Alcoa Inc. has hired some 150 people in the past 18 months at its Fullerton fastener operations and is looking to add another 75 or so by year’s end, thanks to the aerospace rebound.
The Pittsburgh-based company’s Alcoa Fastening Systems Inc. unit now counts 975 workers in Fullerton and could be at 1,050 by December.
That’s closer to the company’s high of about 1,200 workers earlier in the decade and up from 800 or so during the downturn that followed the 2001 terrorist attacks.
The fastener business, which Alcoa bought in late 2002 from Virgina’s Fairchild Corp., should continue to grow next year, said Craig Brown, director of operations in Fullerton.
“In aerospace, it’s cyclical,” Brown said. “Right now we’re on an upturn, and we’re adding a lot of people.”
The Fullerton hiring is part of a broad resurgence among defense and aerospace contractors here with higher military spending and commercial aviation’s turnaround.
Alcoa’s two Fullerton plants make nuts, bolts and fittings that hold together aircraft and engines. They make fasteners for Lockheed Martin Corp.’s Joint Strike Fighter and F-22 fighter jets and Boeing Co.’s C-17 cargo plane.
On the commercial side, Alcoa makes fasteners for Boeing’s next-generation 787 and the new A380 from Airbus SAS.
The fasteners sell for 8 cents apiece to $50 each for some fittings. They are made from stainless steel, aluminum, nickel-based alloys and some advanced composites.
The plants ship more than 10 million parts per month.
Alcoa is having a tough time finding workers and faces the prospect of losing some as older workers near retirement, Brown said.
The company offers hiring incentives and also is spending $8 million this year on upgrades in Fullerton to make the plants more productive, he said.
Alcoa has several fastener rivals, including Irvine’s Shur-Lok Corp. and Rhode Island-based Textron Inc.’s Textron Fastening Systems in Santa Ana.
Textron has added about 70 workers locally this year, with about 370 in Santa Ana, said Chris Marx, vice president of aerospace at Textron Fastening Systems.
The Fullerton operations make up 10% of sales for Alcoa Fastening Systems. Alcoa doesn’t disclose sales for the fastener business, though it said in 2002 the operation did about $1 billion annually.
Covering nearly 270,000 square feet of space, the Fullerton operation is one of the largest in Alcoa Fastening Systems.
The plants are more than 50 years old and have gone through a couple of ownership changes.
Alcoa paid $657 million for the business three years ago as part of a bid to diversify from commodity aluminum. Alcoa combined it with its existing fastener business, Huck, which it acquired back in 2000.
Alcoa and others are drawn to the aerospace side of the fastener business. Unlike nuts and bolts for autos, aerospace fasteners are advanced enough to command a premium.
“These products are the absolute top of the spectrum,” said Andy Cohn, past president of the Los Angeles Fasteners Association, a trade group.
Other companies are going after fastener sales, primarily via acquisitions.
Alcoa has invested more in the Fullerton plants than their past owners, according to Brown. This year the company is spending $7 million on equipment and $1 million to improve health and safety.
“From a company standpoint, they’re not afraid to spend money,” Brown said. “This is going to be a banner year.”
The bulk of the spending is going toward heavy machinery that’s three to four times as efficient as the old gear, Brown said.
The company spent $4 million last year, up from $2 million typically spent in the past, he said.
“The cycles times go from minutes to seconds in terms of how fast we can produce a part,” Brown said.
The company also is spending on more ergonomic equipment, noise control and other workplace issues. Doing so helps “manage down” workers’ compensation costs, Brown said.
China is a looming competitive threat for Alcoa and other U.S. fastener makers. Competition from China appears to have weakened lately, Brown said, though Alcoa did lose a contract to a Chinese fastener maker in the past.
“You worry about it,” he said of China. “You really have got to work to take the cost of our production and make it competitive.”
Alcoa and others have seen their costs for steel and other materials rise. Only some of the added costs were passed on, Brown said, leaving the rest to eat into profits. The price of steel alone was up 17% in the past year, he said.
Textron blamed higher steel prices for at least part of its $6 million net loss in its first quarter, versus a year-ago profit of $20 million. Sales for the first quarter were up 5% to $521 million.
For now Alcoa’s biggest challenge is finding workers to fill rising orders, Brown said.
Younger people don’t seek out manufacturing jobs like they did in the past, spurring demand for older workers who still know how to run technical machines. These people often are the highest paid on the shop floors at $20 to $25 per hour.
To entice some experienced workers, Alcoa is offering them $1,500 just to take a job. The company also is training younger workers.
Alcoa has held four job fairs this year, and is planning for another one later this summer.
Workers “are harder to find than they used to be,” Brown said.
