Milwaukee-based Ladish Co. marked its 100th anniversary this year, and at the company’s Centennial Dinner on September 14 contributing editor Wallace D. Huskonen, spoke with Kerry Woody, Ladish’s president and CEO for the past eight years. The conversation covered his thoughts and opinions on the company’s past, present, and future.
Forging: Congratulations on achieving a 100-year milestone. How would you sum up Ladish’s first century, and how do you describe its place in the forging industry today?
Woody: We consider the first hundred years a resounding success. We have withstood the inevitable economic swings, wars, the Depression, and business highs and lows. The foundation of our success began with Herman Ladish’s vision to establish a drop- and steam-hammered forgings operation. In a short time, his original vision expanded into national aspirations.
This enterprise came into being about the same time the automotive industry was born. To support the automotive industry, Ladish specialized in crank shafts, connecting rods, gear blanks and other automotive components. The company grew with the automotive industry.
Then, around 1935, Ladish started making propellers for aerospace customers. That was our first foray into the suddenly growing aerospace industry, 15 years before the jet age began.
Today Ladish forges many of the most advanced alloys known to man for the hot sections of gas turbine jet engines, while retaining a variety of the general industrial forging work that has long been a part of our heritage — for example, very large, complex components in off-highway vehicles and construction equipment.
Ladish has become a critical supplier of advanced components to jet-engine, aerospace, and industrial manufacturers. In our estimation, we are the second-largest supplier of forged and cast metal components to the domestic aerospace industry. However, we are also a global supplier, with domestic and international sales fairly evenly balanced. Ladish is genuinely “embedded” in the aerospace industry. It is not an exaggeration to say that virtually every aircraft and commercial transport produced in the western world is flying with Ladish parts.
Forging: What is the current state of Ladish’s business?
Woody: Business is good. We enjoyed a 25% sales increase in the second quarter of 2005 compared to the same period a year ago. This is due to a number of factors. First, there is the continuing improvement of the aerospace industry and the growing demand of the industrial market. Thanks to increased sales volumes and a good product mix coupled with cost improvements, our operations improved in the second quarter of 2005. Gross margins increased 40%, compared to year-ago levels.
I think it’s important to emphasize our focus on best practices and continuous improvement. We have ongoing lean initiatives that concentrate on cutting cycle time, eliminating waste, and improving flexibility and responsiveness. We were not resting at the oars waiting for the tide to rise and lift our boat; we’re rowing hard to get better during down cycles and up cycles.
Forging: Do you expect the business climate to remain positive?
Woody: I’m optimistic about the aerospace recovery. I think the global economy will sustain it for some time. Our backlog continues to grow. For example, we hit $377 million at the end of the second quarter of 2005, versus $239 million at the same time a year earlier. That’s a great jump.
As the recovery continues, we’ll be looking for opportunities to capitalize on this upturn to grow, both organically and through acquisitions. All three operating units of Ladish are experiencing an upturn in orders and profitability. The fact that we have an advanced forging operation, a titanium investment casting operation, and a precision machine shop in our portfolio gives us many ways to serve customers and create synergies across our business base.
Forging: Do you see the current market, with pent-up demand that has been building for three years, to remain strong for the next, say, three to five years?
Woody: As I said, I’m optimistic. It’s not only that the market is going up; we’re also getting better. We know from experience that aerospace is a cyclical market; demand will soften at some point. But our commitment to getting better won’t soften. It’s something we have complete control over.
What I’d like to get across is that, good markets or bad, Ladish has always been here and is always going to be here — in part because of our focus on always getting better. Crossing our 100-year milestone with the momentum we have now demonstrates, I hope, that we’ve learned a thing or two about working our way through the ups and downs of the global aerospace marketplace.
Forging: Let’s take a look at the future. What is Ladish doing to keep pace with technological and competitive pressures so it will be successful in the years ahead?
