AAI Corp. restructuring to cut costs, few jobs

June 28, 1994|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

AAI Corp., the struggling Cockeysville-based defense arm of United Industrial Corp., announced a major restructuring yesterday aimed at reducing its operating costs and making the company more competitive in both its military and new commercial markets.

In what has to be good news for an already nervous work force, the company estimated that the reorganization will eliminate only about 10 jobs. AAI, one of the fastest growing companies in Maryland during the defense buildup of the Reagan administration, has eliminated more than 2,000 jobs in recent years, including about 100 in the past two months.

Six workers were laid off yesterday, reducing AAI's total employment at Cockeysville to about 1,000.

As part of the restructuring, the company will be divided into four segments, and AAI said it will eliminate business that has been unprofitable.

AAI President Richard E. Erkeneff said the new structure should make the company more responsive and competitive.

Mr. Erkeneff, the former McDonnell Douglas Corp. executive that United Industrial brought in last fall to turn AAI around, said the moves would enable the company "to better focus on the needs of our defense and commercial customers."

Robert W. Worthing, AAI's vice president and general counsel, said AAI was getting out of the entertainment business. He was referring to anunprofitable venture in conjunction with Trumbull Co. to build a simulated ride for the Luxor hotel-casino resort in Las Vegas.

Earlier this year, United Industrial acquired Symtron Systems Inc., a privately owned company in Fair Lawn, N.J., that was AAI's chief competitor in the fire trainer business. As a result of that acquisition, Mr. Worthing said, the bulk of the work done at AAI on equipment that simulated fires on ships, in buildings and on airplanes has been shifted to Symtron.

AAI has traditionally accounted for 80 percent of United Industrial's total sales.

AAI posted sales of $216.4 million last year and had an operating loss of $20.4 million. The parent company had sales of $253 million and reported an operating loss of $20.15 million.

The four new business segments are:

* Defense systems. This includes the production of electronic warfare training equipment, the development of an amphibious assault vehicle, and small pilotless aircraft used for battlefield observation.

* Fluid Test. It tests hydraulic systems, primarily those on aircraft.

* Transportation. It made components used in Maryland's light rail system and is involved in the production of building rail car shells for another light rail system in Los Angeles.

* Weather. This division is working under a $200 million contract to produce equipment that monitors weather at airports and provides the information to pilots as planes take off and land.

Mr. Worthing said he believes that the bulk of the layoffs at AAI are over and predicted that employment would begin to rise again next year, especially if the company is successful in winning a contract to build a fleet of as many as 90 electric trolley buses for the Dayton-area Miami Valley Regional Transit Authority.

In February, AAI joined with Skoda, a Czech Republic company, to form an electric trolley bus manufacturing company to bid on the Dayton contract.

In recent years AAI has significantly reduced its dependence on defense contracts from about 90 percent of sales to 63 percent.

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