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• Universal Stainless, a key supplier for Boeing and the aerospace industry, is set to be acquired by Aperam S.A. in early 2025. According to a U.S. Air Force Safety Investigation Board report leaked to the media, Universal Stainless is behind a fatal Osprey crash in Japan that killed eight U.S. airmen, and potentially at least five prior aircraft failures. The Osprey has become known as “the widow-maker.”
• An attorney for two of the families of airmen lost in the Japan crash told Hunterbrook Media that they are contemplating a lawsuit against the Osprey manufacturers, which could include Universal Stainless.
• Universal has a history of quality control issues going back at least as far as 2001, when Teledyne Technologies Inc. sued Universal Stainless, accusing it of producing defective steel that caused multiple crankshaft failures in general aviation aircraft engines, with over 90% of the crankshafts found to be flawed.
• Former Universal Stainless employees describe a toxic workplace culture with equipment dating back to the 1950s, pressure to prioritize production over quality, and instances of discrimination and unsafe working conditions. One former employee said he stopped flying, knowing Universal’s metal could be on the plane.
• Multiple former employees have filed lawsuits against Universal Stainless, alleging a range of misconduct. These include claims of racial and age discrimination, disregard for safety, and retaliation against employees who raised concerns. One lawsuit alleged that when an employee tried to report harassment, they were told by HR to “keep your head down and your mouth shut.” Employee reviews on job sites paint a similarly negative picture.
• On Glassdoor, Universal Stainless has an overall rating of 2.3 stars, which is 32% below the manufacturing industry average and significantly lower than comparable aerospace metals producers. Its ratings are similarly low on Indeed, at 2.2. Reviewers cite poor quality control, safety standards, and mental health conditions.
• Over the past decade, Universal Stainless was also four times more likely to receive an Occupational Safety and Health Administration (OSHA) violation than the average rate among its competitors in the aerospace metals industry, according to data compiled by Hunterbrook from a database maintained by Good Jobs First, a national policy resource center that promotes corporate and government accountability in economic development.
• The company cycled through three different auditors in 2023, an exceptionally rare event for a publicly traded company. The probability of two auditor turnovers in one year is just 0.69% for Russell 3000 members, which includes Universal Stainless.
• Amid the auditor turnover, Universal Stainless reported unprecedented gross margin growth, from 7.0% in 2022 to 25.4% in Q2 2024, significantly outpacing industry peers.
• Universal’s latest annual report revealed a series of material weaknesses in internal controls, including ineffective “internal controls over certain business process cycles” and inadequate documentation of management review controls. The company’s financial statements show an unusually low cash balance of $1,000 or less as of July 2024.
• Universal Stainless is heavily reliant on Boeing, based on company statements. Aerospace accounts for the majority of its business. But Boeing is currently facing significant challenges, including a worker strike, regulatory scrutiny, and a renewed emphasis on safety following recent incidents, which may not align with Universal’s checkered track record on quality.
• The Aperam acquisition will need to clear a CFIUS review due to national security risk because Aperam would become a foreign owner of American steel production used for the military.
• Universal did not respond to Hunterbrook’s request for comments on a long list of our key findings, including its role in the Osprey crash, allegations of major product defects, employee lawsuits, auditor turnover, and material weaknesses in its financial reporting.