January 1, 2006
2005 was a record year for Ellwood Texas Forge with sales of $75 million. All of our businesses, but particularly oil and gas and industrial products (mining, crane wheels etc.), were strong. Continuing on from 2004, major challenges have been to ramp up production, cope with significantly higher raw material and energy costs and, earlier in the year, to get adequate supplies of raw material.
Ellwood Texas Forge's safety programs continued to involve all employees we use a modified process based upon the E.I. du Pont STOP program. While not perfect, 2005 was a good year for safety, with an LWDI of 1.3 well below the industry average. Our quality and environmental certifications were maintained ISO 9001:2000, AS 9100B:2004, NADCAP and ISO 14001. Cost reduction and in particular productivity improvement, was emphasized in all departments. As in prior years, several new products and new customers were developed.
2006 promises to be another very busy year ETF's oil and gas and industrial markets continue to be strong and our missile and aircraft engine business will be more active than last year. We continue to see higher costs for raw materials, energy, supplies and employee salaries and benefits. After years of declining selling prices for many of our products, we can no longer absorb or offset these costs by productivity increases and have raised prices to try and retain adequate profitability and support continued investment in the business.
Capital spending in 2005 included a new rotary furnace and mobile manipulator at our 11,000 ton press complex and several smaller investments to improve productivity and equipment reliability throughout our company. A new CNC VTL for machining dies and products and two new CNC horizontal lathes, primarily for machining aerospace parts, are on order for delivery in 2006. It has been very encouraging to see prior, large capital investments 6,000 ton press complex, new machine shop, weld shop and CNC machine tools help us to be more productive in the current strong market.
Again this year, we thank our customers, employees, suppliers and owners for their ongoing support.
