2002 was another busy year for Ellwood Texas Forge. Our Oil and Gas business was slower than expected but did pick up late in the year - primarily due to increased drilling activity in Canada. Fortunately, demand for military products (forgings for missiles, ordnance, helicopter shafts, aircraft landing gear etc.) was strong throughout the year. Also, this was our first year to ship forgings for commercial jet aircraft engines. Demand for other products for steel mills, mining, industrial gas turbines etc. was quite good but power generation requirements did slow down as the year progressed.

We moved into our new weld and machine shops and added several new machine tools. Two new rotary heating furnaces were added in our forging department.

Our quality certifications were upgraded to ISO 9001:2000 and AS 9100:2001 and we maintained our ISO 14001 and NADCAP approvals. On time delivery was much improved and we had our lowest scrap ever. More resources (including six sigma black belts) were assigned to process improvement and cost reduction efforts. A customer satisfaction survey showed positive results.

An employee satisfaction survey showed high levels of job satisfaction. While maintaining an active safety program (“STOP”) we did not achieve our goal of zero injuries. There were no really serious injuries and very few lost work days. In April we held a successful open house - employees and their families were able to see the new weld, machine and inspection facilities as well as enjoy good food, games etc.

2003 promises to be another busy year as we continue to develop new markets and products and improve our processes. Quality improvement, cost reduction and waste avoidance will receive even more attention - as we strive to support our customers in a global economy and stay profitable in the face of rising costs. Again this year, we thank our customers, employees, suppliers and owners for their ongoing support.

2002 Review

January 1, 2003