Moog Inc. - Company Profile, Information, Business Description, History, Background Information on Moog Inc.

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History of Moog Inc.

Moog Inc. is a worldwide manufacturer of precision control components and systems. Moog actuation devices control high-performance aircraft, satellites and space vehicles, strategic and tactical missiles, and automated industrial machinery. As defense budgets faced dramatic cutbacks starting in the late 1980s, Moog was forced to adapt quickly to new markets by moving into new product lines. By the mid-1990s, the company had greatly enhanced its presence in flight controls, becoming one of the top suppliers to the Boeing Commercial Airplane Group. Responding to the defense cuts and to hard times in the commercial airplane business at large, the company introduced products in such areas as injection molding, entertainment simulation, and industrial hydraulics. Such adaptation shed positive light on a future combining contracts for military hardware with commercial and industrial applications for a wide range of control systems.

Moog's products are flexible enough to fill diverse needs in many different markets. In the domain of aircraft controls, Moog's components include hydraulic actuators and mechanical rotary actuators. In the late 1980s, Moog joined forces with Bendix Corporation, a leader in flight controls for such leading aircraft as the F-14 and F-111 fighter jets, as well as the Boeing 747. Together, the companies provided all the actuators for the RAH-66 Comanche helicopter, among other systems. Other key projects employing Moog actuators have included the F/A-18 Fighter Program; the Taiwanese Indigenous Defense Fighter (IDF); various Boeing aircraft; Airbus planes such as those in the A330/340 family; and McDonnell Douglas commercial aircraft parts such as flight control servovalves, anti-skid brake valves, and hydraulic accumulators.

Moog has also been a leading supplier to the space industry, supplying controls for satellites and a broad line of standard products to companies including Hughes, Martin, and Loral in the United States, Royal Ordnance and Matra Marconi Space in England, and BPD in Italy. Moog's propellant isolation valves were used on the much-publicized Motorola Iridium Satellite system. Its solid rocket boosters were used for the U.S. Space Shuttle orbiter and its cold gas thrusters provided propulsion for NASA astronauts wearing a self-rescue device called Simplified Aid for Extra-Vehicular Rescue (SAFER).

The company has also been a principal supplier of flight control servovalves and seroactuators for use on military and commercial aircraft, helicopters, and the Space Shuttle orbiter. Moog's control systems have been used on U.S. strategic ballistic missiles, including Trident and Peacekeeper (MX), while its thrust vector controls have helped steer those and other tactical missile systems. In tactical missiles, Moog has supplied hydraulic servovalves for the Patriot program. In the mid-1990s, the company delivered a Thrust Vector Control (TVC) System designed for the booster rockets on the Titan IV launch vehicle. Other projects have included a propellant valve for the French launch vehicle, Ariane 5; designs for bipropellant thrusters to be incorporated into the Theater High Altitude Area Defense (THAAD) anti-missile defense system; and on-board systems for thermal management controls for space stations.

Moog has also supplied power actuators, electronics, and commercial controls for diverse applications. Its microprocessor-based products are used in radio controls for underground mining and for custom control equipment. The company's digital process controllers are essential in a variety of injection molding and blow molding machines used to make products out of plastic. These valves are paired with Moog's electronic controls used to manage the servovalve functions as well as the sequence of machine operations and temperatures. Moog also manufactures state-of-the-art brushless electric servomotors and controls for the industrial automation equipment market, robotics, and the aerospace industry.

Another important market for Moog's control components has been power generation equipment, which continued to grow globally as energy producers sought fuel-efficient, environmentally friendly solutions to growing energy needs. Moog control components have been sold to gas and steam turbine manufacturers throughout the world, including European Gas Turbines, Juovo Pignone, Phillips, Volvo, GEC, MHI, Mitsui, Fuji Electric, and other international market leaders. In the 1990s, developing economies in the Pacific Rim opened expansive new markets in those regions.

The story of Moog, Inc., began when Bill Moog, a design engineer at Cornell Aeronautical Laboratories in Buffalo, New York, developed an electro-hydraulic servovalve to control the movement of guided missiles and brought it to market. Short on capital and devoid of manufacturing facilities, Mr. Moog persuaded a local machine shop to produce the parts for his valve on speculation. Payment for their services making the valve parts was contingent on his selling the assembled units. Working from the basement of his East Aurora home, the world headquarters for what he affectionately named the Little Gem Valve Company, Mr. Moog assembled and tested the first units himself.

Moog's first sale of four valves to Bendix Aviation Inc. was quickly followed by larger orders from such companies as Boeing and Convair. With his brother Art and a fellow engineer at Cornell, Lew Geyer, the young entrepreneur formed the Moog Valve Company on July 1, 1951. Long hours were dedicated to the completion of a manufacturing and development facility, which was devastated by a fire in 1952. Unshaken, the partners forged ahead, rebuilding their business far beyond its original limits.

