Q&A: Norm Schneeberger, GS Precision

Vermont Business Magazine, Jan 01, 2005

VBM: You said that things are looking better this year. Do you do much work for the military, and is the War in Iraq affecting that?

Schneeberger: We do a fair amount of military work, but not a lot of it is direct from the military For example, we'll do work for military jet engines, but it's for the manufacturer and not for the government, Overall, it's a fairly small chunk of our business. For the war, we see certain items have a greater volume than they've had in past years. Overall though, it's not a major factor. We used to be around 70 percent defense related, back in the 1980s, but in the beginning of the 1990s, that whole market tanked. It really hurt us, and we made a conscious decision to diversify away from that and get more into the commercial side of the engine business. That's been a positive for us.

VBM: What do things look like over the next five years for the company?

Schneeberger: You have to grow. In this business, the large companies typically look to consolidate their supplier base, so that they're dealing with fewer suppliers, each of which is doing more for them. They're fairly open about it. They'll say we want to eliminate every supplier we can that does less than a $1 million a year with us. So they'll draw a line and every business below that will be on a phase-out list. So it's important to be a big player with the big boys. The idea for the next five years is controlled growth. Control your quarterly growth. If you grow to fast, you get in trouble. Our customer base I feel very good about. The commercial airline industry is projecting year-afteryear growth through 2010. Ironically, almost none of that growth is here in the United States or North America. It's all in Asia, with a little in Europe. Things are booming so much over there, airlines are sprouting up and people, as they gain higher standards of living, want to travel. There's a huge demand for that service in Asia.

VBM: Any other areas in the world where this type of growth is projected? And is the change in the value of the American dollar affecting you?

Schneeberger: With the type of work that we do, and we export a fair amount of stuff to Europe, they're going to buy it from us regardless of the value of the dollar in most cases. It's pretty specialized stuff. If they happen to find a European firm that's capable, the dollar valuation may push them over the edge, but in most cases it doesn't really have an impact on us that I'm aware of.

VBM: Any other trends that you see internationally?

Schneeberger: The whole Asia thing is a double edged sword because we're competing against them, but they're also the biggest source of growth in the commercial aviation market. So we're both benefitting from the growth of their economy at the same time that they're creating greater competition against us. The bottom line is that we have to be better at what we do and constantly looking at ways that we can be more efficient and to cut costs so that we can produce what we produce for less and have a lower selling price to our customers. The Asians are also causing the increase in raw materials right now. You see on the news how the price of steel is way up. That's having a huge impact on us. It's because the Chinese are buying so much of it and they're driving the price up. It's a big issue.