Furnaces International Editor Sue Tyler (ST) recently captured an hour of Armand F Lauzon, Jr's (AL) time to interview him about the new Firth Rixson Ltd. In 2003, Mr Lauzon became Chief Executive Officer of Firth Rixson Ltd when The Carlyle Group bought Firth Rixson, plc and merged it with US-based Forged Metals, Inc

ST: Mr Lauzon, please give our readers a little background about yourself.
AL: I earned a Bachelor of Science degree from the University of Massachusetts and an MBA from the University of New Haven. I have 25 years' experience, primarily in metalworking companies. Prior to joining Firth Rixson, I was a Senior Vice President of Precision Castparts Corporation.

Armand Lauzon

ST: Please tell us a bit more about how Firth Rixson Ltd came into being.
AL: Firth Rixson Ltd was formed when the two separate companies were brought together in February 2003. One was Firth Rixson, plc, a publicly traded company headquartered in Sheffield, England, which The Carlyle Group had then acquired. The other was Forged Metals, Inc, a family-owned business based in Fontana, California, which Carlyle had acquired earlier.

ST: What type of forging company is Firth Rixson and what kind of customers does it serve?
AL: Firth Rixson is a company with 16 worldwide locations, approximately 1,800 employees, a diverse offering of products and an extensive number of global customers. Aerospace is our largest single market and we serve most of the major OEMs either directly or indirectly through numerous aerospace supply chains. Other markets we serve are industrial gas turbines, off road and transportation, energy, railroads and petrochemical. Our business can be broken into three segments, the first being seamless rolled rings, the second being general industrial forgings and the third metals.

Firth Rixson can produce large, complex, near-net shapes in its ring mills in the UK and USA

ST: What were the company's turnover and profits for the last financial year?
AL: After the company was acquired, it reverted to a privately held entity from a publicly traded one. In the present circumstances, we do not disclose company financial information. However, I can share with you that sales for the new Firth Rixson have grown in excess of 30% since February 2003 compared to the previous 24-month period, that we have major investments under way in China and that we are on an aggressive acquisition path. We celebrated the completion of our second year in February and the changes we have made have been nothing short of metamorphic.

ST: Let's take those points one at a time. To what do you attribute the company's growth in sales?
AL: That question calls for a multi-part answer. First, we are growing revenues internally by increasing our market share on existing business. The leaders at our facilities have efforts under way to implement best practices, lean thinking and Six Sigma tools to improve our competitiveness. The improvements generated by these efforts are helping us maximise opportunities to grow the business. Second, aerospace and other industry segments are emerging strongly from the 2001 economic slump. We have strategically positioned ourselves to take advantage of improving conditions in aerospace, as well as in multiple other industry segments. Third, we are investing selectively in the business where market conditions warrant such investments. These investments may be made in existing facilities, new acquisitions or in China.

Firth Rixson forges seamless, rolled rings in a range of diameters, face heights and contoured shapes

ST: Tell us about your investments in China.
AL: We are building a wholly owned subsidiary in Suzhou, about 75 miles southwest of Shanghai. The facility is named Firth Rixson Aerospace Components Co, Ltd. It will be housed in a 50,000ft2 facility and will make seamless rolled rings, as well as provide heat treatment and non-destructive testing for the aerospace market. Initial production will be sold in China and the Asian region. Eventually this operation will be selling products around the world. 

ST: You spoke of acquisitions. Firth Rixson recently announced the purchase of Schlosser Forge in California. What can you tell as about that deal?
AL: We acquired Schlosser Forge Company in October of 2004. Schlosser specialises in forging seamless rolled rings, primarily for aerospace applications. This acquisition is really an excellent strategic fit for us because it expands our technology and product-size range. For this reason, Schlosser gives Firth Rixson the resources to meet a broader range of aerospace customer requirements, particularly in the area of complex configurations. Thanks to the Schlosser acquisition, the company is now in a better position to compete in specialised segments of the seamless ring industry. Meanwhile, we continue to evaluate additional targets. We are looking for acquisitions that can provide us with growth opportunities, as well as the benefit of synergies with our other operations, strategic fit in the many markets we serve and competitive enhancements versus other suppliers around the world. What is driving our effort is the tremendous opportunity we see for a first-rate forging company that is able to operate effectively anywhere in the world. Our plan is to define that forging company over the months and years ahead through investments, acquisitions and divestitures that strengthen Firth Rixson's global offering. Major customers support our vision and are encouraging us to proceed.

ST: Tell us a bit about your vision for the new Firth Rixson. How does the company's business philosophy align with current conditions in the global marketplace?
AL: Our approach is actually quite simple. One, we need to meet the challenges of advancing global competition. Two, we need to work closely with our customers to meet their requirements, which include offset manufacturing capability. Three, we need to implement a technical game-plan that can support co-located manufacturing.  The forging industry provides a critical process for multiple supply chains. Yet many suppliers of forged products have not modernised as fast as they might nor have they adapted to the new business conditions being shaped by changing markets. In this environment, our approach is to do what it takes to move quickly where customers will reward us and deliver products faster than others are able to. We are getting better at executing this approach every day.