Woody: Ladish has a cluster of unique resources and capabilities, patented processes, and numerous high-tech initiatives underway. We need these initiatives to stay in step with customers, who are developing ever-better products, and who depend on component suppliers that can satisfy their design advances and meet their performance expectations. Responding to that technical challenge keeps us on the cutting edge in our areas of expertise and also keeps us ahead of our competition in areas that matter to customers. We think our focus on technical advances and continuous improvements in operational effectiveness will keep us in the game.
Forging: But, don’t customers often need more than technology?
Woody: As I mentioned, we have a number of unique processes we offer customers. That allows us to be a one-stop shop in critical areas, such as new product development. We have engineering, modeling, die manufacturing, and other vertically integrated capabilities that make us a self-reliant enterprise. We can assist customers going from first steps to finished parts on a new program. Typically, this cuts time-to-market and costs significantly.
Forging: Are customers benefiting from your initiatives and improvements?
Woody: Most definitely. In aero-engines, our largest category of business, customers have ambitious performance objectives for their new engines. For this reason, they expect more from the parts they buy. They expect these parts for new engines to run in harsher environments and at higher temperatures. Having the technical and human resources to respond to these expectations is the key to the future of our business. Fortunately, we’ve been stepping up to meet these kinds of challenges for decades and customers see us as the kind of company that will continue to be able to take on and solve their tough challenges.
Forging: Tell us a few of the things you’ve learned that help the company handle business cycles.
Woody: I think it starts with a strong sense of identity as a company, which causes us to do certain things and avoid other things. We have unique equipment and capabilities that are designed to do certain things better than anyone else. When there is demand for our services, we do well. When the demand drops, we have to cope with that reduced demand. We cope by concentrating on getting even better at what we do, not by cutting prices to grab a share of work where we are not sustainably competitive. We focus on identifying and developing our core competencies. Irrespective of the type of cycle we were in, we study our opportunities and make investments.
Our patented Supercooler, which allows us to manage cooling rates in different areas of the same component, and our drop-floor furnace for heat-treating aluminum rings, were investments that involved years of study and implementation. We made those investments independent of business cycles because we saw that the fit between these capital expenditures and the future needs of the market was right for our business. We know we need to be flexible so we’ve cultivated a willingness to change whenever we determine that change is needed.
Forging: Technologies such as the Supercooler are well established now. Are you working on any new technologies?
Woody: Absolutely! We are always working on innovations and new capabilities-particularly those that will allow us to step up to challenges in the next generation of aerospace engines. The alternative is stagnation.
Today, for example, we’re working on such technical advances as neural-network modeling and advanced imaging tools. In the area of metallurgy, we’re looking at a new nickel-base alloy with properties between 718 and Waspaloy, and a new high-strength titanium alloy.
Forging: Are you doing all this developmental work on your own?
Woody: Some, but not all of it. We work with customers and suppliers extensively. In fact, some of our most effective work comes throught collaborative partnering with suppliers and OEMs. Customers know we are approachable and responsive when they face a technical challenge. After all, that’s one of our key differentiators. If customers have a design that pushes the performance envelope, they’ll come to us to see what we can do. This reputation for being approachable and responding with innovative solutions is, I think, the hallmark of Ladish and one of our recognized assets.
Forging: Are there other valuable assets?
Woody: Without question, it’s our people. They are our single most valuable asset, because without a motivated workforce a company cannot compete.
We also value our reputation for handling big components. Customers come to Ladish when they need something extremely big. We have some of the largest and most powerful pieces of forging equipment you can find, such as our isothermal press and our No.85 counterblow hammer, both the largest of their type in the world. So our equipment is another valuable asset, because it allows us to make things for customers that they simply cannot have manufactured anywhere else.
Forging: Half of your sales are to international customers, and Ladish is making its first international acquisition. What can you tell us about that?
Woody: We announced earlier this year, we have entered into an agreement with Huta Stalowa Wola to acquire its forging subsidiary HSW-Zaklad Kuznia Matrycowa — we call it ZKM, for short. The forge shop is located in Stalowa Wola, Poland, in the southeastern part of the country. Right now ZKM produces industrial forgings in Poland and sells them throughout Europe. Annual revenues are $34 to 36 million.
