At Robinson Helicopter Co. Inc. in Torrance, supply chain issues began to emerge about a year ago.
According to Kurt Robinson, chief executive of the Torrance aircraft maker, the first year of the pandemic saw the company hold large inventories of everything, so supply chain problems did not initially affect the firm.
“Obviously, over the last year or so it’s affected us quite a bit,” Robinson said. “We’ve seen many cases of sellers missing delivery dates by a wide margin.”
Playing into this is the high rejection rate of parts.
When he spoke to vendors about this, Robinson said they told him it was due to high employee turnover or a change in the type of material used to make the parts.
“We have to maintain a high level of quality, and so we’ve found that much higher rejection rates have been happening more and more over the last six to nine months,” Robinson added. “As we move forward, that’s really our biggest concern, not only that they give us the 100 parts that they should give us, but that all 100 parts are of the quality that they should be.”
Robinson Helicopters is not alone in facing what has become a global supply chain problem, which has emerged due to the Covid-19 pandemic forcing closures in areas with high concentrations of manufacturers, particularly in China; increase in consumer demand; and backup at ports, especially in Southern California, home to two of the busiest ports in the world.
In addition, there has been a shortage of labor in workplaces, key to keeping the supply chain running smoothly.
Like Robinson Helicopter Co., Lee’s Enterprise is also seeing supply chain issues. The Chatsworth-based manufacturer, founded in 1974, only does aerospace work. About 75% of it is for military customers, and 25% is for commercial aviation. It manufactures parts and assemblies for a variety of aircraft, machining parts from carbon steel, stainless steel, aluminum and other standard aircraft metals.
“We make parts that are special gears that go inside electromechanical actuators,” said President Tom Molnar. “So our stuff has a lot of specialized external processing.”
After being machined at Lee’s facility, those parts are sent for heat treatment and plating. But the firm is finding that uptime on its heat treaters and plates is getting longer and longer due to understaffing and experiencing an increase in work, Molnar said.
David Fisher, owner of S&H Machine, an aircraft parts manufacturer in Burbank, also sends his commercial aircraft parts to be heat treated and coated. He has hundreds of salespeople working for the company, and their cost of doing business has gone up, so they raised their prices, he said.
“Which is putting a tremendous financial burden on stores like mine because we’re locked into contracts and fixed prices for many years, so it’s making it challenging for companies like us,” he said.
Due to supply chain and labor shortages, S&H is not taking on new jobs. Instead, she’s focusing on the legacy work she’s always done, Fisher said.
“I’m getting rid of business that I haven’t seen before because I don’t have the capacity to take it on right now,” he added.
Limited quantities
David Goodreau, president of the Small Business Aerospace Industry Coalition, a Glendale-based nonprofit national network of independently owned small businesses that manufacture and supply military aerospace spare parts, components and assemblies, said the coalition sold some manufacturing equipment, which included some simulators for CNC (computer numerically controlled) machines.
Another company bought three of the simulators for several thousand dollars and then did something interesting with them.
Because the computer chips are limited in quantity due to supply chain issues, the company removed them from the simulators and put them in other equipment, Goodreau said.
“You have cases like this where people make lemonade out of lemons,” he added.
For Molnar, of Lee’s Enterprise, the opposite is true, as everything takes longer to make.
Customers are ordering more parts ahead of time because of the long lead times needed to process the parts, he said.
So, in addition to ordering more parts to keep their prices down, they’re also ordering parts faster, Molnar added.
“I feel like it’s creating an artificial backdrop of extremely high demand when there’s not enough supply to handle it,” he said.
For Robinson, it’s a very simple equation: “If you don’t have parts, you can’t build helicopters.”
Lower Optimism
Sikich, a consulting and technology firm based in Naperville, Illinois, last week released its latest Sikich Industry Pulse, a report on the manufacturing and distribution industry. The survey results were compiled from responses from 100 manufacturing and distribution executives surveyed in June.
The survey showed that only 58% of manufacturing and distribution executives rated their optimism at seven or higher on a scale of 1 to 10. This comes a year after 81% of executives rated their optimism at seven or higher up.
Supply chain and labor shortage issues also played a role in how manufacturers are falling behind in meeting their customers’ demands.
Forty-three percent of executives surveyed said supply chain bottlenecks causing material shortages were the number one reason their companies couldn’t meet demand. Thirty-nine percent cited labor shortages for not meeting customer demand.
But Fisher, of S&H Machine, was not pessimistic about the future of his business.
“I have to find people and I have to find ways to automate,” Fisher said. “The fact that I have a job is a good thing. Yes, the lack of raw materials is a problem, and the lack of people is a problem. But if you have work, you have hope.”
Fisher said he felt good about the future and was confident he would get through this difficult period.
“I have less competition than before, so that’s a good thing,” he added. “There are some beautiful things that are there.”
