OEM Report: Aerospace

Flight simulator

By Lynn Stanley

Above: Elite Aviation Products President and CEO Dustin Tillman’s “flight plan” for scale-up has already tripled the company’s manufacturing capacity.

As suppliers grapple with production burdens, one manufacturer has left the ground and achieved cruising altitude

September 2016 - “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…” British author Charles Dickens opened his 1859 novel “A Tale of Two Cities” with these famous words—penned to describe the economic and political unrest that plagued London and Paris in the late 1700s and which led to the American and French revolutions.

For the aerospace and defense market, it certainly seems like the best of times. The Farnborough International Airshow, held in July, broke records with $124 billion in orders and options for aircraft, engines and components. Airbus netted the largest deal, selling 100 of its A321 neos worth $12.44 billion to AirAsia. 

Yet, escalating orders and burgeoning backlogs could prove to be the worst of times for suppliers, warns Dustin Tillman, president and CEO of Irvine, California-based Elite Aviation Products. At the same time, Tillman has deployed a business approach meant to propel his company ahead of the capacity curve while equipping it to support an industry that is staggering under the intense pressure of customer demands.

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Elite is able to slide freely up and down the supply chain to provide multiple solutions for end users.

“The aerospace and defense market is the most bullish we’ve ever seen it,” says Tillman. “There is more booked and undelivered work now than at any other time. There are more new programs being awarded than ever before. It truly is the second Golden Age of aviation.”

He deems the view from the supply chain, however, as grim. “Many U.S. suppliers haven’t been able to step up and respond to what is the largest run-up in the history of commercial flight. Customers are tired of inaction, underscored by a lack of investment, and are actively looking for companies capable of partnering with them for the long haul. Elite is stepping up to fill that role,” he says, “and the results are evidenced by the market share we continue to take from incumbents.”


Explosive growth in single-aisle aircraft has attracted Chinese and Russian aerospace suppliers to a market that is also being cultivated by Brazil’s Embraer and Canada’s Bombardier. But the battle for big jet orders remains between Boeing and Airbus—they hold 70 percent of the market for wide-body and narrow-body commercial aircraft. 

   According to Forecast International Inc., which performs analysis for aerospace, defense, power systems and military electronics, May 2016 backlogged orders for Airbus hit 6,759 units compared to Boeing’s 5,762, backlogs that represent 10 and seven years of production.

Recent earnings statements confirm the A320 and 737 narrow body families are Airbus and Boeing’s mainstays and make up the majority of deliveries. 

According to Airbus, “Middle classes in emerging markets will double to 3.5 billion people by 2035, [by which time] 62 percent of the world population will be city dwellers and the number of aviation-served megacities will rise from 55 to 93. In 20 years, the number of daily, long-haul passengers traveling to, from or via aviation megacities is expected to more than double to 2.5 million.” 

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Inside a Tsugami B326 Swiss-style Turn Mill, high-pressure nozzles are hard at work.

Boeing executives report global passenger traffic, at 6 percent growth year to date, is outpacing gross domestic product. Experts agree, though, that with supplier bottlenecks dogging the airframe builders, Airbus and Boeing are pushing the envelope by booking new orders at a breakneck pace that doesn’t match the actual rate of production. Delays spurred Qatar Airways to cancel its order for its first A320neo jetliner from Airbus, the Wall Street Journal reported in June.

Boeing took steps to minimize risk, such as pooling its suppliers’ raw material purchases and sharing manufacturing techniques. Kent Fisher, vice president in charge of supplier management at Boeing, told the Financial Times in May that “the supply chain is performing better this year than in 2015 when one supplier’s switch to a new resource management system caused the biggest number of shortages in eight years. It was an exception,” he said, but he’s only “one bad phone call away from that record being eradicated completely.”

According to Tillman, the biggest problem suppliers face is a global lack of available capacity. “You have to be able to scale up in a way that doesn’t compromise cost, quality, delivery or service,” he says. “This has proven especially difficult for the industry to manage.”

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The Airbus A321neo engine is just one of the finished products supported by Elite’s expertise.

View from the top

Tillman took a blank slate approach to starting his business, which allowed him to establish solid building blocks to facilitate scalable growth. In 2015, the AS9100 Rev C- and ISO 9000-certified manufacturer acquired its second manufacturing facility in Tustin, California. The 34,000-sq.-ft. facility triples Elite’s manufacturing capacity.

