Breaking Ranks

How one Long Island firm broke itself of its Pentagon dependency

 

It is one of the characteristics of any industry as cyclical as defense that periods of downturn are preceded with dire predictions about the future. And with good reason: companies, jobs, and the prosperity of entire regions of the country are often at stake. But like the forest fire that fertilizes the next crop of trees, the coming downturn in military contracting may generate new growth in other sectors of the economy. It may be a matter of military products and technology finding applications in nonmilitary business. Or it may simply reflect the reality that the talented and ambitious people who drive successful defense contractors will eventually find an outlet somewhere else.

Take Frisby Airborne Hydraulics Inc., for example. Frisby is a family-owned company on the south shore of Long Island, N.Y., that has made hydraulic components for all sorts of military aircraft dating back to World War II. Among its biggest customers have been Grumman Corp. and Fairchild Republic Co., and one of its most recent projects involved the Air Force's ill-fated T-46 trainer, which represented a potential contract of $1.3 million -- not insignificant for a company with sales last year of approximately $7 million.

Several years ago, however, as Grumman's share of the military market began to fall and domestic aircraft production slumped, the company began to look elsewhere for business. "It was a matter of survival," says vice-president Greg Frisby.

Even before the downturn, Frisby had grown disenchanted with defense work -- the constant audits, the bureaucratic overkill, and then the clincher, the proprietary-rights imbroglio. Spurred by declining sales, the company launched a campaign to reduce its dependence on defense work, from 95% in 1980 to roughly 60% today.

In its place, the 90-person shop has moved aggressively into commercial aviation, as it happened just as that industry has begun to pick up some steam. With its flexibility as a small shop, its relatively low overhead, and its high-quality engineering, Frisby decided it could launch a successful campaign to provide The Boeing Co. with a number of different parts. New engineers and technical people were hired to design a new engine reverse valve, a new landing gear component, and a new hydraulic system for the engine doors. Advertising and marketing plans were adjusted, and nwe salespeople were added who were familiar with Boeing's systems and purchasing agents. Now, the campaign has paid off handsomely: Frisby is supplying parts for vitually all of Boeing's fleet -- the 727, 737, 747, 757, and the 767. "We're all over Boeing aircraft," boasts Frisby, "and just about every other commercial airliner in the world."

As a result of this shift, Frisby has grown 15% a year for the past several years, and expects the trend to continue right through the coming defense industry downturn. "The way things are going, we couldn't be happier," says Frisby. But his optimism is tempered with an appropriate dose of reality. "Before, we were hostage to the swings in defense," he says, "and now we're hostage to the swings in the commercial sector."