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Still Up for the Job
For veteran aircraft workers, the sky's no limit at CPI
By James Bernstein
Staff Writer
February 10, 2003
Richard Franke retired from Grumman Corp. in 1993 after nearly four decades of helping to assemble fighters and bombers for the U.S. military.
Franke loved the job, but at age 59 figured he'd had enough of the airplane business.
He was wrong.
So was Tony Fasano, who retired the same year after putting in a total of 42 years, 28 at Grumman and the remainder at the old Republic Aviation Co. in East Farmingdale.
Franke, 69, and Fasano, of Deer Park, 70, came out of retirement a few years ago to work at an aircraft parts company not one tenth the size of Grumman or Republic, and one that few people outside the aircraft industry have heard of: CPI Aerostructures Inc.
CPI, like Franke and Fasano, symbolizes something of a revival for Long Island's once dominant aircraft business. The two say they feel a sense of renewal working again in an industry they joined when they were young men, at the dawn of the jet age, when aviation was still something of a new frontier.
"The aircraft industry is in your blood,” Fasano said. "The job never lets you go.”
CPI has 50 employees in a one-story building in Edgewood, in the Heartland Industrial Park. What it lacks in numbers, it makes up for in experience.
"We're a small company,” said Jim Hope, CPI's senior engineer. "We have to avoid mistakes. A high level of skill is required here.” Hope said 35 of CPI's employees worked for Grumman, Fairchild or Sperry, another prominent defense contractor in Long Island's past. These are aircraft guys.
Like Peter Sheppard, who also came out of retirement about four years ago to work at CPI. Sheppard has 37 years of aerospace industry experience. He retired in 1995 from Unisys Corp.'s defense facility (the former Sperry) in Great Neck, where he was an electrical engineer.
"It's something I'm in love with,” Sheppard, 66, said of his work.
Or John Figurny, 54, of Riverhead, a manufacturing supervisor who has been at CPI since 1985, having come from Fairchild Republic, and before that Pratt & Whitney in Connecticut. Figurny recalls traveling to Kennedy Airport from his Riverhead home in the 1960s to watch jets take off and land.
Or Louis Sarnicola, 49, a structural mechanic who has worked for CPI for 15 years and was at Fairchild for a decade before that. "This is all I've ever done,” he said.
Or Pasquale Amorese, 54, also a structural mechanic who has worked 14 years for CPI after stints at Fairchild, and Dayton T. Brown, an equipment testing company in Bohemia.
Composite Products International was started in 1980 by Arthur August, a former Grumman engineer who is now chairman of the company that has been known as CPI Aerostructures since 1992. Over the years, CPI assembled parts for military and commercial planes. But the company stumbled in the highly risky commercial aspect of the business, which swings from good to bad with the ups and downs of the economy.
Now, it has returned full-time to a business it had virtually abandoned after the Cold War ended: assembling parts for military aircraft, primarily the Air Force's T-38, a trainer used to teach prospective military pilots to fly, and the service's giant C-5 cargo plane.
"We have this niche market,” said Edward Fred, an accountant by training who is CPI's president and was named its chief executive last month. "We don't want to take our eye off the ball.”
In late January, CPI announced that sales in 2002 were a record $24 million, up from $15 million the previous year. Sales have more than doubled since 1997, and profit has quadrupled in that period, to $4.3 million in 2002.
The company's sales were boosted last year by a 28-percent increase in military airplane contracts. The increased revenue has meant more work, and in August the company added 15,000 square feet to the 25,000 it had at Heartland. An entire portion of CPI's factory is dedicated to T-38 work after it won a 10-year, $60-million contract -- its largest single award ever -- from the Air Force to produce inlet assemblies, which are part of engine housings, for 509 trainers that are being overhauled.
"I'd say that's a very good performance,” said Paul Nisbet, a veteran aerospace industry analyst for JSA Research Inc. in Newport, R.I. "If they keep on this track, it would be a very good [stock] buy.”
Long Island was once dotted with small airplane parts companies, but most are gone, victims of the downturn in the aerospace industry that forced out the big prime contractors in the region, Grumman and Fairchild Republic.
Christopher Munna of Smithtown is only 20, but he knows something about the old days. His father worked for Lockheed and his grandfather for Fairchild Republic and Grumman. Munna, who has worked for CPI for the past two years and also studies mechanical design at Suffolk Community College, plans on making the aerospace business his career.
Munna is surrounded mostly by older men. "They're very helpful,” he said. "They're teaching me a lot.”
The industry is no longer what it was in days when Munna's grandfather, or even his father, worked on airplanes. But some of the small-parts companies that remain are faring better these days, the result of increased Pentagon spending brought on by the war in Afghanistan and against terrorism in general.
Frisby Aerospace, a hydraulics maker in Freeport, derives about 60 percent of its revenue from military work and the rest from the commercial area.
"It used to be just the reverse,” said Tom Powers, general manager of Frisby's Long Island operations. "I would have to say 9/11 pushed things along. Our work has to do with fighter jets. They've been flying them regularly, and there's a lot of overhaul.”
CPI stands out because most of its competitors survive, like Frisby, by doing some commercial work. CPI has decided to focus on military contracting, with its prime work consisting of assembling parts that are produced by vendors. CPI also manages the Pentagon contracts from beginning to end.
Analysts have little familiarity with CPI. The number of shares outstanding is a small 2.8 million, and August holds 10 percent of them. But the stock, traded on the American Stock Exchange, managed to attract some attention in the past few months. First, it rose to a 52-week high of $8.38 a share last June after CPI pared costs by restructuring debt related to an acquisition of an upstate electronics company named Kolar that didn't pan out.
Although CPI's stock has since leveled off at around $4, it was the best performer, on a percentage-gain basis, among Long Island's 100 largest public companies during 2002.
Jeffrey Vinik, the well-known money manager who ran the huge Fidelity Magellan mutual fund for four years before leaving in 1996 to start his own hedge fund, last year bought 110,000 shares of CVU (the ticker symbol for CPI) before selling most of them at year's end. Money managers often sell at the close of a year to make their portfolios look better. Vinik did not return phone calls seeking comment.
CPI hopes to drum up interest in its stock through a secondary offering of 1.9 million shares. Fred said the new shares could be placed with institutions and retail brokers this month. The company said it will use the proceeds to retire debt, much of it related to the acquisition of Ithaca, N.Y.-based Kolar, whose sales plummeted in a worldwide electronics industry slump. CPI paid $14.5 million for Kolar in 1997 and closed it in January 2002.
Fred, a graduate of Hofstra University's executive MBA program and former comptroller of Grumman's international sales and marketing division, came to CPI in 1994, soon after Grumman was bought by Northrop Corp. He said Kolar was acquired at a time when CPI was searching for alternatives to the commercial portion of the airplane business.
"We went through some difficult periods” with the commercial business, August said. "It's not really for small companies.”
CPI has learned its lesson, said Fred, who added that the company is unlikely to stray too far from defense work. The challenge will be to keep growing -- Fred said CPI's goal is to become a $50-million company, perhaps as soon as next year -- with almost all its eggs in the military basket.
"We're growing,” Fred said, "but all in one direction. That can't go on forever.”
For some, just being on the shop floor of an airplane parts company is enough. Fasano traveled after he retired from Grumman and saw some of the world. Then, a few years after he stopped working, Fasano got the itch again. He started going to the Cradle of Aviation Museum in Garden City to work with former Grumman colleagues restoring old planes.
"We always come back to aircraft,” he said. |
