Hydro-Mill takes off again.

Airline parts maker barely survived the recession but new management found a way to soar to new heights

CHATSWORTH - Having just barely survived the recession of the 1990s, Hydro-Mill Co., a maker of large airplane parts, has been virtually reborn.

At one point in the business downturn, it looked like payroll couldn't be met, and bank loans were overdue. The corporate gallows awaited.

"The company had been taking on contracts, without figuring out if they could make money on them," recalls Robert Perry, vice president and general manager, who arrived on the scene in 1992 and was asked to play the role of financial fireman. "It's always an educated guess, but they were guessing too low."

Perry was hired by Gloria Well Coppin, who assumed the mantle of chairwoman and owner of Hydro-Mill in 1990, after her husband died.

Propitiously founded by Coppin's father just before World War II, the company boomed in the war, hiring 500 workers and making aircraft parts for Douglas Aircraft, McDonnell (then a separate company), Ryan Aircraft and others.

The company contracted when the fighting stopped, but grew slowly for the next 40 years, as the Cold War blew hot and cold. The 1980s and the Reagan Administration defense build-up was another good period - which turned into a bust almost as Coppin took over, when defense spending was crimped.

Losing faith in her management team in the early 1990s as red ink and debts went unaddressed, she brought in Perry to conduct a complete review of operations.

Dancing into the fire, Perry first cut the number of workers by 30 percent and froze wages. Profit sharing was instituted. Perry also reviewed contracts, eliminating those which were not true money makers for the 110,000-square-foot facility.

Perry's task was, and is, complicated by the fact that he runs a job-shop -- orders for different parts come in, in various quantities, each requiting a bid. One week, Chatsworth-based Hydro-Mill might be making 8,000-pound aluminum cargo door parts for a C-141 (at $27,000 a pop), the large military transport, or steel landing gear components for B-52s.

The next week, orders come in for parts on a space platform, made of titanium, for Rocketdyne - a $65,000 part.

Revenues dwindle 

Never does Perry have the luxury of keeping the machines humming on steady work, and usually he must price a good before actually manufacturing it.

As Perry hacked away at bad contracts, revenues plummeted from $31.9 million in 1991 to $20.1 million in 1993 - but red ink turned to black. Hydro-Mill scored minor profits in 1993 and 1994.

In 1995, revenues edged up to $22.1 million, and the company posted $1.3 million in profit.

All early indications point to a banner year in 1996 - sales in the first quarter soared past $9 million, and net income nearly hit $900,000, even after substantial profit-sharing with its 180 employees.

"This looks to be a record year," says Perry, puffing on a cigar, and leaning back in a high-back chair. "We are way ahead of projections."

And like many other Southern California enterprises, Hydro-Mill is again talking about careful hiring.

Unlike others in the Los Angeles economy, Hydo-Mill has not eschewed defense work in search of diversity. Indeed, the company has gone the other way, decreasing a reliance on civilian work for Boeing Co. and going after work for McDonnell Douglas Corp., Northrop Grumman Corp. and the federal defense agencies.

About 30 percent of work today comes from parts made to replace worn-out parts on existing airplanes. Roughly 10 percent of sales are for export.

New directions

Perry attributes the Hydro-Mill turnaround to its employees and changes in the corporate culture.

"Before, they had a very dictatorship way of running things. Today we invite questions from machinists, inspectors, anybody," he says.

Employees are called associates, and all share equally in the profit-sharing. Their bonus checks are equal, regardless of status or salary.

The bonus checks are not window dressing. In the first quarter alone, $276,595 will be split up among the 180 workers, or about $1,500 per employee.

Perry also notes that Hydro-Mill is prospering because so many others have gone out of business. "There used to be 10 job shops like ours we competed against. Now there are three."

While walking around the Hydro-Mill factory, it is easy to see why competition is not springing up - the equipment is huge and complicated.

Of perhaps two dozen pieces of equipment on the floor, none looks smaller than a school bus, and the largest is 90 feet long, 15 feet wide and 30 feet high. It is used to grind aluminum into specific shapes.

All machines are numerically controlled, and some are as much as 40 years old.

For the long run, replacing parts on aging airplane fleets around the globe is part of Hydro-Mill's growth plan, says Perry, in his office filled with John Wayne memorabilia. "They'll be flying planes out there, and somebody will have to make those parts."

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Hydro-Mill Co.

Year founded: 1937

Revenues in 1995: $22.1 million

Revenues in 1996: (est.) $36.0 million

Profit in 1995: $1.3 million

Profit in 1996: (est.) $3.6 million