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October 29, 1998 FIN – Fasteners were one of the boosters Morton-Thiokol needed after the 1986 Challenger disaster, according to a Forbes analysis by Subrata Chakravarty.
The National Aeronautics & Space Administration criticized Morton-Thiokol, builder of the sold-fuel booster, for lax attention to safety.
Morton-Thiokol later split, and in a name change last May Thiokol became Cordant Technologies.
Salt Lake City-based Cordant continues to supply solid-fuel booster for the space shuttle.
Cordant reported sales totaled $1.8 billion and net income was $119 million for the fiscal year ended in June.
CEO James Wilson, who took over in 1989 just after the split from Morton, found Thiokol was loaded with debts totaling 50% of capital and poor operating margins. “By concentrating on cash flow and reducing the number of divisions, Wilson quickly cut debts and improved margins,” Chakravarty noted.
After the Berlin Wall came down later in 1989, Thiokol’s core defense business dropped.
“There wasn’t much we could do about it other than manage the downsizing efficiently,” Wilson told Forbes.
Thiokol also sought to diversify away from government programs “without going too far afield.”
The booming electronics field wasn’t the answer, because Thiokol had no expertise in it. Instead Wilson sought an industry with products that were “engineered, something you could touch and kick and understand.”
In late 1991 Thiokol bought Huck, a maker of industrial fasteners for trucks, railcars and aircraft.
“Huck was an order-taker,” Wilson told Forbes. “They were technically very good, but they were somewhat high cost and they were arrogant.”
He fired most of the senior management and instituted a customer-attentive atmosphere.
Huck revenues have grown steadily to $358 million for the last fiscal year. Profit margins have almost tripled to 14.5%.
Thiokol also formed a partnership with an investment company, Carlyle Group, to acquire precision cast blade and gas turbine maker Howmet.
A combination of a strong commercial aircraft market and management changes led to improved margins at Howmet. “With its ownership at 62% Thiokol consolidated Howmet, in the process doubling he size of the company. It was this change that led to the name change from Thiokol to Cordant, Chakravarty wrote.
Cordant’s rocket-related business remains under the Thiokol name and is expanding after several years of cutting back.
“In short, Cordant has found a mission for itself in the post-Cold War era, depending far less on government contracts,” according to the Forbes article. “In fiscal 1991, 51% of the company’s profit came from space programs and the rest from defense. With the addition of Huck and Howmet, space now accounts for 21% and defense for 16% of Cordant’s business. Commercial business is a solid 63%.”
Wilson told Forbes that Cordant’s plan is to have “three or four businesses that have high technology and highly engineered products that sell only to large companies. All three of our businesses are the technology leaders in their particular niches.” ©1998/2012 Fastener Industry News
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