Firms merge to make jet engine parts

Tempe boasts the headquarters of a new international company following the merger of three aerospace machining companies into a single firm that makes engine parts for the next generation of jumbo jets.

Paradigm Precision, 404 W. Guadalupe Road, manufactures components such as seals, disks, rims and frames for the interior of jet engines and industrial gas turbines.

The company’s customers include the world’s biggest engine manufacturers such as General Electric, Honeywell International and Rolls-Royce. Paradigm’s parts are going into General Electric’s GEnx turbofan engine, which will power the new Boeing 787 Dreamliner and the Boeing 747-8, the latest version of Boeing’s venerable jumbo jet.

Chief executive Mike Harris said the timing is right to form the new combination because the world aviation market is at the start of long upward cycle driven by the introduction of new aircraft and growth in emerging markets such as India and China.

“The new products are cycle extenders,” he said. “The dynamics of the aviation market will extend the cycle for a long time.”

Paradigm’s creation was engineered by three private-equity firms that saw an opportunity to increase efficiency in the fragmented and undercapitalized turbine engine parts industry, Harris said.

Harris, a former senior manager at Honeywell, was approached by one of the funds to search out machinedparts companies that would be well matched for merging into a single entity. He settled on a company called Smith West, which operated plants in Tempe and Guaymas, Mexico; and Palmer Manufacturing Co., which maintains its manufacturing complex in Malden, Mass. Also, Palmer owned a subsidiary called Eurocast in Tunis, Tunisia, which became a part of the new company.

Combining all four of those operations into a single global company has allowed the new entity to offer a wider range of products to engine manufacturers. At the same time it has cut costs due to efficiencies of scale and more efficient use of equipment, Harris said.

“What we have done is create one of the largest precision machined parts suppliers to the gas turbine market in the world, as measured by revenue,” he said.

And Paradigm isn’t finished. Harris said the new company, which set up its headquarters at Smith West’s Tempe site on Guadalupe east of Kyrene Road, may wrap up another acquisition by the end of this year.

“We want to supply as many components on engines as we can,” he said.

The development of new jet engines has increased the technical challenges for parts suppliers, said Duane Korytko, vice president of operations. To be more fuel efficient, next-generation engine parts are being made of superalloys such as Inconel that are heat- and corrosion-resistant. But those materials also are more difficult to shape, requiring computer-controlled tools that can cost more than $1 million each, he said.