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Entrepreneur Crafts Encore

James Downey is replicating the business model that made him one of Orange County’s wealthiest executives.

The cofounder of aptly named EnCore Aerospace LLC has the startup soaring with new business opportunities and a roster of established airline customers, including Southwest, Delta and American.

The company nearly doubled its space in June in a move from Irvine to a completely renovated 80,000-square-foot headquarters and production plant in Huntington Beach to meet increasing demand for galleys, closets, partitions, dividers and other stand-up compartments on commercial airplanes supplied by its EnCore Interiors manufacturing unit.

Meanwhile, the division’s 60,000-square-foot plant in Seal Beach is busy building integrated floor panels for all of Boeing Inc.’s B737 and B747 aircraft models set for production this year.

“It’s a pretty quick ramp-up,” said EnCore cofounder and Chief Executive Tom McFarland.

The floor-panel contract with the Chicago-based aerospace giant is valued at $20 million to $25 million annually.


Bullet-Proof Panels

EnCore is also working with Boeing to manufacture bullet-proof wall panels for airplane bathrooms that will be delivered next year in the test aircraft for the 737 MAX, which is scheduled to enter service in 2017.

“We will have a lot delivered to Boeing in the pipeline before that,” McFarland said.

The five- to seven-year contract is valued slightly less than the floor-panel deal.

EnCore will also supply Southwest Airlines with galleys for the 737 MAX and for retrofit 737s.

The expertise in bullet-proof wall paneling dates back to the work handled by Downey’s prior company, C&D Aerospace, which he built from the ground up and that retrofit cockpit doors of Boeing’s narrow-body, or single-aisle, planes following the Sept. 11 terrorist attacks.

“The opportunities aren’t that troublesome for us,” said McFarland, a former executive at C&D who was hired by Downey nearly 30 years ago as a young engineering graduate from the University of Notre Dame.

Downey, who keeps a low profile in OC and who the company said was unavailable for this story, sold C&D in 2005 to Zodiac SA in France for $600 million.

The sale accounts for the majority of his estimated $475 million in net worth.

The Huntington Beach-based company at the time generated about $400 million in annual revenue, employing about 4,000 in 15 locations around the world.

The sale included a five-year noncompete agreement for McFarland, who took the chief executive role at the renamed C&D Zodiac. Downey, who bided his time for a comeback, turned his attention to his Aliso Viejo-based family investment firm, Wave Equity Partners LLC, which manages and supports family investments and philanthropy.

“He was counting the days,” McFarland said.

The duo launched EnCore in 2011, setting up shop in Seal Beach and outfitting the facility with production equipment for aircraft interior work.

Two Buys

Two acquisitions that year quickly changed the company’s fortunes.

Sales at EnCore Composite Structures, which operates out of a 120,000-square-foot factory in Brea, have increased 30% in the past three years since Downey acquired Irvine-based Composites Unlimited Inc. for an undisclosed amount and London-based BAE Systems PLC’s composite structures line of business in Brea for $32.5 million. The unit is handling complex assemblies for Airbus’ A350 aircraft and the Bell Boeing V-22 Osprey, a military aircraft that fuses the speed of an airplane with the hovering capability of a helicopter.

The acquisition provided EnCore with an anchor customer in Southwest Airlines, as well a lengthy list of FAA approvals and Boeing certifications, which typically take years and deep resources to obtain.

“That was one of the main reasons that we did look into buying it,” director of operations Randy Newkirk said during a tour of the expansive manufacturing floor in Huntington Beach.

Large equipment buzzed constantly as workers handled precision panel cutting, bonding, trim work, subassembly, structure fitting, final assembly and inspection of numerous interior airplane compartments.

About 230 people handle new orders and repairs in two daily shifts here. It takes up to 30 days for an order to wind its way through the system before it’s shipped by FedEx ground to Boeing or airline customers.

“It’s a controlled environment,” said Newkirk, who spent 30 years at C&D before joining EnCore. “Unfortunately, if there’s an issue with an airplane, we have to able to trace all these materials back to the raw material.”

Advantages

EnCore has had a runway few startups in the aerospace industry can match: no capital concerns, a proven business model, decades of industry relationships, and a blueprint for growth.

“That’s why we’ve grown so fast,” McFarland said.

Indeed, he said the company’s on pace to hit $75 million in revenue this year and $100 million next year. It employs about 500 people in Seal Beach, Huntington Beach, Brea, and a small research development office in Aliso Viejo.

It appears Downey and McFarland’s encore has created the next chapter in C&D’s aerospace legacy.

“That’s what it is,” McFarland said. “I want to make the best company possible. I want it to be world-class.”

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