Avcorp Industries Inc. (TSX:AVP) may be catching a bit of a tailwind with the securing of contracts with Boeing (NYSE:BA).
The company says the orders from Boeing bumps its order backlog from $390 million to $579 million, which would put the value of the orders at around $189 million.
Avcorp announced the deal earlier this week. The contracts are for a variety of components – doors, panels and spoilers – for Boeing’s 737 MAX and 777X passenger jets.
Avcorp, which is headquartered in Delta, has fabrication plants in Ontario and Los Angeles. The company has not yet decided where the bulk of the new work will be done.
“Some of the work will certainly be done in Delta,” said Peter George, who was named CEO in 2014 as part of a management reorganization.
“I think we’ll make a final decision later this year on selecting the manufacturing sites for the majority of the contract that has just been announced. We will definitely have to add people to the company to execute these orders over the coming years.”
Avcorp employs a total of 700 people, half of whom work in Delta.
On large orders like the Being contract, the company typically takes several months in development before it starts production.
George points out that large contracts like the newest one with Boeing are often extended with future orders.
“What we’ve announced is just the firm contracted period, but it’s been customary for us to extend those contracts over and over again, especially with Boeing.”
The Boeing contract isn’t the only large one that Avcorp has won in recent years. It also won a $500 million contract a few years ago to make components for the Lockheed Martin Corp. (NYSE:LMT) F-35 stealth fighter.
There is some question, however, whether Canadian aerospace companies like Avcorp will continue to receive orders on the F-35 project if the federal government decides not to go with the F-35 as a replacement for Canada’s aging CF-18 fighter jets.
Initially, the Trudeau government announced it was considering buying the F/A-18 Super Hornet, which is made by Boeing. George said the aerospace industry wants to see the decision base on an open competition.
“I think there’s a consensus in Canadian aerospace that the best thing for Canada, because there’s so many factors to be considered, is just an open and competitive process,” George said.
An earlier version of this story, which put the value of the Boeing contract at $579 million, has been corrected.
