Diversifying Keeps Aircraft Firm Aloft

Norman Wong wasn’t exactly an aerospace neophyte when he led an acquisition of Arvan Corp. in 1987.

Wong had spent 20 years as an engineering manager in the space and communications unit of Hughes Electronics Corp. And things went swimmingly in his early years at Gardena-based Arvan, with sales rising more than 15% annually and the number of workers growing from 50 to 75.

But he wasn’t prepared for the three-year slide that hit the aerospace industry in the early 1990s. When the commercial aircraft industry hit a low in 1991, demand for the aircraft control pulleys and electrical terminal blocks that Arvan makes dropped dramatically. The company laid off 30 people and had to dip into its reserves to keep operating.

Today, Wong is working aggressively to diversify Arvan’s product lines. Pulleys--which are used to control the wings, rudders and other parts of an airplane--used to account for more than half the company’s sales. Now they contribute less than a third.

The pulleys and terminal blocks, which anchor electrical connections, are custom-molded out of high-grade, super-strong plastics. Wong set out to find other products Arvan could make using the same machines and techniques.

The company first developed automotive parts, but found that profit margins were low and marketing costs high, said Ken Leung, Arvan’s vice president and a co-owner. After that, the company worked closely with customers to develop new products.

The most promising is a specialized electrical wire substitute known as a laminated bus bar. The bus bar is made out of thin copper sheets laminated together using the same compression techniques Arvan uses to make aircraft parts.

Like most small aerospace companies, Arvan counts giant firms such as McDonnell Douglas Corp., Boeing Co., Lockheed Martin Corp. and Northrop Grumman Corp. among its major customers. That’s been a source of comfort in the past--but now it makes diversification even more essential. McDonnell Douglas, for example, has said it plans to cut its supplier base from 42,000 companies to 8,000 in the next few years.

“If you’re not already an aerospace supplier, it’s tough to get in, and if you’re already in, it’s tough to stay in,” said Wong, who has boosted sales above pre-slump levels and now has more than 100 employees. “We all have to work smarter from here on out because the name of the game is elimination.”