Metal Sleeves Roll Up As Profits For Family-Run Venture

Fatigue Technology Inc.

-- Employees: 110

-- Headquarters: 150 Andover Park West, Tukwila

-- Business: Manufactures air-driven puller guns and other tools and parts used in a special process to strengthen aircraft rivet holes.

-- Chairman: Burke Gibson

-- Sales: $12 million

-- Strategy: Expand application of hole strengthening process to autos, windmills, jet engines; develop new products linked to existing product line.

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When Burke Gibson acquired Fatigue Technology Inc. (FTI) in 1973, the company went by the low-tech sounding name of Industrial Wire and Metal Forming.

The company name befitted its products - springs, clips and snaps used in things such as ski boot racks and commercial fishing gear.

Gibson was intrigued by the innocuous-looking ``split sleeves'' the company, with 10 employees, then was producing under a small contract for The Boeing Co.

``They were difficult to make and we weren't making very many of 'em,'' Burke recalls. ``But we thought they had a great future.''

Burke was right.

The sleeves - which look like short metal straws of varying diameters, split down one side - were used in what was then a new process Boeing had developed for significantly strengthening aircraft fastener holes susceptible to cracking.

The process - called ``split-sleeve cold expansion,'' or ``cold working'' - involves pulling an oversized tool, fitted with a protective split sleeve, through a hole. This forceful expansion of the hole creates a high-strength zone around the hole.

Before long, Gibson began designing and mass-producing items to make the cold-working process more efficient, namely ``pulling guns'' powered by compressed air and an array of mandrels, the over-sizing tool that fits like a drill bit on the gun. In the meantime, he continued to refine production methods for the bread-and-butter split sleeves.

Business picked up when Boeing began cold-working rivet holes on used 727 jetliners, and when the military began using the process to repair and upgrade jet-fighter parts.

As the process gained wider acceptance in the aerospace industry, FTI won customers from among the airlines.

A boon came when Boeing called for cold-working wing parts in the original design of the 767 and 757 models introduced in the late 1970s. Later, Boeing introduced cold-working of wing parts on the 747-300 and 747-400 production line.

By 1980, Gibson had phased completely out of the wire-bending business and, so, changed the name of the company to Fatigue Technology Inc.

This year FTI is on track to reach record sales of $12 million. It has 110 employees in a sprawling modern manufacturing plant and research-and-testing laboratory in a former pharmaceutical warehouse across the street from the Southcenter J.C. Penney store.

The company, owned 95 percent by the Gibson family, has been profitable enough to expand steadily over the years without taking on debt. Three years of major capital improvements, for instance, will be capped this year with the installation of computer-controlled mills and lathes worth $750,000 - all of it paid for in cash.

The new equipment should boost productivity to the point where the company can continue to expand sales about 20 percent annually - an average it maintained through the late 1980s - while correspondingly increasing its work force by only 5 percent.

And the outlook for growth, even the conservative Gibson has to admit, is bright.

The company now specializes in manufacturing and selling complete cold-working tool sets. A typical set includes a puller gun, a compressed-air power unit, a set of mandrels and a storage cabinet.

Tool-set prices start at about $40,000. Metal sleeves, designed to be used once and discarded, are constantly in demand and sell for an average price of $1.50 each. So far, the company has delivered some 20 million sleeves.

A major contract to supply Airbus Industrie with tool sets and sleeves to cold-work wing parts on the new A-330 and A-340 jetliner models is expected to generate ``several million'' dollars in sales over the next few years, Gibson said.

And Gibson anticipates that the Boeing 777 will include the cold-working process in its original design, as happened with the 767 and 757.

Beyond that, two areas - new applications and new products - hold the most promise for the future, Gibson said.

FTI cold-working tools and supplies are being used to strengthen railroad ties in England and window frames aboard Washington state ferries. And the company is researching applications in automobiles, windmills and jet engines.

``We're not selling products as much as we're selling technology to solve a problem,'' Gibson said.

In the area of new products, FTI engineers are perfecting a process, called GromEx, that uses FTI pulling guns and mandrels to more securely insert metal grommets, which serve as fastener holes, in an array of composite materials.

``GromEx is still in the early development and research phase,'' said FTI Executive Manager Len Reid. ``There are so many composites that we need to test to find its limitations. But the potential for GromEx is extremely good as the aerospace industry uses more and more composites.''

A blockbuster new product - potentially bigger than GromEx, tool sets and split sleeves combined - is in the works and is scheduled to be introduced this fall.

``It's very highly proprietary, but I can tell you that what we're trying to do is keep all of our new systems using the same product line,'' Reid said. ``This could be far bigger than anything we've done so far. We may have to look at the possibility of licensing to help us in manufacturing and distribution.''

At 64, Gibson still affects a young man's enthusiasm about FTI's prospects, putting in long hours and six-day work weeks. Quick to point out that he is not an engineer, Gibson has a habit of asking Reid or one of his technical staff, ``Is that correct?'' after winging his way through a jargon-filled technical explanation.

Yet the former Coca-Cola truck driver and Rainier Beer salesman clearly has an innate sense of enterprise and the knack for hiring and nurturing team players.

Gibson went into business for himself in 1959, at age 33. Using his background in beverage sales, he and a partner began manufacturing point-of-purchase advertising displays. The partnership dissolved in the early 1960s.

Gibson then established Burke Gibson Inc. (BGI), a maker of paint- and stain-sample chips, a company for which he still serves as chairman. A few years ago, however, Gibson turned management of BGI over to the elder of his two sons, Scott. Under Scott Gibson, 29, BGI has grown from 10 to 50 employees, moved into a new plant, expanded overseas sales and is now doing about $2.5 million in annual sales.

With BGI no longer a day-to-day concern, the senior Gibson professes to be as content as he has ever been about the course FTI is on, especially since younger son, Bruce, has shown a desire and aptitude to take over FTI.

After earning a business economics degree at the University of California at Santa Barbara, Bruce Gibson, 28, briefly pursued a career in retail management, but returned to the family business four years ago.

``Working for him has its pluses and minuses,'' Bruce Gibson said. ``He's got high expectations of everyone who works for him. Obviously, it's a little higher for his sons.''

Last month, father promoted son to vice president of domestic sales and manufacturing.

``Things turned out much better than I ever dreamed,'' the father said. ``We've got good people, good teamwork and the teamwork just produces tremendous results.''

Strategies appears weekly in the Business Monday section of The Seattle Times.