Over the last two years we have been transforming Ducommun from a third-tier subcontractor of components organized as a holding company, to a second-tier subcontractor of subassemblies and subsystems organized as an operating company with increased mass and capabilities, intent on becoming indispensable to our key customers.

This transformation is necessary to ensure Ducommun’s success in the 21st century. As the aerospace industry consolidates and, at the same time, grows more global, it is becoming increasingly clear that the days are numbered for small, third tier subcontractors of build-to-print parts in the United States. Over time, these relatively simple component parts will seek lower cost labor overseas in reaction to the increasing pricing pressure existing in our industry from the airlines on down.

Therefore, our plan has been to grow Ducommun into a tier-two supplier providing subassemblies and subsystems which require higher levels of engineering and the ability to manage a global supply chain for our prime and tier-one customers. In this way we are Strategically Growing Ducommun by increasing our work content and by making the Company indispensable to its customers. This process was initiated in 2001 and is well underway.

An equally important part of our transformation is the shift in our corporate organizational structure from a holding company to an operating company. The importance of this effort cannot be overstated as it provides the skill set and market focus to accomplish the move from tier three to tier two. Our One Company journey has effectively taken six small independent subsidiaries which operated under separate names, policies, procedures, and sales efforts and combined them into two business units of far greater size and presence in the marketplace by sharing the Ducommun name and increasingly common policies, procedures and sales and marketing approach. This transformation in shape and structure has given us more visibility and value for customers and suppliers alike. With broader capabilities and size, customers have been more willing to give us the opportunity to take on larger and more complex programs and projects.

Internally, the movement from parts provider to subsystem/subassembly supplier has necessitated a significant upgrade in human capital. Historically, a “promote from within” company, we have been more willing in the last two years to look outside when our home-grown talent did not possess the necessary skill set. As a result, 16 of our top 30 managers are new in their positions in the past two years; five are internal promotions, but eleven are outside hires. This infusion of human capital has helped springboard our efforts in Operational Excellence through Lean, and soon, Six Sigma as well as in Strategic Growth by reorganizing our sales and marketing efforts to be customer oriented as opposed to product/process oriented. As a result, we have been making tremendous changes in what Ducommun is and how it operates, to better position us in the 21st century aerospace industry by transforming ourselves into a company that will prosper in the new environment.