Interview with Troy Palmer, president and CEO, and Malissa Nesmith, vice president, COO
One of the astonishing things about business is the way seemingly small opportunities can roll onwards and upwards, until what starts off as a small, one- or two-person operation running out of a garage or a spare bedroom turns into a substantial company. When, in 2003, Troy Palmer found an OEM that was simply providing parts on demand, he saw the opportunity for a little add on margin profit. “My first purchase was about 75,000 dollars and that took about six credit cards, max’d out to $10,000 each and a further $15,000 off my parents,” he recalls.
Buying in bulk, Palmer was able to sell parts as single items to owner pilots at a mark up. After a year of trading in this ad hoc way, he’d managed to build up a sufficient track record to go to the banks and start lines of credit with them, using the inventory that he was building up as collateral. In the early days, Palmer’s operation sold the parts about as fast as it managed to get hold of them, using his network of contacts and also selling online through eBay. Then he got the opportunity to take on a distributorship from Raytheon. “We were initially given only a very narrow distribution list by Raytheon, with the focus being on a single model. The idea was that we would focus on the legacy parts while the OEM focused on sales of the newer production parts for the Hawker 4000, the 987 and so on. That gave us a great platform to launch our distribution company and since then we have worked to expand our offering to other OEMs,” he comments.
After two and a half years of building up a solid performance history as a distributor, Raytheon gave Palmer the right to distribute parts across a range of models. “We were given a quota of sales to hit as a distributor, and you had to buy the inventory that you had committed to. It was up to us to shift it. I had to keep building my credit with the bank as the scale of our inventory commitment grew,” he observes.
What made Global Parts.aero different from the outset, Palmer explains, was that his competition consisted of repair stations whose primary revenue stream was servicing and repair. By definition a repair station only needs the parts that it requires to do a specific job or series of jobs. Palmer’s operation was set up on a different scale from the start. Malissa Nesmith, chief operating officer at Global Parts.aero, adds: “We were creating the infrastructure required to service and support customers solely through distribution at that stage, so we went for volume from the start and that worked well for us.”
By early 2005 the company had decided to invest in a major IT system, upgrading to a Microsoft Sequel Server database in 2006, which held the company’s entire parts inventory. Then, in 2007 the company got a major break when Hawker Beechcraft, as Raytheon had become, gave Global Parts.aero the opportunity to buy the legacy spares division. “This was when we really beefed up our IT and distribution capabilities and brought on 64,000 line items. In effect we went from being a small brokerage to being a big distributor overnight with this deal,” Palmer comments.
The business had moved into offices on the campus of a municipal airport with a small stockroom. To accommodate the vast increase in inventory, Palmer added a new building with around 100,000 square feet of warehouse space. Over the last 12 months Global Parts.aero has expanded beyond its core business of distribution, adding a Part 145 repair station and an EASA Part 145 certification for its repair station, as well as a manufacturing facility. This has allowed it to add a specialist line of rotables (more complex assemblies which are switched out in their entirety during a repair, with a complete replacement assembly being swapped for the old one). “To make these kinds of repairs, you have to have the technical capabilities and be able to prove to the FAA that you are competent to make those repairs,” Nesmith explains.
In 2013 Global Parts.aero added a manufacturing capability that allows it to machine in all five axes, allowing for complex part creation in hard metals. “We can now build direct for OEMS, and that is becoming a significant selling point. There are a huge range of OEM parts, from airframe parts to brackets and specialist pieces. It is very much a build to print operation,” Palmer explains. With these capabilities established in-house there is nothing stopping the company from moving on to do reverse engineering of end of line parts or to support the aftermarket in parts. Another addition has been the purchase of a powder coating company, which has been added to the manufacturing side. “Our business model has been to keep adding one capability after another and it has been a fundamental part of our growth,” Palmer comments.
The company now has some 64 staff, with the bulk of the workforce being located at Wichita. “This really is the air capital of the world and it is a great place to be. It allows us to meet with all the OEMs in the Wichita area and that has been a real plus for us,” Nesmith adds. After exponential growth in the early years, the company is now growing at between 10% and 20% a year, which both Palmer and Nesmith say is more than fast enough. “As you go up the scale, new challenges emerge, not least being the need to keep on finding and attracting the right, qualified individuals. We need these people on both the manufacturing side and on the repair and overhaul side. We are ISO AS9120 and ISO AS9100 certified on the distribution and manufacturing sides respectively and that commitment to the highest verifiable standards has definitely been a strong plus in our growth,” Palmer enthuses. Becoming ISO certified requires a very significant up-front investment, but it has definitely been worth it. “There is no substitute for being a reputable company in aviation,” he concludes.