“I have gained a macro perspective of the supply chain, how it works and how to address these legacy challenges because I spent my career on the supply side of the aerospace market prior to establishing Elite,” Tillman says. At first glance, the sequence of operations that work in concert to design, produce and deliver products for the aerospace and defense market seems simple with a typical value stream comprising Tier 1, 2 and 3 suppliers, a subcontractor performing assembly and a prime integrator. But the tiered relationship is complex and difficult to navigate, requiring a knowledge and flexibility that many in the industry lack, according to Tillman.

“Today’s project and customer needs don’t always follow a traditional path,” he says. “Suppliers are finding that they must be prepared to play multiple roles.” Nimble-footed Elite is able to slide freely up and down the value stream to provide “plug and play” solutions that go beyond that of a conventional parts supplier. Tillman explained why in testimony he gave before a U.S. House of Representatives Small Business Committee hearing in May 2016.

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An Elite machine tool operator evaluates the first stage on a new component to ensure speeds and feeds are dialed in.

American manufacturing has been stifled over the last couple decades by lack of investment in emerging technologies, slow adoption of business models with 21st century efficiencies, large growth capital requirements and lack of investment in prioritizing the cross training of employees, Tillman testified. “Elite was born out of recognition of these challenges,” he says, adding, “Our ability to address these problems has allowed us to quickly break into the aerospace marketplace while creating domestic manufacturing jobs and dispelling the myth that successful manufacturing in America is a thing of the past.”

It’s why Tillman chose to build from the ground up, seeding the workspaces with a homegrown culture that is geared to the customer. “It’s no longer a decade of napkin agreements,” he says. “It’s about commissioning your customer for the work their customers are demanding.” 

Tillman’s three-point plan is simple: people, processes and technology. “People are the centerpiece of any business,” he continues. “We hired best-of-breed talent and we maintain a robust human capital management program that empowers our employees through recognition and incentive systems that reward out-of-the-box thinking.”

Elite’s infrastructure is networked with enterprise resource planning, quality management systems and business operating system (BOS) to promote an agile manufacturing environment that is populated with the latest equipment. The company subjects each request for proposal to a multi-departmental review and analysis to ensure the right machine tool is selected for the project.

Elite’s current offering includes Swiss-style turned products used to support a variety of build-to-print and standard commercial and orbital rocket launch applications. Elite also makes complex, high cost-of-failure components like enclosures, heat sinks, manifolds and engine mounts. Raw materials range from carbon steels C12L15 to aluminum 6061-7075 and titanium 6AL4V to Inconel 625. Elite specializes in turned parts under 32mm and super alloy-milled components within a 17-in. by 24-in. envelope. Elite has plans to expand its product offering and add larger format machining by next year. The company has its eye on the commercial space transportation market as well.

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Tool holders stand ready to support a scheduled aviation component fabrication job.

“Given the maturity of the supply chain at the OEM level over the last decade, especially in regard to total cost of ownership initiatives, we are seeing a sharper focus on quality and delivery,” says Tillman. “With the sheer volume of work in front of us ensuring parts are on-quality and on-time is going to become even more important.”


Quality and invisible costs associated with activities like processing and shipping are reasons Elite is also winning work back from overseas competitors, like the large contract it recently landed with an airframe manufacturer that was procuring parts from China used in the fabrication of seat monuments. 

“The rejection rate [for the Chinese parts] was over 50 percent per delivery, numbers that left our customer in a predicament,” says Tillman. “Having parts reworked would have been cost prohibitive and caused further delays. Sending a quality team to regularly monitor the manufacturer added up to tens of thousands of dollars in airfare, hotels and other expenses. When our customer tallied these expenses and amortized the costs back through the piece part price, they were appalled,” according to Tillman. “The exercise made their decision a no-brainer.”

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Experience on the aerospace supply chain side of the fence has given Tillman a macro view of how to address the industry’s legacy challenges.

Leading by example, Tillman hopes other suppliers in the global aerospace sector will follow suit. He acknowledges that it takes a certain amount of risk appetite and the ability to manage growth without diluting a company’s offerings.

“We represent a very important voice,” he says. “It is the voice of the customer, not just over the next year but for the next 20 years.” Tillman also advocates getting involved in reshoring efforts and ways to remedy the shortage of skilled manufacturing workers from hiring and training veterans to engaging young people. 

“As a nation we need to make manufacturing exciting again and reintroduce a curriculum in primary schools where children can be exposed to different vocations. The backbone of America has always been and will continue to be its skilled labor force,” he says. When the skills are homegrown, the entire supply base will be flying high. FFJ



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