HMI Metal Powders scrambles to meet demand

CLAYVILLE — Before the Revolutionary War, the village connecting Fort Schuyler (present-day Utica) and the Cherry Valley was known as Paris Furnace — named after Isaac Paris, a merchant in Fort Plain. Paris is credited with saving the area’s residents from a famine in 1788. In September 1849, Henry Clay stopped in the village and gave a speech, which prompted the name change to Clayville (incorporated as a village in 1872 in the town of Paris). At the time of the re-naming, the village was home to iron foundries and machine shops.

Since 1980, the skyline of Clayville (located in southeast Oneida County) has been dominated by HMI Metal Powders, a wholly owned subsidiary of United Technologies (NYSE: UTX) and a business unit of Pratt & Whitney (P&W), which is also owned by UTC. HMI owns a five-story building that formerly served as a knitting mill. The current state-of-the-art facility manufactures nickel-based, structural, super-alloy powders used in the production of commercial and military gas-turbine engines.

“HMI has invested more than $30 million in the plant and equipment in the past seven years,” says Mark Hewko, general manager, “in an effort to keep up with the growing demand for airplane-engine parts. We just installed a second production tower, which alone cost $7 million and is scheduled to come online by the end of this year. We’re the world’s leading supplier of super-alloy powder, and our role is to supply more than a dozen parts centers, module centers, and service locations supporting Pratt & Whitney’s growth.”

The newest addition to the HMI plant is the production tower — a giant atomizer that functions much as a perfume bottle emitting a fine spray. At five stories in height, one story in diameter, and weighing 50,000 pounds, however, it won’t fit in a lady’s pocketbook.

“The process begins with inserting solid-metal ‘remelt’ bars into the furnace at the base of the tower and heating the metal into a liquid form,” explains Hewko. “The atomized metal turns to powder in the tower, which is then collected at the base. The powder is sifted and inspected at several stages for purity before it is ‘canned,’ a process in which the powder is placed into a metal canister and capped at both ends. We ship 100 percent of the canisters to an external vendor, which utilizes a compaction-and-extrusion process to convert the structural powder into solid-metal billets. The extruded product is shipped back to us to ‘decan’ (remove the outer container) and machine to final dimensions. The finished billets are then shipped to a P&W facility in Georgia for conversion into parts such as retaining rings, seals, disks, etc. The parts are typically designed for high-stress, high-temperature operation: The compression cycle in the gas-turbine engine would be one example.”

Hewko says HMI focuses on quality.

“The aerospace industry has set stringent requirements for its parts,” continues Hewko. “The [proprietary] process we use at Clayville ensures that all the constituents of the alloys don’t break down at high temperatures, a problem common in cast and wrought products. The powder metal we use also results in finer grains for improved forging. The result is parts that are super-reliable and that operate for thousands of cycles. To ensure reliability, our lab does chemical analysis during the manufacturing process utilizing spectroscopy, residual-gas analysis, and carbon- and sulfur-level determination. We also do a physical analysis including ultra-sonic inspection, metallographic inspection, particle-size distribution analysis, and optical and electron microscopy. HMI imposes rigid control over every phase of the operation to ensure product quality. This means the strictest standards of powder cleanliness in all powder-handling areas, including spending four days to clean a giant atomizer when we do a changeover to another alloy formula.”

HMI today

The process used at HMI was the brainchild of Joe Wentzell, an inventor and entrepreneur who developed the idea and incorporated the company in 1965. He built a small pilot plant in Chadwicks (town of New Hartford) before moving the operation to Herkimer in 1969. The following year, P&W approved HMI (originally known as Homogenous Metals, Inc.) as a super-alloy powder vendor for engine parts. United Technologies bought the company in 1975 and the former knitting mill in 1980, consolidating HMI operations in Clayville in 1983. The plant currently employs 180 full-time people and management plans to hire 30 more this year. In addition, another 70 people are on site, including part-time employees and contractors. The five-story building comprises 143,000 square feet. The plant runs three shifts Monday through Friday and a weekend shift of 12 hours. HMI declined to disclose revenue figures.

What’s fueling HMI’s growth?

Commercial growth

“Ze plane! Ze plane!” The quote is from a TV show — “Fantasy Island” — that aired in the late 1970s and 1980s.The show opened with Tattoo spotting a plane approaching the island and excitedly announcing its arrival. Fast forward to 2017 and the aircraft industry is shouting the same thing, because they can’t build them fast enough. Airbus’ “Global Market Forecast” from 2016-2035 calls for air traffic to grow 4.5 percent annually, requiring 33,000 new passenger and freighter aircraft valued at

$5.2 trillion (U.S.). Following the recently concluded Paris Air Show, the Boeing Company raised its 20-year forecast of plane deliveries to more than 41,000, equating to a $6 trillion price tag. The Airbus “Global Services Forecast” projects that the maintenance and overhaul business will generate another $1.8 trillion over the same period and the carriers will need to hire 500,000 new pilots.

