In Sikorsky deal, cautious local optimism

Local defense contractors are hoping for an uptick in business from the acquisition of Sikorsky Aircraft by Lockheed Martin, maker of the next-gen F-35 fighter.

By GREGORY ZELLER // Long Island aerospace manufacturers are reassessing their markets following word of Lockheed Martin’s $9 billion acquisition of Sikorsky Aircraft, but none expect the megadeal to hurt existing business. Some Island parts-makers, in fact, are already anticipating an uptick.

The deal, announced earlier this week, is pending regulatory approvals and is expected to close late this year or in early 2016. The prospect of a giant Connecticut-based customer with long ties to regional suppliers being acquired by an even bigger firm with exclusively Southern manufacturing operations – sprinkled throughout Florida, Georgia, Mississippi, South Carolina and Texas – might understandably give Long Island producers pause.

Instead, managers at some of the Island’s largest aerospace manufacturers – including several intimately familiar with Lockheed Martin and Sikorsky – see the fuselage as half-full.

“We think it’s going to be a plus,” Nazzareno Palmerini, director of programs for CPI Aerostructures, told Innovate LI. “Having Lockheed team with Sikorsky creates all-new options, and hopefully it will grow business for us.”

Easing the Edgewood-based manufacturer’s worries is the fact it has existing relationships with both companies in the blockbuster acquisition. An active Sikorsky subcontractor, CPI Aero has completed several Lockheed Martin projects in the past – and recently inked a $10 million award for lock assemblies on the F-35, Lockheed’s multifaceted stealth fighter jet.

Another regional manufacturer with ties to both Lockheed Martin and Sikorsky is Ronkonkoma’s East/West Industries, which produces aircraft seats, life-support systems and ground-support equipment for high-performance military aircraft. A Lockheed supplier since the 1980s and Sikorsky supplier since the 1990s, East/West “doesn’t anticipate any negative effects in the short run” following the acquisition, according to Vice President of Business Development Joe Spinosa.

“The programs we’re in (at Lockheed Martin and Sikorsky) are both legacy programs and new-build programs,” Spinosa said. “I think Lockheed is going to go in there and see what kind of economies they can shape with their management system, and in the long run they may leverage their abilities in regards to their supplier network. But in the short term, the programs we’re in are good programs.”

The fact that CPI Aerostructures and East/West Industries have extensive relationships with both companies adds an extra layer of confidence, particularly since the companies have a long history of collaboration: Sikorsky already partners with Lockheed Martin on combat rescue choppers, U.S. Navy airships and the VH-92 Presidential Helicopter.

But that additional swagger may be missing today, Spinosa noted, from regional suppliers used to dealing with one aerospace giant or the other.

“I think they’d have to look a little more closely, if they were only a single supplier instead of both,” he said. “It also depends on the type of items you supply. If you were supplying more commodity-type items – fasteners, and not specialty designs – you’d have to be more concerned.

“But items that are more custom-designed are less of a concern,” Spinosa added. “I don’t think they’re looking to disrupt the supply chain, just looking to leverage economies of scale within their existing relationships.”

Hauppauge-based Air Industries Group – an umbrella of machine shops, metallurgists, welders, aerostructure specialists and electronic assembly experts throughout Long Island and Connecticut – has had very little interaction with Lockheed Martin, but boasts a four-decade history as a Sikorsky supplier. The merger certainly caught the attention of Gary Settoducato, Air Industries veep for business development, but like other Island-based manufacturers, Air Industries Group isn’t looking for the ejector seat just yet.

“Right now, we don’t see it affecting anything,” Settoducato said. “If anything, we look forward to continuing our good relationship with Sikorsky and expanding our relationship with Lockheed.”

Air Industries Group – whose Long Island companies include tool and metallurgy shops in Hauppauge, Bay Shore and West Babylon – plans to continue providing machine and sheet-metal assemblies to its longtime customer. And while Settoducato stressed that he’s “not aware of Sikorsky consciously looking to get out of this area,” he did note one post-acquisition concern troubling his conglomerate.

“Our main concern is whether jobs will stay in this region,” he said.

It is, at worst, a minor worry: Not only has Sikorsky “always been loyal to their suppliers and to their connectivity with the Long Island region,” according to Settoducato, but as CPI Aerostructures’ Palmerini noted, aircraft assembly is no longer a regional industry.

“They do a lot of sourcing in other regions,” Palmerini said. “It’s not like the old days where if you were in Texas, you only worked with companies in Texas. It’s an international business now.”