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Retool, revive: helping defense manufacturers pivot

Michigan lost nearly 50%
of its manufacturing jobs
during the recession

SEAN
When 2016 came around we were still feeling it.
The motorcycle business wasn’t growing back out of that hole that it went into.

Cobra Aero needed to
develop new markets
in order to thrive

U-M’s Economic Growth Institute
helped them to
innovate their business

Mitten – Hillsdale

SEAN HILBERT
PRESIDENT
COBRA AERO
The off-road market in the U.S. went down by 80%. We needed to look for new marketplaces for our capabilities and our people and our technology that we were employing in one market, we felt that would be really useful in the aerospace market as well.

Cobra sought help from U-M
to develop new hybrid technology
for Navy surveillance drones

JAMIE CROWLEY
PROGRAM MANAGER
U-M ECONOMIC GROWTH INSTITUTE
We engaged with Sean. When you’re in the business of providing solutions, you don’t tell someone what they need. You listen to them and find out what they’re looking for.

SEAN
The Economic Growth Institute came out and visited Cobra at our plant here. We sat down with some of our employees. We talked about our plans.

U-M connected Cobra with
development funding

And with companies that helped
with engine design

And production efficiency

PAULA SORRELL
DIRECTOR
U-M ECONOMIC GROWTH INSTITUTE
We see that small- and medium-sized manufacturers are challenged in a way that they’ve never been before. We’re really interested and invested in these companies because it’s so critical to our region and because a lot of these companies that we work with are the sole employers in their communities, and so it’s very important that they survive.

SEAN
We have many capabilities now that we never would have had otherwise if it weren’t for the initial seed of what the Economic Growth Institute did for us.

Expanding their markets
has allowed Cobra to
maintain its
loyal employee base

And start
recruiting a new generation
of workers

WADE COONEY
COBRA AERO EMPLOYEE
After high school, they offered me a full-time position here. Now, this is kind of turning into my home. I’ve loved it ever since I started here.

Over 35 years
U-M has worked
with over 1200 companies

And helped to retain or create
over 60,000 jobs

SEAN
It’s not just the little bit of help that we got to begin with. It’s all the relationships and
ideas and people that we met and companies that we met. All those things went together to actually change our company in ways that we never would have dreamed of otherwise.

Video Produced by Chris McElroy, Michigan Media All photos by Eric Bronson, Michigan Photography
By Greta Guest

As defense contractors throughout the Midwest lost work because of federal budget cuts, many were at a loss about what to do next, including Sean Hilbert, CEO and President of Cobra Aero, a rural manufacturer in Hillsdale, Michigan.

Hilbert, whose main business is making youth competition motorcycles, heard that the drone business was in dire need of a qualified engine manufacturer. He heard stories of expensive failures caused by poor quality engines, and that’s when Cobra Aero started work on supplying high-powered hybrid drone engines to an independent firm working with a department within the U.S. Navy.

In late 2017, he connected with the Economic Growth Institute at the University of Michigan. Through a program that helps defense suppliers pivot to new product lines or services, he was able to get a match to the $83,000 he was able to put into the research and development for the new engine, for a total of $165,000.

Aero CEO Sean Hilbert and U-M's Jamie Crowley, University of Michigan Economic Growth Institute program manager, with the 3D-printed metal used in the engines.

Hilbert and Crowley

“The help they gave us accelerated things dramatically. It gave us the funds to design the next-generation aero engine,” he said. It’s made of 3D-printed metal made in an additive manufacturing process, meaning the metal is added one layer at a time instead of starting with a block of metal and cutting it away.

The Defense Manufacturing Assistance Program worked directly with defense companies to identify ways to strengthen and diversify their business to ensure the long-term vitality of the defense supply chain.

Sean Hilbert, CEO and president of Cobra Aero, among the youth competition motorcycles

Sean Hilbert among the motorcycles

The six-year collaboration among U-M, Purdue University and Ohio State University resulted in 139 new products, 662 new jobs, $183 million in new sales and 93 new markets in Michigan, Indiana and Ohio. U-M’s Economic Growth Institute provided financial, marketing, operations and technology assistance to help the 125 defense manufacturers retool.

Hilbert said Cobra had been doing rolling layoffs to keep the business afloat during the height of the economic downturn. Now, his employee count is 36, up from 26, and the company plans to deliver its first alpha prototypes next year.

Cobra Aero plans to make airplane engines and engines for unmanned aerial vehicles.

Expanding markets helped Cobra Aero retain their loyal employee base

Expanding markets helped Cobra retain their loyal employee base

“The first interest was the Navy, but we have interest from everybody from defense contractors to unmanned submarine makers,” Hilbert said. “Whether it’s in the water, on the land or in the air, we have tremendous interest in this platform.”

“The companies we served had to have lost defense contracts that made up at least 10% of their revenue, and we helped them diversify their revenue streams to stabilize the company as a defense contractor,” said Paula Sorrell, director of the Economic Growth Institute.

“It was estimated that 50% or more of the defense supply chain was at risk. This impact was also felt in the communities where military suppliers reside, leading to job losses, erosion of technical capabilities and community hardship.”

Another company helped by the program was Patriot Solutions, a Grand Rapids-based veteran-owned firm that helps small businesses bid for government contracts. It was started by Jon Tellier, a retired lieutenant colonel in the U.S. Army, and Chad Boersma, a Marine.

“The help they gave us accelerated things dramatically. It gave us the funds to design the next-generation aero engine.”
– Sean Hilbert

They founded the company in 2008 and found out about the Defense Manufacturing Assistance Program as a service provider. Their work helped another manufacturer land a contract before they needed the program’s matching grant to help update their website.

Some of the drone engines produced by Cobra Aero

Drone engines

“We happened to be on both sides of the program,” Jon Tellier said. “I think it’s a great program to help companies, and it’s a cost share. It’s enough support to get people over the hump.”

With each company and community, the program assessed many factors including financial health and market placement. The program managers then worked with each company and community to implement diversification plans, which are jointly funded by all parties.

Paula Sorrell, director of the University of Michigan's Economic Growth Institute

Paula Sorrell

The website redesign, completed last summer, has helped Patriot Solutions boost its credibility within the defense industry. As a result, the company has drawn more traffic to its website and strengthened its supply chain.

“We’re still in business. We got bumped and bruised along the way and we are better for it,” Jon Tellier said. “We used programs like DMAP. We leveraged some of the existing resources and we paid for others. Now 12 years later, we’re in a different place. We have people who rely on us for health care and jobs. It changes your perspective a little bit.”

Michigan, Ohio and Indiana have lost more than 6,800 defense supply-chain positions in recent years—cuts spurred largely by the ending of two foreign wars and the current federal fiscal environment.

U-M Economic Growth Institute

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