A 2016 Deloitte study of the global commercial aerospace industry identifies an industry production backlog of 9.6 years, a 100 percent increase since 2009. The study, using a worse-case scenario, also projected that if all the orders vulnerable to cancellation or deferral due to creditworthiness were eliminated, the backlog would still be 8.4 years. Driving the commercial growth is travel demand, which Deloitte says is growing at a compound annual rate of 5.4 percent. The carriers are in a good position to respond to the global demand with more aircraft orders because of improved financial performance thanks to low fuel prices, consolidation, more efficient operations, the decline of regulatory hurdles, and additional sources of revenue (checked bags, food, premium seating). Because of the strength of the backlog, analysts are now predicting that the historical boom-and-bust cycle experienced every eight years may be over.

More than 85 percent of the backlog value is shared by full-service carriers (45.8 percent), low-cost carriers (22.3 percent), and leasing companies (17.7 percent). While Boeing and Airbus are the world’s leading manufacturers of airframes, they face plenty of competition from companies such as Embraer (Brazil), Bombardier (Canada), Comac (China), Irkut (Russia), and Mitsubishi (Japan). The industry is typically divided into three segments: regional, narrow body (single aisle), and wide body. P&W is perhaps best known for selling engines to regional carriers and to the narrow-body segment. The single-aisle aircraft represent more than 80 percent of the current industry backlog, driven in large part by the popularity of Boeing’s 737 series and Airbus’ A320 neo (new engine options).

Military growth

P&W won its first contract in 1925, making engines for the Navy. Today, the company has 300 military engines in service with 31 armed forces worldwide. The U.S. military uses P&W engines in the F-15, F-16, the C-17 Globemaster, KC-46 tanker, F-22, and F-35. UTC reports Pratt & Whitney sales of military aircraft engines increased 4.7 percent in Q1/2017, generating $3.8 billion.

Competition

“The bottom line is that airplane deliveries are driving the demand for airplane engines,” notes Hewko. “In 2015 P&W started installing the next-generation of engines which is revolutionizing the industry: a geared, gas-turbofan engine that permits the engine’s fan blades to turn more slowly. (P&W also revolutionized the aircraft industry in 1925 when it produced the first air-cooled engine.) The net result is a 75 percent decrease in noise, a 16 percent increase in fuel efficiency, 50 percent reduction in emissions, and an engine with only seven moving parts. After 20 years of research and a $10 billion investment, the new release already has 8,000 orders. The demand on our parent means HMI has to increase our production of super-alloy powders without any loss of quality. It’s critical that we hire 30 more employees now in order to train them so they are prepared when the second atomizer goes on line in December.”

Three airplane-engine makers dominate the industry: G.E., Rolls-Royce, and P&W. G.E.’s aviation business generated $26 billion in 2016, a 6 percent increase over the previous year. Commercial-engine manufacture represented 68 percent of that revenue. The company’s engines power the A320 neo, 737 MAX, 747-8, and 787 Dreamliner. Rolls-Royce generated just under $20 billion in revenue last year with 51 percent coming from commercial aircraft and 16 percent from defense. The company specializes in manufacturing engines for wide-body aircraft. P&W posted revenue of $14.9 billion in 2016, a 5.8 percent increase over 2015, and profit of $1.545 billion. To date, P&W has installed 13,000 large, commercial engines.

Employees

“P&W poked the bear with this new engine,” opines Hewko. “The competitors are trying to catch up. HMI’s immediate challenge is to ramp up our production by bringing the new tower online. There is still a lot to do in order to make the tower operational, but my biggest concern is having trained people in place when it does come online.” That responsibility falls to Nancy Rudnitski, HMI’s human-resources manager. “We’re looking for people with mechanical aptitude, math skills, and a high-school diploma,” emphasizes the HR manager. “Candidates have to be trainable and should be enthusiastic to learn. There are openings for electricians, mechanics, and machinists, to name some. Last year, we hired 45 people and the requirement to now hire another 30 quickly is putting pressure on my office. What makes my job easier is that we have very low turnover and get positive referrals from our employees. The company also pays very good wages and offers a … [smorgasbord] of benefits, both critical for attracting qualified employees in this economy with low unemployment. The learning curve for new hires is typically four to six months, so … [we’re pulling out all the stops].”

Hewko’s background

Hewko earned his bachelor’s degree in physics from the State University of New York College at Potsdam and a bachelor’s degree in mechanical engineering from Clarkson University, both in 1991. He added a master’s degree in engineering manufacturing management from Clarkson in 1999. Hewko worked at the Carrier Corp. from 1992 until 2009 with assignments in Syracuse; Singapore; York, Pennsylvania; and the Charlotte, North Carolina area, before joining Pratt & Whitney in September 2009 as the general manager.

Every year Forbes magazine picks “10 hot companies that are hiring like crazy.” The companies are chosen based on sales, earnings growth, and headcount. If HMI were a small, publicly traded company rather than a unit of UTC, it would be on this year’s list. HMI is so hot that it may be time for the residents of Clayville to re-visit the village name and, after 168 years, change it to HMI Furnace.