Pride and a Boeing Contract Buoy Machine Shop
It took six hours to carve the dull-gray, 250-pound slab into a gleaming, intricate aluminum beam weighing less than 10 pounds.
But the piece isn’t an artist’s work bound for the Getty Museum. It’s one of thousands of wing spars that Aero Machining in Garden Grove is churning out for Boeing Co. under a new contract for its behemoth C-17 Air Force transport plane.
“When you take a block of aluminum, or any raw material, and you form and shape it, it looks like a sculpture. Except it was done with a milling machine,” said Aero co-owner Mike Cabral.
The contract, the largest ever for the company, will bring Aero more than $10.9 million over six years, contributing significantly to the firm’s explosive sales growth. The company will produce hundreds of parts for each plane under the contract.
Aero Machining is one of the beneficiaries of aerospace giant Boeing’s practice of rewarding contractors who have done good work in the past.
Aero had submitted the winning bid for the C-17 job every year since 1995. After the company won the job again last year, Boeing offered to lengthen the contract to six years, according to a spokesman for the aerospace company.
Aero works hard to control costs but is willing to upgrade equipment rather than hanging on to older machinery that might save money in the near term, said Larry Whitley, Boeing’s communications manager in Long Beach.
“Any company that’s trying to move ahead has got to stay innovative and aggressive as they move through the entrepreneurial stage,” Whitley said. “It’s critical for young businesses to stay focused.”
Cabral, a third-generation machinist, views the Boeing contract as an endorsement of the hard work that he and his brother put into their trade for decades, starting on the assembly line.
“I love the trade,” he said. “You have a passion for it . . . like an artist.”
For years, Cabral, 37, and brother Tony, 36, worked in a variety of shops. Then they decided to go into business for themselves.
“After a while, I realized what I was doing was making the owners of these companies very wealthy men. Why not do it for myself?” Mike Cabral said.
Their initial venture proved costly. The brothers discovered that they had to take a pay cut in a trade where machinists can make close to $100,000, counting overtime.
“It was tough to get started,” Mike Cabral said. In fact, the brothers sold their first shop in 1989 during an aerospace downturn, remaining on the sidelines for a few years.
They opened another shop in 1993, then turned to Aero Machining to help out on a contract because the Cabrals didn’t have the equipment to handle it themselves. Then-owners Paul and Kirk Nguyen invited the brothers to join the business as partners. The Cabrals bought them out in 1997, assuming the company’s accrued debt and paying off the rest over time, in a deal totaling about $400,000, Tony Cabral said.
The Nguyens had an amicable falling-out with the Cabrals over the newcomers’ aggressive management style. The two sides are in mediation to resolve their differences, but have maintained a business relationship. In fact, the Cabrals have referred some Boeing business to a new company started by the Nguyens, Pacific Machine in Garden Grove.
The first year after the Cabrals joined Aero--Mike in charge of engineering and sales, Tony of machining--Aero did $500,000 worth of business. The next year, sales surged to $970,000, then $2.5 million. Last year sales hit about $5.5 million.
“One-hundred percent growth every year--that’s not bad,” Mike Cabral said.
Boeing accounts for 90% of the company’s business. Aero now produces 260 different parts for the huge C-17 cargo jet.
It can be risky for companies to rely so heavily on a single customer, says John Rooney, president of the Valley Economic Development Center.
“Obviously, if you lose your account, you’re out of business,” he said. “Boeing is a good company to have, though. They really are cautious in the suppliers they choose. They try to build a relationship with them.”
Sometimes, Rooney said, large customers flood suppliers with so much business that they can’t accept other contracts, then play hardball in future negotiations when the small company has nowhere else to turn for income.
“Before you know it, you’re working on contracts that aren’t profitable,” Rooney said. “The key for [Aero] is not to get complacent, and to aggressively pursue other contracts.”
But Mike Cabral said he’s not concerned, noting that the Boeing contract is for several years. In the meantime, Aero is working to win business from Boeing archrival Airbus Industrie.
“We’ll be fine,” he said. “There’s plenty of work out there.”
Boeing announced recently that it will slash commercial jetliner production and cut as many as 53,000 jobs over the next two years, but Aero Machining’s contract should be secure. The C-17 cargo plane is being built under a military contract.
Mike Cabral says Aero operates on the theory that it is easier to keep its customers happy when the company’s 30 workers are happy.
The owners expect employees to work long hours, if necessary, to get the job done. But the workers can count on receiving various perks in return.
When a recent production glitch threatened to delay delivery of a crucial part, for example, Aero workers logged 80-hour weeks to finish the job on time. When the work was done, the Cabrals gave employees bonuses and time off with pay.
Mike Cabral has taken others on weekend jaunts to Las Vegas and bought them home computers.
“As long as I get the parts to my customer, I feel like it’s a fair exchange,” he said.
It’s a good strategy, particularly these days when unemployment is down and skilled workers are in high demand, said Edward Lawler, professor of management and organization at USC.
Such ingenuity and aggressiveness has helped a growing number of small and minority-owned businesses like Aero win an increasing share of defense contracts, said Tim Foreman, assistant deputy director in the Defense Department’s Office of Small and Disadvantaged Business.
“Small business is very successful at bringing innovation to the marketplace,” he said.
Minority-owned companies are among the fastest-growing segments of defense subcontractors, capturing 5.6% of all contracts awarded in 1997, up from just 1.9% a decade earlier.
Mike Cabral is proud of his family’s legacy in the machining business, recalling how his grandfather, Jesus Cabral, burnished parts for locomotives in Chihuahua, Mexico, at the turn of the century.
“I don’t think my grandfather ever worked behind a desk,” Cabral said. “He would have loved to have run his own business, but I don’t think the opportunities were there for him.”
Cabral bristles at the idea that his ethnicity has played any role in advancing his company.
“What matters is a supplier who always delivers on time,” he said. “Regardless or your ethnic background, if you don’t produce a quality product, those doors aren’t going to be open.”