For a number of years, we have worked with ZKM to supply industrial forgings for certain of our U.S. customers, and we are excited about the prospect of making ZKM a part of the Ladish family of metalworking companies.
Forging: What can you tell us about ZKM operations?
Woody: It’s an impressive forge shop. The operation has the kind of experienced personnel, production equipment, and cost structure that can drive significant growth. The acquisition will give us an opportunity to establish a manufacturing base in the European Union. ZKM will enable us to expand our participation in international industrial markets and, at some point in the future, to make additional inroads into international aerospace markets with a highly cost-effective forger.
Forging: Let’s talk some more about Ladish. What specific characteristics about the company account for its success in your view?
Woody: The fundamental characteristic of Ladish, in my opinion, is that we are driven to do things right. We’re a company of engineers, and their principled and practical approach is just part of our “organizational DNA.”
Also, we deal with the world’s best companies. So we’d better do it right, since we work with the world’s leading high-tech OEMs, and doing things right is the only way to retain their confidence.
Looking in the other direction, we also deal with the world’s best suppliers. If you stand back and look at our supply chains, we buy the most advanced material in the world, and use it to forge the most advanced components for aerospace and other applications.
We make critical parts. So doing it absolutely right is the only solution. When you do that, the people who work in your company earn a valued place in one of the world’s important supply chains.
Forging: Are you saying “Ladish Company” is synonymous with “Ladish employees”?
Woody: Yes, it is. You can’t have one without the other. We have deep roots in the Midwest, which has a strong work ethic. Generations of Midwesterners have worked at Ladish. It’s not uncommon for two generations to be on the payroll at one time; we’ve even had three on the payroll at the same time. At our anniversary picnic more than 3,000 employees, retirees, and their family members came to celebrate, so our impact over our history on the surrounding communities has been significant.
When these people come to work everyday, they come suited up to compete and to win. I think our people know how much they’ve contributed to building the U.S. industrial base. They see the products that use our parts and know their effort makes a difference in how those parts perform. They bring that “do-it-right” quality to their work every day. They care. They are proud of their company — and I’m very proud of them.
Ladish Celebrates 100 Years
Now completing its 100th year of continuous operation, Ladish Co. began as a drop- and steam-hammer forging producer serving industrial customers from its Cudahy, WI, shop near Milwaukee. Today, the company manufactures high-strength, high-technology forged and cast-metal components for an extensive range of load-bearing and fatigue-resisting applications in jet engine, aerospace, and general industrial markets.
With about 92% of revenue coming from the sale of jet engine parts, missile components, landing gear, helicopter rotors, and other aerospace parts, it was fitting that Ladish celebrated its centennial with a dinner in a futuristic setting: the glass-walled reception hall of the Milwaukee Art Museum. Just before dinner, the guests, including customers, suppliers, company officials, and local government officials, were invited to move outside to view the spreading of “wings” above the museum roof line. Known as the Burke Brise Soleil, the hydraulically operated sunscreen is traditionally raised when the museum is open during the day, or when there is a special evening event there.
During the evening’s program, Fred Schmidt, representing ASM International, presented a Historical Landmark Designation plaque to Ladish Co. The materials society began the program in 1969 to recognize and permanently identify sites that have played a prominent part in the discovery, development, and growth of metals and metalworking.
The guest speaker was John Gurda, author of the Forging Ahead—A Centennial History of Ladish Co. He traced the story of the company through the decades, relating interesting anecdotes about company founder Herman Ladish, and other key figures in the development of the company.
Ladish today offers a variety of forging, investment casting, and precision machining services. The Cudahy Forging operation, in Cudahy, WI, specializes in closed-die hammer and press forgings, ring-rolling, isothermal forging, and hot-die forging. The company’s Pacific Cast Technologies operation, located in Albany, OR, supplies investment cast titanium components almost exclusively to aerospace customers. Stowe Machine, in Windsor, CT, has expertise in precision machining of large and small components, primarily for aerospace equipment manufacturers.