Growth dictates LMI?s move into new facility

By: Mike Trask, Managing Editor, St. Charles Business Record // August 27, 2007

St. Charles-based LMI Aerospace Inc. is spreading its wings.

Last month the local manufacturer of structural components, assemblies and kits to the aerospace, defense and technology industries announced that it had agreed to acquire San Diego-based D3 Technologies Inc., a design and engineering services firm, for $65 million in cash. D3 has 350 employees and the company performs structure and sub-structure design work for manufacturers of commercial, business and military aircraft, including Boeing Co., Airbus North America and Lockheed Martin.

The acquisition is expected to close during the third quarter. LMI has integrated six acquisitions since 1996 and has 10 facilities located throughout the U.S. Revenues for fiscal year 2007 are estimated at $150 million, more than double the $71 million generated in fiscal year 2001, according to the company.

LMI?s recent, rapid growth has forced it to seek additional space in St. Charles, and in mid-March the company relocated its headquarters and some assembly operations from its building on Mueller Road into a leased facility in the Fountain Lakes Commerce Center?an increasing popular choice of area companies looking to relocate their headquarters.

?We?ve moved all of our corporate team into the new building, and then we moved 45,000 square feet of assembly that we moved from our [North Highway] 94 location into this building,? said Audrey Crane, public and investor relations representative for the company. ?Half of the space is for assembly, and the rest is for offices.?

LMI continues to utilize the Mueller Road facility. ?We?re actually doing a reconstruction of the 62,000-square-foot building on Mueller, which we haven?t completed yet. We?re going to be putting in a state-of-the-art training facility and then also expanding the plant into where the offices are,? Crane said.

Those office workers who remain at the Mueller facility eventually will be relocated to Fountain Lakes. Close to 40 people now work at the headquarters, she added. Altogether, the publicly-owned company employs approximately 900 people at its St. Charles locations.

LMI no longer owns the facilities it occupies on Mueller and in the 3000 block of North Highway 94. ?We have arranged for a leaseback on both of those locations,? Crane said.

Outsourcing opportunities

Currently, LMI operates only one facility outside the U.S.?a distribution center in Mexicali, Baja California, Mexico, that employs some 25 workers. But that could soon change. The company recently said it wanted to ?establish a second supply source in a low-labor-cost country in 2007.?

?We?re looking at the opportunities for outsourcing in China,? Crane said, adding that Boeing already has a presence there. Israel also is a possibility, she said.

Already LMI is moving processes to the Mexicali location ?in order to free up more capacity on some of the larger projects here in the states,? she said. As of right now, plans to outsource production should not impact jobs here. ?It?s not going to force any layoffs. This is our way of creating capacity so we can bring on new projects.?

It?s too early to say what impact Boeing?s decision to extend production of the C-17 military cargo plane will have on LMI. Production had been scheduled to end in two years. ?We?re more looking for opportunities on [Boeing?s] 787? Dreamliner commercial aircraft that was recently unveiled, Crane said.

Bright outlook

The aerospace industry is bouncing back from the dark days of 9-11, 2001. LMI expects continued U.S. corporate profits to further drive demand for business jets, and says production rates of commercial aircraft should grow for the foreseeable future.

In addition, LMI expects to benefit from the military?s need for more rotorcraft such as the Black Hawk and Apache helicopters.