ITT 101:
A Profile of Our Aerospace Controls Business

How many companies can say that virtually every aircraft flying today -- commercial, civilian or military -- contains at least one of their parts? 

ITT's Aerospace Controls division can make that claim. Headquartered in Valencia, California, and part of our Motion & Flow Control business unit, Aerospace Controls is an industry leader in the design, development and manufacturing of fluid control devices and linear and rotary actuators for the aerospace industry.

Its fuel, hydraulic, pneumatic, motor and solenoid-operated valves, actuators and electro-mechanical switches are qualified worldwide on virtually all aircraft, jets and helicopters.

With thousands and thousands of aircraft relying on its products every day, this ITT business has learned that there is no substitute for being close to the customer. That's why, in August 2004, Aerospace Controls made a significant decision to bring distribution of its products in-house and become an aftermarket seller.

"We had two reasons for bringing distribution in-house," says Bob Briggs, president of the Aerospace Controls business, who has been with the division since it was formed in 1986. "First, we were significantly isolated from the users of our components. We didn't have the day-to-day relationship with the customer, so we didn't know what their issues were.

"Second, we had placed a middleman between us and the airlines to hold inventory, and we had some poor delivery performance. We decided that we could carry the inventory, deliver on time, service our airline customers and make money at it. It was the right thing to do," he says.

Selling direct enabled Aerospace Controls to collect Voice of the Customer data and respond more quickly to opportunities; increasing sales of fuel pumps, for example, and doing more volume with "finishers" -- companies that take "barebones" airplanes and customize them for corporations or heads of state.

Aerospace Controls timed its transition perfectly.  After flying low for a few years following the terrorist attacks of September 11, 2001, the airline industry began to gain altitude again in 2004. In 2005, with a full year of aftermarket sales under its belt, Aerospace Controls' business really took off:

• Sales grew sales 15% -- three times the industry’s growth rate.
• Operating income increased by 70%
• Operating margins grew by nearly a full percentage point -- the best profit percentage in all of ITT last year, earning the division a 2005 Chairman’s Award for growth.

Being in the aftermarket has also helped build the division's repair business. "Customers knew about our service capabilities before, but not as well as they did once we were providing aftermarket service," says Briggs. "They may have been sending equipment out to have someone else repair it, but now we have become more 'top of mind' for them."

Briggs also attributes Aerospace Controls' strong performance in 2005 to sales growth at Conoflow, which markets pressure regulators and actuators for natural gas vehicles (NGV). Development of these vehicles and the infrastructure to support them is surging, especially overseas. "The automotive market is fairly weak, but it’s the right time to be in the NGV market," Briggs says.

But a healthier airline industry, combined with the decision to get closer to customers through in-house distribution, were clearly the drivers of growth for Aerospace Controls.

The Aftermarket Services team (top) is enabling our Aerospace Controls business to sell directly to customers and helping sales of its valves, actuators and electro-mechanical switches to take off.