The company supplies ingots, billets and barstock to foundry and forging customers around the world

ST:  As CEO, what are the principles you follow to help you succeed at your tasks?
AL: When I interview young professionals for possible employment, I always tell them there are a few principles they must follow to be successful. They need to learn how to use every last bit of their intelligence when doing their job. They need to be willing to work hard and put in the necessary hours. Lastly, they need to learn how to make luck for themselves. To this day, I still follow these principles and work on the right things.

ST: What, specifically, are your goals?
AL: Ultimately, our goal is to grow the business in a profitable manner, aligned with customer requirements. To accomplish this we must stay in step with our customers and work hard to develop a human capital plan. There are a number of things we are doing that will build momentum in this direction. We have hired Sue Mullen as Group Vice President of Human Resources.  Sue's job will be to establish a Human Resource blueprint that can be overlaid throughout the company with a common and consistent approach to the development of our employees. One example of what I mean by common approach is variable pay, which creates opportunities for employees to earn bonuses. We have successfully rolled out bonus plans at three of our locations with outstanding results. Implementing variable pay across the remaining 13 facilities is a key ingredient in our plan to reward and educate employees.

A specialist in the manufacture of seamless, rolled rings, primarly for aerospace applications

ST: We hear continuously how much pressure is being put on forging and casting operations by competitors and demanding customers.  In this era of globalisation, how do you feel the casting and forging industries are faring? Are they in good enough shape to make the improvements you envision?
AL: First of all, cost pressures will never go away. In aerospace, they come from the top of the supply chain. They also come from competition and from the metal markets, to name a few. In the face of this pressure, every company must maintain a responsive, accurate system that provides visibility of financial performance. Such a system helps management steer the enterprise through the market's cost-reduction demands. Having a good financial system enables a company know its true costs and thus to participate fully in growing markets, such as Asia, which projects a massive need for new aircraft. The OEMs will be competing fiercely for a share in this market. As a supplier, we have an obligation to support our customers by developing forging capabilities in this part of the world. The smaller companies that do not have good financial systems or the capital to expand into other regions are vulnerable to global change and are likely to be consolidated into larger entities that do have solid financial management and capital reserves. Smaller companies are also hurt by rising metal prices, which are a significant portion of the forging cost structure. The consolidation of forging companies also consolidates metal purchasing activity, which enhances the buying power of purchasing departments as they become larger. In the face of globalisation, the companies that will fare well are those with good financial systems, the ability to grow and the willingness to commit to supporting customers wherever they go.

Firth Rixson supplies rings and forgings for Pratt & Whitney Canada PW10F engines, which power the new Eclipse 500, the world's first VLJ (Very Light Jet) now entering full production

ST: How would you describe your competitive strategy?
AL: Externally, stay tuned-in to our customers' wants and needs and have a solid working knowledge of the competition. Internally, continue to reduce cycle times and operating expense, while closely monitoring working-capital metrics to support our growing operations.

ST: What are your plans for the future regarding Firth Rixson's UK operations?
AL: We have an enormously experienced workforce and strong equipment base in the UK. We need to build on these assets to strengthen the competitiveness of our UK operations. As I mentioned earlier, introducing variable-based pay is the approach we feel will align the work force with the company's business objectives. It works well in operations in other countries. In the UK, we have the knowledge, the tools and the people; the next step is the installation of a reward structure that gives employees the incentive to make needed changes.

ST: China is on everyone's mind these days. Tell us more about why you see China as an opportunity while so many others see it as a threat.
AL: The simple answer is that China is a huge market and there is an appetite there for improvement. For the major OEMs that want to participate in this market, building relationships within China is vital. By investing now to establish a presence as the first UK/US-based seamless-ring-roll manufacturer in China, we are offering our aerospace OEM customers a key link in their Chinese-based supply chain for serving Chinese and regional end-users.

ST: What are your plans for the company in the foreseeable future?
AL: First, I'll reiterate our most important task: the development of human capital. To meet our business goals, we've simply got to have the best people. We won't win our competitions if we don't have a top team. To that end, we are going to assemble the team, then educate and reward its members. This will help us achieve our second goal, alignment with our customers. Lastly, we remain on an acquisition path and are actively evaluating companies that would strategically fit into our portfolio.

ST: Where do you see the company in five years' time?
AL: I see a larger and more efficient operation with a much deeper technical bench.

Firth Rixson Forgings Ltd - Mike Alexander, Regional Sales Manager, Meadowhall Road, Sheffield S9 1HD, UK. Tel: +44 (0) 114 219 3112  malexander@firthrixson.com