Strict Guidelines, New Solutions Rule Defense Business

July 14, 2014
Distributors working with aerospace and defense-related industries see their products as part of the nation’s defense capabilities

Distributors selling to defense and aerospace industries are reasonably bullish about their business — both looking to last year and looking ahead to the rest of 2014.

“We have seen some growth this year,” said Katey Wise, national sales manager for Newark element14. “Some of our sweet spots are in the aerospace industry, which is good … We expect overall a better-than-average performance, compared to last year.”

Defense industries demand a variety of high-tech products and solutions that companies such as element14, which specialize in electronic components and related products, are focused on providing. The ongoing call for new solutions and strict adherence to federal guidelines makes selling to this sector a source of pride and constant innovation, Wise and others explain. “It is amazing how many different products these aerospace companies are making. It isn’t just airplanes,” she said. “They have a very diverse product line for the government. And it is all about the needs of the [Department of Defense]. It comes down to them being out on the front lines. [You might hear], ‘My backpack is too heavy. Can you make it lighter?’ or ‘We need better night goggles.’”

Regardless of which AD&M (aerospace, defense, and marine) products are being discussed, many contain various metals. Gold, copper, and titanium, among others, are crucial. And their availability and volatility in price have companies such as Newark element14 watching them carefully.

“Some of our sweet spots are in the aerospace industry, which is good … We expect overall a better-than-average performance, compared to last year.”  

“We do see over the years pricing increases … which will affect our wire and cable sales,” Wise explained. “So that does present a problem. But we do a really good job of trying to minimize that by … buying a large amount and having it in inventory. So that can sort of stabilize the prices. But we have seen some issues, especially with gold and copper.”

In addition to price concerns, the purchasing of these metals — especially when they are to be used for government and defense products — come under the rigidly enforced Federal Acquisition Regulations (FAR).

Rick Simonic is the distribution sales manager for TE Connectivity’s AD&M product lines. TE designs as well as manufactures an array of electronic components and connectors.

Simonic is responsible for TE Connectivity’s sales to and through its distribution channel in the Americas. Like Katey Wise at Newark element14, he says TE also operates under FAR — or “DFAR” as they are called when referring to defense-related metals.

“They make sure we are environmentally and socially responsible in terms of how we procure those materials,” Simonic said. “There are a lot of regulations, but frankly the majority of them are there for very good reasons. We absolutely have to adhere to them. There is no option.”

At Newark element14, Wise and her sales team are also careful to follow these regulations. In addition, there are some countries from which certain metals cannot be sourced.

“If you have metal that is melted or smelted in certain countries, you cannot sell it to the government,” Wise explained.

Counterfeiting of electronic components can also be a problem if companies are not vigilant about procuring products only from component manufacturers or their authorized distributors.

“We have to be cognizant of all those requirements,” Simonic explained. “We have to do everything we can to ensure we’re meeting all the requirements of the federal government and sovereign governments around the world. We don’t want to do business with entities that don’t adhere to the standard you would expect on a global basis.”

Lightweight Materials In Demand

Titanium is a metal that has grown in use in making aerospace and defense-related products.

Jeff Wise is the vice president of sales and marketing at Titanium Industries, a global distributor of titanium. The company “does everything from alloy steel to stainless steel to nickel-based alloys and titanium. Aerospace is roughly 40% of our business and is the largest single segment of our business,” he explained.

“In aerospace applications, the biggest driver overall is strength-to-weight ratio. You can increase your payload in any airframe by using titanium. Corrosion resistance, thermal expansion rates, and compatibility with carbon-graphite composites are another reason.”  

Titanium has a number of uses and applications throughout the aerospace industry for a variety of reasons.

“In aerospace applications, the biggest driver overall is strength-to-weight ratio,” Jeff Wise said. “You can increase your payload in any airframe by using titanium. Corrosion resistance, thermal expansion rates, and compatibility with carbon-graphite composites are another reason.”

Titanium lasts far longer than steel or most other metals in many applications, especially where seawater is involved — a strong selling point, he added. The corrosion resistance of titanium in seawater is superior to most other metals, often allowing for 40-year warranties.

“One of the ways we sell titanium is on a life-cycle basis. The selling point for titanium is life-cycle value,” he said. “It is something that will last in many applications. In addition to the life cycle, it is weight saving. So titanium has an opportunity to take more and more of the market share as requirements for safety and fuel efficiency increase.”

Any distributor or manufacturer takes professional pride in seeing a finished product performing well. It’s the nature of the supply-chain business. But in defense-aerospace industries, there seems to be an added enthusiasm.

“We don’t always know what goes into the end products,” Katey Wise explained. “But we know that it is at least going into the prototypes and that’s what these guys are making — the defense contractors. It is for the front lines, defending our country.”

And occasionally Katey Wise envisions herself on a different career path.

“[Sometimes] I think I would rather have been a fighter-jet pilot,” she laughed. “I get to go out there and see some of these products and then I wish I had been a pilot.”

To date, though, she’s never been up in one of those planes.

“[But] I have actually met some pilots that happened to be at the company when I was visiting. So I had the opportunity to have conversations with them and that was very interesting,” she said. “And I’ve seen some of those unmanned aircraft up close. And they are a lot bigger than they look on TV.”

Simonic agrees that seeing the finished product — be it a commercial jet or military fighter plane — is a source of pride.

“I have been in the business for 30 years but I’ve only been on this side of the business — the AD&M side — for the last six years,” Simonic said. “It is the most fascinating segment of business that I’ve ever been associated with, just because the nature of the products that we make and the nature of the products our customers make. It is awe-inspiring.”

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