we were not able to grow the revenue at this Fort Worth site and in the last ten years the plant was converted to machining components primarily for other LMI plants.
“Additionally, with the acquisition of Valent Aerostructures in late 2012, we have several larger plants with the right equipment to perform the Precise work,” Saks continued. “In recent months, capacity at those plants has become available, allowing this work to be done at the transfer plants without adding personnel and overhead expenses.
Precise Machine has 35 employees, according to the company. The closing will be completed by May 2014. LMI will transfer approximately $7 million in work orders from Precise Machine to other machining operations in the organization. It also said it expects to realize $1.5 million in recurring pre-tax savings from the consolidation, after incurring approximately $1.5 million in shutdown costs.
"Given the reduction of demand in 2013 for certain engineering services and structural components, LMI is aggressively reducing costs while maintaining the ability to deliver quality product on time and to accept new work when available,” he explained. This closure is one of several actions we expect to take to realize the savings anticipated when we made the Valent acquisition."
Valent, like LMI, produces complex structural components, major sub-assemblies, and machined parts for several commercial, business jet and military platforms, including the Boeing 737, 747-8, 777, 787 and V-22 and the Gulfstream G650. LMI paid $240 million to acquire it late last year.
Now, aims to integrate Valent more closely into its core organization. It appointed its own former CFO, Lawrence E. (Ed) Dickinson, as the new president of Valent. Dickinson will have oversight of most the Valent machining business.
Two co-presidents of the LMI Aerostructures segment and the executive vice president of Business Development for Valent, resigned from the company.