Alta Precision forecasts sales could reach $20 million annually in the next few years – one and a half times more than what it sells today.
Alta Precision, a small company by aerospace industry standards, says having EDC “in its corner” is a major strength. Here’s how the company works closely with EDC to anticipate and overcome financial challenges.
Alta Precision got its start 32 years ago when master toolmaker Guillermo Alonso Sr., who had immigrated to Canada from Spain in 1956, used his experience in the aerospace parts industry to start up his own aviation business in Montreal.
“When the business was founded, Alta was more of a ‘mom and pop’ shop that manufactured precision parts,” says Karim Zerrad, controller at Alta Precision. “Today, with a staff of 65, the company is all about specialization and the business is now run by Guillermo Alonso Jr. and his sister Sonia.”
Since taking over as president in 1999, Alonso Jr. has focused the company’s efforts on manufacturing complex landing gear parts and other aircraft components for the likes of Boeing, the U.S. Air Force, Bombardier and Airbus. “My father never dreamed of these opportunities when he started out,” says Alonso Jr.
The company entered into partnerships with major players in the aeronautical industry to boost international sales. Along the way, Alta has grown from a $5-million company to making $13 million annually, mostly through military contracts and cost-reduction initiatives to optimize its business.
Impact of Canada’s aerospace sector
The Aerospace Industries Association of Canada (AIAC) celebrated its 50th anniversary at a Summit in Ottawa this fall. The industry in Canada comprises more than 400 companies, employs some 37,000 workers directly and more than 107,000 people if you count all types of suppliers in the production chain.
Improving cash flow
The majority of Alta’s business comes from exports to Europe and the United States. Aside from delivery and customs logistics, one of the biggest hurdles is that manufacturing cycles can take anywhere from 12 to 24 months – that’s a lot of time to wait for money to come in the door for a company of this size.
“We are a small business and, as such, cash flow will always be one of the biggest challenges,” says Zerrad. “That is where having EDC in our corner has been a major strength. Not only does EDC provide effective financing solutions like EGP (Export Guarantee Program, which provides EDC backing on bank loans) to help us with operating capital, but it sees our potential and helps by providing monetary and other value-added services such as industry and market knowledge.”
Jean Bellemare, Alta’s EDC Account Manager, adds: “We also look at the complete supply chain and the cash flow cycle to help the company identify any problems. Then we look at financing options that can help.”
For example, Montreal-based Bellemare recently suggested the company explore the possibility of financing assets outside of their balance sheet, such as buyer and supplier financing.
“We want to take our business to the next level,” says Zerrad. “We see EDC as a major strategic partner in that; we also need to ensure we are running the business as efficiently and effectively as we can. If we do it right, we believe the sky’s the limit for us.”