Precision Tube Company

Foreign Compliance Case Study, May 2017

(Company Names Changed to Protect Confidentiality)

BACKGROUND

Precision Tube Company (PTC) manufactures precision, small diameter tubing using dozens of high quality 

metals and alloys. It has very few competitors. Primary markets include aerospace, nuclear, medical, chemical, 

and oil & gas. It has roughly 200 employees and international is less than 10% of sales. It has sold product into 

35 countries. After being an 80-year-old family business through four generations, the company was acquired 

by a diversified $4 billion multinational two years ago. 

EUROPEAN AEROSPACE MARKET

PTC has had a sister company in Europe since the 1950’s. They have overlapping capabilities and the sister 

company has naturally focused its international expansion in Europe and Asia, while PTC has been more 

focused on the Western Hemisphere. However, the European sister company has also helped PTC to develop 

relationships in Europe. According to PTC, the culture in Europe differs from that of the US and it can be difficult 

to “get in front of Airbus.” However, when Airbus decided it wanted to geographically diversify its supply base (in 

part to support US manufacturing), the sister company helped PTC develop a relationship with the OEM.

For many of PTC’s industry segments, “US requirements are the biggest hurdle. Once you are in compliance in 

the US, the rest is easier.” From the company’s point of view, foreign regulatory compliance is not the major 

challenge, but rather customer compliance requirements. For example, it got AS9100 certification (a global 

aerospace standard) because Airbus required it. AS9100 certification was managed primarily in-house.

(Interestingly, Embraer, a Brazilian aerospace company, did not require it to be AS9100 certified, though PTC 

did go through an Embraer qualification process.) In addition, there are some auditing and testing requirements, 

particularly for European customers.

OTHER MARKETS

Aerospace in Brazil. PTC sells to Embraer in Brazil, but not directly. Its products go through distribution. 

Suppliers must be on the OEM’s qualified list. Embraer only has three approved suppliers for PTC’s product, 

which must pass fatigue tests and inspection, as well as meet specific OEM specs. The qualification process is 

done directly with the OEM. The process is similar for Airbus and Boeing. (PTC also sells to these OEMs 

through distribution.)

Nuclear. There are no particular foreign compliance challenges. For PTC, compliance is US regulatory based. 

For example, the US Nuclear Regulatory Commission has a list of countries that US companies can sell to 

under a general license. The US manufacturer simply needs to report that it sold to those countries. Outside of 

those approved countries, the manufacturer needs an export license from the NRC. PTC sells to Argentina

(through a Canadian customer), which is not on the NRC list, so the company needs an export license from 

NRC. PTC did not require outside assistance in getting the export license. Its in-house legal department 

submitted documentation, which PTC described as being fairly simple: company information, product 
information, etc. For nuclear customers in Canada, PTC ships under the general license. (As Argentina does not 

have its own nuclear technology, there are no Argentinean compliance requirements that flow down to PTC.) 

In addition, PTC’s parent company limits the countries PTC can sell to in the nuclear market, because of liability 

concerns. The parent company will only allow shipments to countries that are part of international nuclear 

treaties such as the Paris Convention1 and the Vienna Convention2, which afford some liability protections. 

Selling to countries outside of these treaties involves undue risk or costly insurance, and requires specific 

approval by the NRC. This policy forced PTC to drop out of pursuing business in the South Korean and Indian 

nuclear markets. Liability concerns also impact its ability to supply the nuclear market in China, which is served 

through a 3rd party in Europe rather than direct. Though it has not yet made sales into the nuclear market in 

China, it believes there is opportunity and is better protected to sell in China than South Korea or India.

 1 Paris Convention on Nuclear Third Party Liability

2 Vienna Convention on Civil Liability for Nuclear Damage