Hayes Aircraft Corporation
The Hayes Aircraft Corporation (later Hayes International Corporation, Pemco Aeroplex, and Alabama Aircraft Industries, Inc.) was an aircraft design, maintenance and customization company operating from a 200-acre facility at the Birmingham International Airport from 1951 to 2011. The company's corporate headquarters was located at 1943 50th Street North.
The company manufactured cargo systems, rocket vehicles, control systems and components, and offered engineering services to private and governmental clients. At its height, the company employed as many as 12,000 workers.
The company changed its name to Hayes International Corporation around 1960.
In 1965 Hayes was awarded a U.S. Air Force depot maintenance contract for its Hercules C-130 transport planes. In 1968 the company added KC-135 tankers to its maintenance roster, a contract that continued to expand into the late 1990s, providing as much as 80% of the company's overall revenues.
A 1965 civil rights case, one of the first prosecuted under Title VII of the Civil Rights Act of 1964, found that Hayes continued to keep black workers in the lowest paying, most menial jobs, depriving them of opportunities for advancement enjoyed by white employees.
In 1982 Hayes contracted with Performance Advantage Inc. to recycle drained jet fuel and to dispose of paint and solvents used in their operation. The waste was found to have been illegally dumped and Hayes was prosecuted for the crime.
In 1986 Hayes pleaded guilty to 38 counts of making false statements and paid over two million dollars in fines, restitution and damages. During the same year a Navy C-130 refurbished by Hayes crashed during a test flight in Dothan, killing three reserve officers aboard.
In 1987 the company was reorganized as the Pemco Aviation Group, a subsidiary of Precision Standard Inc. (PSI, formerly PR Inc.) of Denver, Colorado, which had also acquired Monarch Aviation of Miami, Florida. The combined company secured a U.S. Navy contract to convert McDonnell Douglas DC-9 cargo planes for their use.
In 1988 the Birmingham airport maintenance facility was renamed the Pemco Aeroplex. That company employed over 2,300 people and serviced over 200 aircraft per year. Plans for a new maintenance facility in Dothan, Houston County, were announced in 1991, but put on hold. Despite holding on to its military contracts, the company struggled to grow and saw its valuation reach a low of $0.40/share on the NASDAQ exchange in 1991.
Pemco engineered a turnaround with contracts for Boeing 737 and 757 conversions in the early 1990s. A similar program for converting Russian-made Tupolev Tu-204 airliners into cargo carriers in partnership with another firm was announced, but did not move forward. PSI's revenues were reported at $170 million in 1993, and $149 million in 1994. In those years the Pemco Aeroplex won contracts from Northrup Grumman and Mesa Airlines. It also began manufacturing aerial targets for military training use under the brand name "Hayes Targets".
In a 1994 restructuring of Precision Standard's worldwide operations, the Birmingham Aeroplex was established as the base for its "Government and Military Aircraft Services Group." A planned expansion into California was scuttled after the company lost a bid to maintain C-141 Starlifter transports.
In 2000 Michael Tennenbaum, a financial advisor for Bear Stearns, which controlled 27% of the corporation, purchased another fourth of Pemco's stock from Precision Standard's Matt Gold to secure a majority stake. He brought the headquarters for the company back to Birmingham and renamed the entire company Pemco Aeroplex. He installed Ron Aramini of America West Airlines as CEO, and restructured the board to include more former military officers who could advise on bidding for military contracts. The company also refurbished its hangars and replaced the dilapidated aircraft visible along the approach to the airport with newly-painted planes. Pemco also started an aircraft mechanic training program for local high school students which has helped stabilize the supply of skilled labor.
Between 2000 and 2005 shares of stock rose from from about $12 to over $24. On February 28, 2006 the Birmingham City Council passed a resolution to invest up to $2.5 million in infrastructure improvements contingent on Pemco being awarded the KC-135 Re-Compete contract. In May the Air Force reduced the number of craft in its 2008 contract, prompting Boeing to withdraw from its partnership. Pemco asked the Air Force for permission to bid as a sole contractor, but was denied. AAI later sued Boeing for $100 million, claiming that the larger company had abused the partnership and stolen trade secrets. After numerous delays, AAI was awarded $2.1 million from Boeing by a federal jury in March 2020. Judge David Proctor upheld the jury's verdict on appeal.
Pemco's 2002 sales were $163 million, and its 2005 revenues were $150 million.
The bankruptcy of Northwest Airlines, a major Pemco customer, caused earnings to slip in 2006 below the level at which the company's $31 million debt could be serviced. The company went into negotiations with its major lenders, Wachovia and Compass Bancshares, regarding refinancing.
In July 2007 Pemco agreed to sell Pemco World Air Services, its Dothan-based commercial aircraft conversion and maintenance division, for $43 million to WAS Aviation Services, Inc. The sale would fund the retirement of bank debt and pension plan liabilities. The remaining company would be re-named Alabama Aircraft Industries.
In February 2011 the company filed for Chapter 11 bankruptcy protection in advance of seeking an agreement with UAW Local No. 1155 to terminate its pension plan, reducing long-term obligations. It was acquired out of bankruptcy by the Virginia-based Kaiser Holdings Group. The facility operated as Kaiser Aircraft Industries until 2014.
- Pemco Aeroplex operates ten 160' x 750' x 40' aircraft bays at their Birmingham facility capable of servicing KC-135-sized aircraft as well as a backshop for fabricating custom parts and a paint facility. This facility employs approximately 1,100 workers.
- Pemco Aircraft Engineers provides engineering services to the aviation industry from offices in Corona, California.
- Pemco Engineers provides cargo systems and aircraft component design and fabrication from a 30,000 square-foot shop in Corona, California. (Pemco plans to seel this division)
- Pemco Space Vector, founded in 1969, provides launch vehicles and services for scientific and military missions from a 44,000 square foot facility in Chatsworth, California
- Underwood, Jerry (January 9, 1994) "Pemco Parent Paces '93 State Stock Action; Shares Once Were Bought for Four Dimes." The Birmingham News p. 1
- Diel, Stan (April 12, 1996) "Pemco's Parent Losing Money; Firm Delays Financial Report, Blames Government Contract Woes." The Birmingham News, p. 1B
- Hubbard, Russell (October 13, 1998) "No Layoffs Expected After Pemco Loses Bid." The Birmingham News, p. 1D
- Hubbard, Russell (January 18, 2000) "Precision Standard Moves HQ Back; Company Also Names CEO to Raise Profile." The Birmingham News, p. 1C
- Nicholson, Gilbert (May 25, 2001) "Flying High: Pemco Aviation Group Is Soaring Under New Leadership." Birmingham Business Journal
- "Pemco Aviation Group Inc." (2003) in the International Directory of Company Histories. St James Press, Vol. 54
- Pemco Aviation Group corporate spotlight at American Executive - accessed June 11, 2006
- McCauley, Charles R. (June 10, 2006) "Pemco set to bid solo on military craft pact." The Birmingham News
- Hubbard, Russell (August 18, 2006) "Pemco earnings too low for lenders." The Birmingham News
- McCauley, Charles R. (July 11, 2007) "Pemco Aviation to sell Dothan subsidiary." The Birmingham News
- "Alabama Aircraft Industries Inc. files Chapter 11." (February 16, 2011) Birmingham Business Journal
- Hubbard, Russell (September 14, 2011) "Alabama Aircraft Industries sues, says Boeing Co. stole secrets." The Birmingham News
- Coker, Angel (May 19, 2020) "Former Bham aircraft company prevails in lawsuit against Boeing." Birmingham Business Journal