Covid-19 Insights: Aerospace Defense Manufacturing (Part 1)

Mark Mirelez, President and CEO, BEI Precision

Aerospace Defense Manufacturing

• Current Status: While we have made significant modifications to the way we conduct business just as everyone else has, our work falls under the Defense Industrial Base (DIB) and is therefore deemed “critical infrastructure.” We have accordingly continued to operate since the outbreak of COVID-19 with increased safety measures in place. So far, supply chain risks have been the biggest challenge in operating during a pandemic, particularly when moving goods to, from or through the world’s hot spots. In addition to this, therehave been some program and acquisition delays at the Department of Defense, which Ellen Lord, Under Secretary for Defense and Acquisition, recently said could continue for three months. In spite of these challenges, we are pleased to be able to continue supporting America’s defense and national security.
• Longer-Term Concerns: Our long-term concern is the safety and well being of our employees, and while we are taking unprecedented measures to mitigate the risk of the disease’s spread at our facilities, there is so much about COVID-19 that is still unknown. Our response plan includes quarantining of close contacts and a 48-hour shutdown of the plant for deep cleaning in the unfortunate event that we have a confirmed case.To ensure our ability to deliver critical products to our customers, we are working on a plan to cross-train employees in non-traditional areas and supplement the workforce with temporary contract workers if needed and where possible.
• Noteworthy Aspects: At the outset of the pandemic, we were surprised by the impacts of evolving or inconsistent guidance from various authorities, which led to confusion about what businesses were deemed essential. Some of our suppliers were forced to cease operations temporarily before being granted waivers to operate in their geographic locations. These disruptions were mostly corrected in fairly short order, but posed a challenge to our response efforts.I had early concerns about moving approximately a third of our workforce to telecommuting but by deploying new resources, training and infrastructure we were able to do it pretty seamlessly. I have been pleasantly surprised by how my team has adapted, and this shift has changed my perception a bit about telecommuting as a productive tool in the future.
• Important Variables: Lots of ongoing variables to consider.Indirect Material/Services –The materials and services we use have changed significantly. We are using extra cleaning services and providing our teams with protective supplies and equipment at all our facilities.We continue to pulse the local economies of our locations around the globe to make sure we can maintain the necessary protective materials and services.
• Direct Material: We rely on several small business suppliers and are concerned about their financial stability.This is something we will continue to watch closely and support as necessary.
• Labor: As states and geographies lift shelter-in-place orders, there is a potential for additional spread of the disease. We are keeping a close eye on the applicable guidance in the locations where we operate and are hopeful that our employees are not put at risk by relaxed guidance. To mitigate that risk, we are cross-training employees where possible and considering contracted resources if necessary.
• Analyst Assessments: The robustness of our supply chain is a top concern for the industry, specifically for suppliers in non U.S. geographies.Critical suppliers and their corresponding supply bases are normally re-evaluated every few years. COVID-19 gives us an additional chance to re-evaluate those critical pieces. We’re optimistic this evaluation will increase the robustness of the industry’s overall supply chain.
• The impact on small businesses, which for us often provide critical resources to upper level hardware or software, will also remain a concern.One confirmed COVID-19 case in a small factory could disrupt operations there for months, which is just one of the many reasons all efforts to mitigate the spread of the disease must be implemented.
• The lack of consensus and about when and where to reopen economies will continue to cause uncertainty. At BEI Precision, we will consistently err on the side of caution in an effort to safeguard our employees.
• Ones to Watch: These are no doubt challenging times. But when challenges arise, so do new thinking and new solutions. It has been encouraging to see Honeywell, for example,shift from their core competency to manufacturing 24 million N95 masks.
• Personal Note: Like everyone else, my life looks a lot different than it did before the pandemic. Instead of flying every week, I am running four international businesses from what has become a very messy office. But I have a great team, great leadership and great people who continue to come up with great ideas about how to adapt and grow, with the health and safety of our employees always in mind.I have also gotten to spend some very valuable time with my two sons.I even won two basketball games recently (out of about 40) and I am now allowed to play on their Call of Duty team. It’s been great in many ways, but I look forward to getting back to normal, whatever that may be.