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Local firms seek Competitive Edge in aerospace industry

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Argus Industries president and CEO Mike Easton says his company is always trying to gain an edge on the competition.

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Argus Industries president and CEO Mike Easton says his company is always trying to gain an edge on the competition.

Mike Easton's goal is to turn Argus Industries into a world-class manufacturer, supplying rubber and rubber-moulded parts to original-equipment manufacturers -- particularly in the aerospace industry.

He knows "world-class" is a moving target -- "as soon as you think you're there, it's changed" -- but the company has a plan and it's sticking to it thanks to a program initiated a few years ago by the Manitoba Aerospace Human Resources Council (MAHRC).

"We have been on a world-class journey for a while," Easton said. "We're always trying to figure out how to get an edge."

The MAHRC program is appropriately called Competitive Edge.

Argus is one of five small- and medium-size businesses in Winnipeg taking part in the program that leads companies through a detailed course in benchmarking 11 elements of their business against the best in the business.

It's an involved and complicated process with no obvious point at which participants can say "mission accomplished."

But according to several industry experts at the two-day 2013 Western Aerospace Expo in Winnipeg this week, it's exactly the kind of journey lower-tier suppliers need to take to protect their positions in the globally expanding aerospace industry supply chain.

Martin Vezina, a national leader in government incentives and the aerospace and defence industry sector with Deloitte & Touche LLP, has helped produce an industry outlook document. Among other things, the report makes clear investment in the aerospace industry is growing much faster in Mexico, China, Russia and Brazil and that Canada's ability to maintain its position as the country with the fifth-largest aerospace industry is not guaranteed.

He said the large aerospace-equipment manufacturers are expanding their supply chains, relying on more parts suppliers from around the world. Also, there are emerging commercial plane manufacturers in Russia, China, India and Japan that are creating brand-new supply chains Canadian suppliers can take advantage of if they are prepared.

"Competition in the lower tiers is becoming fierce," Vezina said, noting it's in developing countries such as Mexico, Brazil, Russia and China where aerospace-industry activity is growing the most.

"Canada used to have a competitive advantage because of the lower dollar," Vezina said. "Now Mexico competes on the lower tier of the supply chain. Those lower-tier suppliers in Canada need to move up the supply chain."

That's exactly what they're trying to do at Argus and at Cormer Industries, Enduron Custom Inc., Standard Manufacturers Services Ltd. and MicroPilot -- the other companies participating in MAHRC's Competitive Edge program.

Manitoba's aerospace industry is the largest in Western Canada and third largest in the country behind Quebec and Ontario. It's characterized by three large players -- Boeing, StandardAero and Magellan Aerospace's Bristol Aerospace. (Aveos used to be the fourth large player before it went into receivership and closed last year.)

StandardAero does engine maintenance, repair and overhaul and Bristol and Boeing in Winnipeg would be characterized as tier II suppliers. Their presence in Winnipeg provides significant economic spinoffs but they do not do much business with lower-level suppliers in Manitoba.

That's partly because of the exacting standards and tight regulatory requirements in the aerospace industry.

"Those suppliers need to be able to demonstrate that they have the systems in place, the ability to deliver on time and with the required quality," said Wendell Wiebe, the executive director of MAHRC.

Not only that, he said they also have to demonstrate to customers from around the world they can make money on the order and are not just low-balling a price. They have to be able to show what they are doing is sustainable.

But because of the global competitive environment, they have to provide more value-added products and not just low-end parts those Mexican suppliers can do just as well but at a lower cost.

Since Easton joined the family business in 1997, it's more than doubled its workforce to 80 people. Easton is passionate about transforming the company and said about four years into the Competitive Edge program he's now confident about bringing in big-name potential customers in the demanding aerospace and defence industries.

For instance, Argus recently started doing some work for the Canadian division of submarine manufacturer, Babcock International Group.

"We're ready now," Easton said. "When we do go put ourselves in front of a world-class company like Boeing or Rolls Royce or Airbus, we will have something to show them."

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition May 8, 2013 B4

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