Norwich Aero: déjà vu all over again

NORWICH — “Well Mr. Chamber of Commerce, what are you going to do about that?”

 

In early 2014, a friend put the question to Steve Craig, the Commerce Chenango president and CEO, in response to the sudden announcement by Norwich Aero’s parent company, Esterline Technologies, that it was closing the Norwich plant and moving production to its Tijuana, Mexico facility and some administrative functions to its Buena Park, California location. Local media highlighted the closing with bold headlines declaring that 120 workers would be laid off.

 

“Esterline had told us late in 2013 that the company was reorganizing,” recalls Craig, “but we had no idea that meant … [shuttering] the plant. All we heard was that the Norwich plant was setting records for quality, on-time delivery, and [profit] margins. Despite our best efforts to have Esterline reconsider the decision, it was obvious they felt we couldn’t offer incentives to offset the total labor cost of just $5 an hour paid in Mexico. The role now of Commerce Chenango is to spearhead the effort to find a new operator who will not only utilize the plant but also the workforce.” Craig describes his organization as a combination of a chamber of commerce, an industrial-development authority, and local-development corporation all rolled into one.

 

“This could be a very attractive opportunity for the right company,” says Steven Palmatier, the workforce and industrial liaison who is contracted by the Chenango County planning department and who shares office space at Commerce Chenango. “The building contains 57,000 feet on one level and includes a 6,500-square-foot, high-bay area. It comes with industrial electrical service, natural gas, municipal sewer and water, a 25-horse [power] reciprocating compressor, and 24/7 building security and monitoring. 

 

The workforce is very skilled in making high-precision sensors for America’s premier aerospace manufacturers, such as Boeing, G.E. Aircraft Engines, Airbus, and Pratt & Whitney. Norwich Aero is a vertically integrated company that does its own machining, welding, coil winding, encapsulation, harnessing, and cabling. Norwich Aero’s employees are also skilled in a variety of tests and inspections involving shock, humidity, pressure, and temperature. The only thing they don’t do in-house is electro-plate coating.”

 

History

For the residents of Norwich, it’s déjà vu all over again, to quote the illustrious Yogi Berra. In 1983, the community watched Lewis Engineering close down its sensor-manufacturing plant and move its operation to Connecticut. A native of the region, William G. Ballard, led a group of private investors to create Norwich Aero Products, Inc. The New York corporation was certified on Sept. 19, 1983, and went into production with six employees by December of that year, in a 5,000-square-foot building at 10 Gladding Lane. Ballard was the company’s president. Minutes of the Common Council meeting from May 8, 1984, indicate unanimous approval of a request for a UDAG (Urban Development Action Grant) loan in the amount of $155,000. The loan supplemented $555,000 the company already had to buy machinery and equipment and to renovate the building. To accommodate its growth, Norwich Aero amended its certificate of incorporation on April 15, 1987, to increase the authorized shares from 100,000 to 5 million.

 

In 1999, Roxboro Group, PLC, headquartered in the U.K., acquired all outstanding shares of the business of Norwich Aero from the group of private investors and management who had founded the company. Norwich Aero was then integrated into Roxboro’s Weston Aerospace operation, which also manufactured high-end sensors. On June 11, 2003, Esterline Technologies (NYSE: ESL) of Bellevue, Washington closed its acquisition of the Weston Group for $88 million. At the time, Esterline employed 5,000 people and generated $600 million in annual revenue.

 

Marketing the facility

“There are a number of incentives available to assist a potential buyer,” notes Craig. “The Industrial Development Agency is empowered to confer property-tax relief, mortgage-recording-tax abatement, state and local sales-tax abatement, and bond financing. In addition, the Empire State Development Corp. offers grants up to 20 percent of the cost of capital investments in the project. [The frosting on the cake, of course] … is the combination of not just the plant but also a very skilled workforce. That’s quite a package.”

 

Craig and Palmatier are actively marketing the package. “From May 12 to 14, we promoted Norwich Aero at the Eastec exposition in W. Springfield, Massachusetts,” explains Palmatier. “With somewhere between 500 and 1,000 exhibitors, this is New England’s premier manufacturing trade show. I would guess that we spoke to 1,500 people about Norwich Aero at this show. 

 

In June, we traveled to the Javits Center in New York City for the Atlantic Design & Manufacturing show. Both events gave us an opportunity to reach out to hundreds of manufacturers in a very short time. Our marketing plan [to date] also includes e-mailing more than 1,000 prospects in the Northeast, our website presence at www.50oharadrive.com, and collaborating with CBRE (a Fortune 500 real-estate company). Future efforts include targeted Internet marketing, print, and cold calls in the Binghamton, Syracuse, Cortland, Utica, and Oneonta areas. We are also talking with three start-up companies as an option if we can’t find a single buyer.”

 

Craig and Palmatier have been working closely with Esterline on the impending transition. “[The Bellevue Corporation] … underwrote the local effort to attend Eastec,” avers Palmatier. “Now we are waiting for a valuation on the property,” adds Craig. “There is also a serious flooding situation on the property, which has to be remediated. With Esterline planning on leaving the building by the end of December, there are ongoing negotiations to deal with a number of questions.”

 

In the 12 years since Esterline bought Norwich Aero, the parent company has grown from $600 million in revenue and 5,000 employees to approximately $2 billion and 13,000 employees. The growth has come largely through acquiring a dozen companies. Today, 50 percent of Esterline’s business comes from commercial aerospace, 30 percent from defense, and 20 percent from non-aero applications. The company holds the number-one or number-two position in each of its market niches. The company’s sensor division also has facilities in California, Tijuana, France, the U.K., and Singapore.

 

In the event the effort to find a buyer for Norwich Aero is unsuccessful before the plant closes, the employees are eligible for a number of benefits. “While the U.S. Department of Labor is awaiting information from Esterline, the current employees will probably be eligible under the federal Trade Adjustment Assistance program for free job training up to and including the associate degree level,” asserts Craig. “At the state level, a department of Labor Rapid Response Team is already assisting employees who are eligible with the full range of services provided by the CDO Workforce office, including counseling, skills-assessment, and the development of individual employment plans. (CDO is a consortium of state and local agencies serving Chenango, Delaware, and Otsego counties.) Of course, the employees are eligible for unemployment-insurance payments.”

 

Background

Craig grew up in Jamestown and attended Harpur College (now Binghamton University). He spent 35 years as a broadcast journalist in New York, Pennsylvania, Ohio, and Florida before joining Commerce Chenango four years ago. Craig also serves as the county’s designee to the Southern Tier Regional Economic Development Council and sits on the board of the Southern Tier Region Economic Development Corp. Palmatier was born in Binghamton and graduated high school in 1974. He attended Verrazano College and subsequently owned and operated Gilbert Machine and Tool from 1975-2006, an aerospace machining, fabrication, and assembly shop. Gilbert, which was located in Greene, employed 50. Palmatier also has expertise in natural-gas development with a focus on best-practices for the industry and for localities. 

 

Commerce Chenango is optimistic that déjà vu will turn out as well in 2015 as it did in 1983. Craig and Palmatier are relying on two other Yogi aphorisms: “If you don’t know where you’re going, you may not get there;” and “When you come to a fork in the road, take it.” Both have a map of where they are going, and when they come to a fork in the road, they will be sure to take the right one.