In 1959 the young company went public, and sales from both aerospace and industrial valves surpassed the $10 million mark. Moog's products found markets beyond guided missiles, in military aircraft, commercial airplanes, and eventually nonmilitary systems from mobile opera stages to entertainment simulators. In 1965 the company changed its name to Moog Inc. and was listed on the American Exchange for the first time.

Rapid growth and decentralization marked the next two decades. Starting in the mid-1960s, subsidiaries were established in Europe and Asia, and the domestic company was broken into divisions for maximum efficiency and optimal customer service. Historically, the company would begin with sales and service of imported products and then move to in-country manufacture, assimilating technical personnel from local universities and industries to design products tailored to the preferences of local markets. In 1966 a German subsidiary, Moog GmbH, was established along those lines. A U.K. subsidiary, Moog Controls Ltd, followed. Thereafter, subsidiaries were developed in France, Italy, Spain, Ireland, Sweden, and Finland.

Though the first non-U.S. subsidiaries were established in Europe, Moog quickly moved into all corners of the globe. In 1970 the company established Moog Japan Ltd., with facilities taking root in Korea, Hong Kong, and Australia during subsequent years. In 1985 Moog established a manufacturing operation in the Philippines, with inauguration of another such facility in Banhalore, India, five years later. In addition, the first South American subsidiaries were started up in 1981, in Sao Paulo, Brazil, followed by numerous others over the years. Indeed, by 1994, approximately one third of Moog's revenues were from customers outside the United States.

By 1980, Moog had become a global leader in electrohydraulic controls and a pioneer in pneumatic and electromechanical control applications. That year, Fortune Magazine listed the company's servovalve as one of the "100 Best Products America Makes."

In addition to market demand for its top-notch products, Moog gained a reputation as a team-driven work environment distinguished by innovative thinking, individual responsibility, and unusual commitment on the part of employees and employer alike. The company won admiration--and a chapter--in Robert Levering and Milton Moskowitz's 1993 book The 100 Best Companies to Work for in America, even after difficult years during which Moog had to lay off workers. "I think it's clear we made the book because we have what I call a sense of community," Robert T. Brady, president, told the Buffalo News.

In the early 1980s, Moog made the strategic decision to expand its product range beyond hydraulics and into electric servomotors. The company's industrial motor development required extensive research and development efforts that would take more than a decade to pay for. Still, the investment was well on its way to paying off, with customer applications ranging from robotics with Bosch (Germany), to material handling with ISI (U.S.), and Engel Automation (Austria). In addition, the wide variety of specialty machine applications for the motors ranged from brush-making machines to textile, glass grinding, packaging, weaving, and printing machines.

An important offshoot of Moog's industrial motor development came in the form of electric drives and elevation controls for gun systems in military vehicles. Sophisticated systems had to be designed to manage the electric power in the motors in such a way that precision could be maintained as the vehicles traversed bumpy terrain and handled rapid maneuvers. Customers have included Bofors, which manufactured the Combat Vehicle 90/40 for the Swedish army, and the Norwegian company, Hägglunds, which provided a similar vehicle to its military.

In 1988 Bill Moog resigned from the company he had founded to concentrate on developing new suspension technology for autos. Mr. Moog acquired two of Moog Inc.'s divisions--the domestic industrial controls business and its automotive operations--in exchange for all his equity. The 72-year-old entrepreneur would become the president and chairman of a joint venture with Group Lotus, a British sports car maker owned by General Motors. The venture was formed in 1986 to develop new suspension systems employing hydraulic systems controlled by a computer to sense and correct bumps. According to industry analysts, Moog Inc. was not interested in pursuing those interests. According to Moog Inc.'s 1994 annual report, the company initially intended to buy back the industrial servovalve division it had sold to Bill Moog. When Mr. Moog put his new company up for sale in 1994, however, a bidding war boosted the price beyond what Moog Inc. deemed reasonable. Thereafter, the company worked carefully to regain market share in that domain.

After Mr. Moog's departure, Moog Inc. realigned its management, naming Richard A. Aubrecht chairman, Kenneth J. McIlraith vice chairman, and Robert T. Brady president and chief executive. That new team was quickly put to the test after the company reported losses of $14 million and initiated a restructuring of its domestic operations. The reorganization called for elimination of eight percent of the staff, representing a serious blow to a company that considered job security for its employees a top priority.

Drastic defense cuts worldwide, paired with recessionary world economies, put a damper on Moog's aircraft business, leading to a major realignment of business strategies in the early 1990s. In 1992, the company took it on the chin, as Washington either canceled or severely cut back on programs using Moog's valves, including the B-2 bomber, the F-15 fighter, and the MX, Midgetman, and Maverick missiles. Moog was forced to scale back operations, cutting 24 percent of its work force and closing a factory in Clearwater, Florida, and two plants in upstate New York. "Like many companies around the world, we've had to re-think, re-define, and re-organize our way of doing business," wrote Robert T. Brady, president and CEO, and Richard A. Aubrecht, chairman of the board, in their 1994 Letter to Shareholders.

