EDGEWOOD, NY--(Marketwired - Oct 24, 2016) - CPI Aerostructures, Inc. ("CPI Aero®") (NYSE MKT: CVU) announced today that it has entered into a long term, strategic supply agreement with Pittsburgh-based PPG (NYSE: PPG) to supply consumable products in a Vendor Managed Inventory (VMI) operating model.
Under the agreement, PPG will be responsible for all purchasing, inventory management and logistics for consumable materials, such as paints, sealants, adhesives and lubricants in accordance with CPI Aero's planned consumption rates through December 31, 2019. PPG also will employ a full-time worker at CPI Aero's facility, who will be responsible for inventory management. Storage cabinets for the materials are located directly within the work cells in order to provide convenient access for CPI Aero assembly personnel -- a key principle of lean manufacturing.
Douglas McCrosson, president and chief executive officer of CPI Aero, stated, "The implementation of this VMI project for consumable materials represents our fourth VMI initiative since 2014 and is another example of our commitment to continually drive down our internal costs so we can provide our customers with the highest-quality aerospace assemblies with competitive pricing. We commend PPG for providing the winning proposal in what was a very competitive source-selection process."
Kenneth Hauser, Vice President of Global Supply Chain at CPI Aero, added, "It is expected that this initiative alone will provide savings of $500K annually. When combined with similar initiatives implemented recently for aerospace fasteners, shop supplies and cutting tools, we anticipate realizing over $3M in annual savings. This agreement will ensure that we have the right materials on hand when we need them. And, since we are only billed for the material when it is consumed by CPI Aero, we also expect to enhance our cash flow through inventory reduction."
David Morris, General Manager and Vice President, Americas, for PPG's aerospace business, commented, "We are excited to be awarded CPI Aero's chemical management services program. We look forward to supporting CPI Aero with best-in-class chemical management services as they execute on their growth strategy."
PPG: WE PROTECT AND BEAUTIFY THE WORLD™
At PPG (NYSE: PPG), we work every day to develop and deliver the paints, coatings and materials that our customers have trusted for more than 130 years. Through dedication and creativity, we solve our customers' biggest challenges, collaborating closely to find the right path forward. With headquarters in Pittsburgh, we operate and innovate in more than 70 countries and reported net sales of $14.8 billion in 2015. We serve customers in construction, consumer products, industrial and transportation markets and aftermarkets. To learn more, visit www.ppg.com.
About CPI Aero
CPI Aero is a U.S. manufacturer of structural assemblies for fixed wing aircraft, helicopters and airborne Intelligence Surveillance and Reconnaissance pod systems in both the commercial aerospace and national security markets. Within the global aerostructure supply chain, CPI Aero is either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. CPI also is a prime contractor to the U.S. Department of Defense, primarily the Air Force. In conjunction with its assembly operations, CPI Aero provides engineering, program management, supply chain management, and MRO services. CPI Aero is included in the Russell Microcap® Index.
The above statements include forward looking statements that involve risks and uncertainties, which are described from time to time in CPI Aero's SEC reports, including CPI Aero's Form 10-K for the year ended December 31, 2015, and Form 10-Q for the three-month periods ended March 31, 2016 and June 30, 2016.
CPI Aero® is a registered trademark of CPI Aerostructures, Inc. For more information, visit www.cpiaero.com, and follow us on Twitter @CPIAERO.