URL: http://www.abqjournal.com/AED/306369west_news05-14-08.htm

Wednesday, May 14, 2008
Business Soaring at Aero
By Andrew Webb
Copyright ©2008 Albuquerque Journal; Journal Staff Writer
    Three years after 9-11, the nation's airlines were trimming the fat from their businesses and staging a comeback.
    So a Santa Fe aviation consultant and a Dallas businessman took a bet, converting a former electronics plant into a business that overhauls and repairs airliner parts.
    And it appears to have paid off. Today, Aero Mechanical Industries Inc., or AMII, employs 94, and has become part of a growing aviation-related business cluster for Rio Rancho and Albuquerque's West Side.
    Now, its vice president and co-founder, Rodney Doss, has expansion on his mind.
    "By the end of '08, we'll be at about 120 employees," he says. "We're right on track with our original plans."
    Aero Mechanical fixes structural and fuselage parts, such as cowlings and fairings, wings and control surfaces— industry-speak for parts like rudders and elevators.
    These parts of the aircraft face a daily barrage of hail and bird strikes, vibration and temperature fluctuation. The Federal Aviation Administration, alongside similar bureaucracies in other parts of the world, have strict safety requirements that necessitate frequent inspection and repair.
    "If it has to do with the fuselage, we can repair it for airlines worldwide," Doss says as he points out thrust-reversers from Ethiopia and a horizontal stabilizer from China with a tiny, lightning strike abrasion marked with a Sharpie.
    Post-9-11 industry

    AMII was born of a new paradigm in the post-9-11 airline industry, which was struggling back from the severe blows wrought by closed airspace, increased security and an already faltering economy.
    As part of efforts to reduce costs, airlines slowed acquisition of new aircraft, instead keeping older models airborne longer and creating a booming market for parts pulled off retired airframes and spruced up for reuse.
    To reduce inventory costs, airlines shuffled the responsibility of stockpiling parts to independent parts brokers, who hold on to parts until airlines order one, then send it to a maintenance, overhaul and repair company, or MRO, like Aero Mechanical. Aero Mechanical then completes any necessary repairs, recertifies the component as airworthy and forwards the part to the customer.
    Aero Mechanical has relationships with several parts brokers, including Chicago-based AAR, which has a facility in Roswell, and Houston-based Source One Spares, which opened a warehouse right next door to Aero Mechanical in 2006.
    Meanwhile, many airlines were shrinking their backshops, instead sourcing repair work to third-party companies like Aero Mechanical, which has contracts with commercial carriers around the globe.
    Doss, a former FAA employee, was a certification consultant based in Santa Fe. AMII president and co-founder, Jim Cooper, previously had been with a different MRO that, like many, went under in the wake of 9-11.
    "I was watching the industry, and I saw the airlines were ready to start rebounding," Doss says. "The indices were there that the industry was coming back, and coming back lean."
    Because so many MROs had closed in the years after 2001, a shortage loomed, he said.
    "Those that did survive 9-11 had a one year plus backlog," he said. "So we put together a business plan."
    The pair contacted real estate brokers, and quickly narrowed in on Sparton Electronics, which was in the process of moving from its 100,000-square-foot Rio Rancho facility to a larger West Side plant formerly used by Honeywell.
    Buoyed by aggressive state and local efforts to attract aviation-related business, AMII sought investor capital to get the business going.
    They eventually raised about $2 million from private investors and New Mexico Community Capital, a Bernalillo-based investment firm that focuses on the dual return of job creation and investor return, and whose pool of money includes some state permanent funds.
    "A factor that eliminated a lot of our competition was that they had loaded up on bank debt," Doss says. "That's why we decided to go the investor route."
    Recruiting workers

    Doss said the company decided on New Mexico because of the tax benefits and other incentives offered to aviation industry companies, as well as a state-run program that reimburses the cost of training.
    An early challenge for the company was finding technicians who specialized in repairing the lightweight honeycomb sub-structures, carbon-fiber and sheet metal skins and high-tensile spars that comprise light-but-strong aircraft fuselages.
    "They had trouble finding a lot of qualified employees that have this specific training," says New Mexico Assistant Economic Development Secretary Stuart Paisano, who oversees the job training incentive, or JTIP, program. "They were going out of state to recruit workers."
    Aero Mechanical has received several rounds of JTIP on-the-job training reimbursement, totaling $282,684 for 47 employees, and was recently approved for another $162,000 to train 25 more employees.
    "We've had great success with this company," Paisano said.
    Doss agreed.
    "We took people off the street with no aviation experience, put them in entry level jobs and trained them, and now we've got lots of those individuals in higher positions," he said.
    The firm is also working with Central New Mexico Community College on an aviation maintenance training program, similar to a CNM aviation manufacturing program designed with input from Eclipse Aviation.
    "There have been so many benefits to doing business in New Mexico," Doss says. "The political and business attitude of Rio Rancho, Albuquerque and the state is just phenomenal. It's been like that from day one."
    Booming business

    Since its founding, the company has received certification to do business internationally, most recently in China, and has also achieved AS 9110, the aviation industry equivalent of ISO 9000, a quality standard required for government contracts, and, increasingly, in civilian business.
    And although today it serves the airline industry, AMII is considering a foray into the military market— whose equipment must also be held to exacting safety inspection and overhaul standards.
    "The differences are minimal," Doss says.
    Aero Mechanical had about $7 million in revenues last year, and is on track for $12 million this year, thanks in part to booming airline business in emerging economies like China and parts of Africa.
    In response, the company plans to add another 25,000 square feet to its facility, Doss said. Construction is expected to start sometime this summer.