Among Moog's steps to strengthen its market share, in late 1994, the company purchased the product lines of AlliedSignal Actuation systems, a company divided between flight control actuation for military aircraft and controls for commercial airplanes. The addition of AlliedSignal greatly strengthened Moog's overall position in flight controls, enhanced its relationship with the Boeing Commercial Airplane Group, and extended its contacts in the general aviation market to Canadair, Gulfstream, and Lear.

Moog also applied its expertise in electric motors to various applications in entertainment simulators. In 1991 the company's business development team identified the need for electrically actuated motion base for the entertainment business. After Moog designers completed several electric actuation projects for NASA, the company development of entertainment simulators continued to grow and attract new clients in that growing market. Projects included four Japanese platforms, including two to Shirahama Earth Adventure and another to Geo-Bio World in Fukuoka. Moog also designed a system for Bill Saleir's Tempus Expeditions, a company that packaged high quality audio-video-kinetic entertainment in megamalls, such as the Mall of America in Minneapolis. Tempus's growing operations, as well as a surge in Asian Pacific theme parks showed great promise for Moog's activity in this domain. By 1994, the same company that manufactured controls for real spacecraft and jets was creating self-contained simulators that gave participants the impression--jolts, sights, sounds, and all--that they were on a flight to Mars, or on a jet fighter mission.

While Moog's strategic defenses against the volatility of defense and aviation markets produced positive results, the company still faced many uncertainties. A case in point was the company's contract to supply actuation systems for the B-2 bomber program. After supplying actuation systems for all but the last four of the 20 aircraft in production, further expectations hinged on Congressional go-ahead for an additional 20 aircraft. "From our point of view, the politics of buying additional B-2's are too speculative to count on." The fate of numerous other projects, such as rotor and tail rotor actuators for the Comanche helicopter, remained contingent on Congressional decisions or other outside forces.

That message was driven home in November 1993, when Congress cut $7.5 million out of Moog's $10 million proposal for a high-tech research project, its "Center for Advanced Control Systems." The project, aiming to convert the defense industry jobs of the past into the jobs of the future, would only be able to sponsor three or four research projects, compared to the eight originally planned. "We're delighted to have the $2.5 million," Aubrecht told the Buffalo News on November 12, 1993, adding that once the company demonstrated its capabilities, it hoped to earn larger support in the future.

Into the 21st century, the company hoped to maintain a balance between its domestic business and its international business, which continued to generate one-third of its revenues. Moog also looked for increased opportunities in industrial products, both inside and outside the United States, and expected a substantial increase in business with Boeing, as recovery in international markets was expected to boost production of 747 and 757 aircraft. Regardless of the direction the market might take, Moog was well poised for change and adaptation. From valves for steering guided missiles, the company's product line had, itself, been guided into outer space, Japanese theme parks, mineral mines... everywhere a use could be found for its top quality valves and components.

Principal Subsidiaries: Moog Australia Pty., Ltd.; Moog do Brasil Controles Ltda. (Brazil); Mooh Buhl Automation (Denmark); Moog Controls Ltd. (U.K.); Moog OY (Finland); Moog Sarl (France); Moog GmbH (Germany); Moog Controls Hong Kong Ltd.; Moog Controls (India) Pvt. Ltd.; Moog Ltd. (Ireland); Moog Italiana S.r.l. (Italy); Moog Japan Ltd.; Moog Korea Ltd.; Moog Controls Corporation (Philippines); Moog Singapore Pte. Ltd.; Moog Sarl Sucursal en España (Spain); Moog Norden A.B. (Sweden); Esprit Technology, Inc.

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Further Reference

Campbell, Tom, "Investors Want Answers as Moog Founder Leaves," Business First-Buffalo, February 8, 1988, Vol. 4, No. 16, Sec. 1, p. 2.Cuff, Daniel F., "Founder of Moog Starts New Company," New York Times, March 2, 1988, p. D4.DePerro, Don, "Grant Denial Sours Moog on Training Center," Business First-Buffalo, December 9, 1985, Vol. 2, No. 7, Sec. 1, p. 1.------, "Push on to Develop Full-Scale Moog Training Center," February 10, 1986, Vol. 2, No. 16, p. 14.Hartley, Tom, "Moog Hopes to Generate Sales in Electric Engine Development," Business First-Buffalo, August 16, 1993, Vol. 9, No. 44, Sec. 1, p. 1.Khermouch, Gerry, "Moog's Industrial Controls May Reclaim Spotlight; Seeks to Offset Slack from Slowing Aero Arm," Metalworking News, December 28, 1987, Vol. 14, No. 663, p. 5.Levering, Robert, and Milton Moskowitz, The 100 Best Companies to Work for in America, New York: Currency Doubleday, 1993, pp. 302--06.Robinson, David, "Moog Eliminating 80 Jobs in East Aurora; End of B-2 Stealth Bomber Forces Action ... " Buffalo News, October 3, 1994, p. 11.Schroeder, Richard, "Entertainment Simulators the Next Big Market for Moog?" Buffalo News, February 10, 1994.Zremski, Jerry, "Congress Cuts $7.5 Million from Moog Project," Buffalo News, November 12, 1993.

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