Silicone parts manufacturer Magnifoam Technology International Inc. will benefit from two new supplier contracts with Air Canada, with a potential windfall of more than $14 million in sales.
MTI will supply interior thermal and acoustical insulation to two aircraft manufacturers-Canada's Bombardier Aerospace and Brazil's Embraer S.A.-to help fill firm and optional orders to Air Canada for commercial jets.
Montreal-based Bombardier has a contract with Air Canada to provide 15 CRJ 700 Series 705 and 15 CRJ 200 regional jets, plus conditional orders for 15 more CRJ 200s, MTI said.
There also are future options for 45 aircraft, bringing the potential value of the agreement for MTI to more than $7 million.
Similarly, Sao Paulo, Brazil-based Embraer will supply Air Canada with 45 Embraer ERJ 190 aircraft, with an option for the airline to purchase 45 additional planes at a later date. The total value for MTI, including firm orders and options, also exceeds $7 million.
Air Canada emerged from bankruptcy in Canada this fall after filing in spring 2003. Bill Neill, MTI president and CEO, said the airline is poised to do well and its suppliers will benefit from its success.
MTI's lightweight, non-flammable, non-toxic insulation contains some silicone, but also glass fibers, felts, polyamides and non-rubber foams, Neill said. There is the potential to use more silicone, but the company needs to address weight concerns for these applications, he said.
The firm's strength in the market is its understanding of its materials and how they're affected by energy waves, heat and cold, sound and vibration, Neill said. ``We think our knowledge gives us a competitive edge,'' he said.
The Mississauga-based company acquired RBX Corp.'s Groendyk silicone product operation in Buchanan, Va., in August, but none of its aerospace components will be made there, Neill said. MTI has two 50,000-sq.-ft. facilities in Mississauga, one totally dedicated to the aerospace market, which makes up about 44 percent of the company's revenues.
The firm employs slightly fewer than 200 for its aerospace operation and about 400 companywide, he said.
Neill doesn't anticipate needing to expand capacity to accommodate the additional business. MTI has established some lean manufacturing principles this year, and the changes have freed up space and capacity if it is needed, he said.
The Groendyk purchase helped boost MTI's sales in the second quarter of this fiscal year. Revenues rose 23 percent from the like period in 2003 to $12.6 million, with silicone sales accounting for about $5.52 million, according to the company's financial results. Net income for the period was about $82,000.
MTI is in the midst of a switch to a December year-end fiscal year from a March year-end fiscal year. Its 12-month fiscal year ended in March and the company is operating in a shortened nine-month fiscal period, which ends in December. A new 12-month fiscal year will begin in January.
The change was made to line up the company's European and North American segments and take the confusion out of the equation, Neill said.