Heath Tecna Braces For Grimmer Downturn

KENT

In his 14 years as president of Heath Tecna Aerospace Co., Larry has guided the company through two other aerospace industry recessions.

But the current downturn, which began in late 1990, is longer and could be more severe than the others.

Heath Tecna, South King County's largest aerospace employer next to Boeing, expects sales to drop by possibly 15 percent next year from 1991's $129 million as jetliner production slumps at its biggest customers: Boeing, McDonnell Douglas and Airbus. The maker of fiberglass and composite-material parts may continue to cut its workforce through attrition, from its current 1,325 employees to less than 1,100 in two years.

Those jobs are not expected to return anytime soon.

"The amount of losses the world's airlines have sustained will take some time to recover, even in a rebounding economy," Kring says.

But hardship is driving long-term changes at the company that, along with the workforce reduction, will help it ride out the recession and beyond. Kring says he is "extremely confident" Heath Tecna will survive.

The changes include increased automation, a computerized system for tracking parts and production and worker-training and ambitious product-development programs. Heath Tecna makes parts such as nose cones, wing fairings and baggage compartments from fiberglass and composites and wants to apply its technology to nonaerospace products.

Kring says Heath Tecna will continue to focus on aerospace, but may have 3 to 5 percent of its sales outside the aerospace market by next year. He says Heath Tecna already has a contract with one company to develop a prototype part, but the project is under wraps.

Some of the Heath Tecna changes begun before the downturn should help as competition intensifies from companies such as Rohr Industries and BP Chemicals.

"We expect competition to be more fierce in the next couple of years," Kring says. "A number of people will be doing extraordinary things to keep their business viable."

Having a rich parent is also helping Heath Tecna, a subsidiary of Ciba-Geigy Corp., a diversified pharmaceutical and chemical company based in Switzerland. The relationship gives Heath Tecna financial stability that a smaller company might not have on its own, Kring says.

Kring is confident, but on the factory floor, some employees are worried.

Paul LeCroy, a technician monitoring the huge pressure cookers where composite parts are hardened, says,

"all the airlines seem to be cutting back."

In his five years at Heath Tecna, LeCroy watched others lose their jobs in late 1991 and early 1992 after McDonnell cut production of its MD-11 airliner. Earlier this month, 90 workers took a voluntary buy-out offer.

Instead of layoffs, Heath Tecna offered resigning workers $1,000 in severance for each year they worked at the company, with a cap of $5,000, plus accrued annual leave and sick pay. They were also given one month's health insurance coverage after they left. The company achieved the staff reduction it needed with the buy outs.

Karen Eichenlaub took the buy out. She had worked at the company for only a short time and feared she might be laid off or have to change shifts.

Now she will try to find an office job, but says she will miss her work at Heath Tecna. Eichenlaub and other workers who took the buy out know they will be hard pressed to find a replacement job that pays as much. The average union wage at Heath Tecna is about $8 an hour.

Not everyone is worried, though. Julie Szalay has worked at the company for 15 years and expects to retire from Heath Tecna when she is 62, 11 years from now.

Szalay's job is to lay long-fiberglass strips in a large, concave mold to make nose cones for Boeing 747's.

"I've never been laid off," she says confidently.

Automation and training are changing the work life of Heath Tecna's employees. A computertized system has been installed for cutting fiberglass and composite materials, a job now done by hand in a large room, mostly by women.

Displaced cutters are being moved to different jobs, while others are being trained to operate the automated system. Heath Tecna will spend $400,000 next year on worker training.

"If we have to work with a smaller workforce, they have to be better trained and more versatile," says Karen White, head of human resources.

White expects the company to be operating at its reduced size for some time.

"The jobs will come back at some point because airplanes wear out," she says. "But I think we're looking at five or six years before we see an uptick."