Daily Gazette

Albany International division trimming production, outlook
Wednesday, August 20, 2008

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— Albany International Corp.’s aerospace parts arm will not be soaring as high as the manufacturer had anticipated, because Eclipse Aviation Corp. might scale back production of a private jet line.

Six months after Albany International President and Chief Executive Officer Joseph Morone predicted his Albany Engineered Composites (AEC) arm could become a “second core business of the company,” the Menands paper machine clothing manufacturer Tuesday toned down that ambition, at least in the short term.

The sudden turnaround comes from the possibility Eclipse will substantially reduce the production of its Eclipse 500 Very Light Jet. The Albuquerque, N.M.-based Eclipse in February also unveiled an $8 million service station for that jet at Albany International Airport in Colonie.

“[T]hese developments have not diminished management’s continued belief in the previously expressed long-term growth potential of the AEC business,” Albany International said in a statement.

The Rochester, N.H.-based AEC is one of Albany International’s newest and fastest growing segments. Its composites are used for jet landing gear and brakes. The potential blow to that division kicked Albany International’s stock down 13.2 percent to $29.12 per share by the close of trading Tuesday.

In Boerne, Texas, AEC employs 250 workers who make 47 advanced composite parts and subassemblies for the Eclipse 500. Since December 2006, Eclipse has delivered 245 of those jets.

Reflecting Albany International’s hopes for the Eclipse parts production, Texas officials in January said AEC would bring 337 new jobs and a $41.6 million capital investment to the Boerne area, north of San Antonio. In 2006, Albany International acquired the Boerne facility from Texas Composites.

Albany International’s revised short-term outlook came less than three weeks after Eclipse founder and Chief Executive Officer Vern Raburn stepped down. Raburn’s resignation was a condition of a new round of financing Eclipse received to help give it a positive cash flow.

Eclipse spokesman Alana McCarraher said company officials next week will meet with parts suppliers in Albuquerque to discuss ways the company can improve jet manufacturing operations. Notices recently sent to suppliers did not specify plans to scale back production.

The Boerne plant would be impacted by a reduction in jet production, but such a drawdown would not affect Albany International’s operations in Capital Region. Locally, the company employs 275 administrative and manufacturing workers, said company spokeswoman Susan Siegel.

McCarraher said no changes are expected at the company’s Northeast factory service center in Colonie. Albany International Airport spokesman Doug Myers said that facility has been very busy in recent weeks, handling almost double the eight jets it was designed to contain.

“That’s certainly a positive sign,” Myers said.

Albany International earlier this month reported that AEC had reached break-even profitability at the end of the second quarter. The division’s net sales rose over the year by 95.7 percent to $14 million.



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