Thread by @Osinttechnical

BREAKING: Universal Stainless and Alloy Products (NASDAQ:$USAP) is reportedly behind the deadly crash of a USAF Osprey in Japan last year.

@hntrbrkmedia found glaring issues in Universal's operation, which supplies steel to major aircraft manufacturers including Boeing.

On the 29th of November, 2023, a U.S. Air Force CV-22B Osprey, callsign Gundam 22, suddenly crashed into the Pacific Ocean off the coast of Yakushima Island, Japan. All eight crewmembers were killed in the impact.

After a series of onboard alerts, the Osprey had taken an emergency diversion and was on final approach when a critical gear in its left-hand Proprotor Gearbox (PRGB) shattered, stalling the left engine and sending the aircraft tumbling 800 feet down into the Pacific.

After the wreck of Gundam 22 was pulled from the waters off of Yakushima Island, investigators tore into the gearbox, discovering that a high-speed planetary gear pinion had exploded, tearing apart other gears and leading to a catastrophic failure of the gearbox.

Recovered logs show a final, cascading series of failures over a period of just three seconds. The catastrophic failure of the gearbox led to a complete and unrecoverable loss of control. After this failure, there was no way Gundam 22’s crew could have saved their Osprey.

The Air Force released an official Accident Investigation Board Report in August. In their findings, investigators blamed both the catastrophic failure of the left-hand PRGB, and the pilot’s decision-making process, primarily for not diverting sooner.

However, the Air Force put together another report, the Safety Investigation Board (SIB), for internal distribution. This report went into far more detail on why the gear failed, and in August, it leaked to the press.

military.com/daily-news/202…

The SIB report found that the failure in Gundam 22 was "similar to those seen on seven previous failures in low-speed planetary pinion gears." Five of those failures were caused by "non-metallic inclusions", impurities in the underlying gear material that military investigators believe “most likely” took down Gundam 22.

In 2014, Bell Textron and Boeing, the companies that built the V-22, sent a formal risk assessment to the DOD entitled “Gear Metal Raw Material Impurities.” When the Navy office under NAVAIR that handles the Osprey program received the warning, according to the report, it did not fully process it to determine if the military should take action.

Instead, "NAVAIR implemented contractual financial withholds in hope the contractor would correct deficiencies in the [alloy] processing that had resulted in previous gear failures."

When they followed up, Air Force investigators found that "there have continued to be inclusion failures in [alloy], suggesting contractual financial withholds did not prompt corrective actions."

That contractor, according to , was a midsize specialty steel manufacturer based out of the Ohio Valley, Universal Stainless and Alloy Products. Military.com

Ryan Smith, a former Universal Stainless employee, told us he hasn't flown since leaving his job at Universal Stainless, whose product, as its former CEO once put it, is part of "every Boeing plane."

Over what Smith said were three stints at Universal Stainless starting in about 2014 — in roles ranging from machine operator to maintenance supervisor — he encountered outdated equipment “from the ’50s,” a fire drill mentality when major customers visited, and quality control subject to “pressure from management.”

Hunterbrook built on initial reporting of the leaked SIB report— interviewing former employees and experts, visiting USAP’s sites, reviewing the company’s accounting, and diving into its history of litigation.

Our key findings:

- Universal Stainless products linked to fatal Osprey crash and at least 5 similar aircraft failures
- History of quality control issues and related lawsuits dating back to 2001
- Toxic workplace culture with discrimination and safety concerns
- Claims of unprecedented margin growth — but with three auditors in one year and material accounting weaknesses
- Heavy reliance on Boeing as key customer and overall industry challenges

Another former Universal Stainless employee, a manager who spoke to Hunterbrook anonymously out of fear of retribution, also pointed to a noxious, high-stress corporate culture that prioritized production over quality and safety. He said he “saw two lab managers go out in ambulances because they thought they were having a heart attack.”

“My wife actually took out a life insurance policy on me while I worked there,” he said, describing a culture of “finger-pointing” and intense “pressure to get things done quickly.”

He also said Universal’s workers are told they “can lie to the customers” and deal with the “fallout later.”

“They would come up with shipping reports or shipping estimates at the beginning of the month. And there'd be a lot of pressure on operations … to hit these numbers. And then at the end of the month, it's like, all hell breaks loose when you're not hitting them,” he said, adding that managers would often cite a fear of missing an “earnings report” in order to convince them to move faster.

One former quality inspector at the North Jackson facility said, “Almost everything in this place is falling apart.” A former maintenance technician, meanwhile, claimed: “Nothing is repaired correctly because they just want to keep everything running, therefore most repairs are ‘band-aided.

At least five lawsuits in the last six years by former employees describe discrimination, unsafe working conditions, and retaliatory practices.

In one lawsuit, an employee claimed she was told by HR to "keep your head down and your mouth shut" when reporting harassment.

Another alleged that African American employees were routinely forced to perform dangerous tasks alone that typically required multiple people.

From 2014 to 2024, Universal Stainless was also four times more likely to receive an Occupational Safety and Health Administration 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 workplace culture issues are reflected in online employee reviews as well. On Glassdoor, Universal Stainless has an overall rating of 2.3 stars, 32% below the manufacturing industry average.

One review stated: "If you want to work in a place that degrades you, puts you in constant danger... this is the place for you."

Other comments included: “The environment is very pass the buck and no accountability”; “The company is not serious about quality. There was no quality department”; and “Upper management only cares about 1 thing and that's production numbers.”

Despite these issues, Universal Stainless reported unprecedented growth in 2023:

41% increase in net sales

2023: Gross margin jumped from 7.0% to 14.5%
Q2 2024: revenue up 19.9% YoY, gross margin at 25.4%

But there are red flags in Universal Stainless's financials:

- They cycled through 3 different auditors in 2023 (the probability of 2 turnovers in 1 year is 0.69%)

- Universal holds an unusually low cash balance of $1,000 or less (% of companies on NASDAQ with balances that low: 0.36%)

The company's latest annual report also revealed material weaknesses including:

-Ineffective controls over business processes

-Inadequate documentation of management review controls

-Insufficient monitoring of internal controls

-Ineffective "information technology general controls"

We tried to talk with a number of stakeholders, including the US Air Force, AFSOC, SOCOM, the USMC, NAVAIR’s PMA-275 (the program in charge of the Osprey), and the DCMA.

Only AFSOC responded. In their statement, they stressed that they could not talk about the still unreleased SIB report.

But they shared that they had “conducted a comprehensive review of the CV-22 enterprise” and were “working closely with various stakeholders as well as Air Force and SOCOM leadership to ensure AFSOC is properly organized, trained and equipped to conduct safe and affordable CV-22 operations.”

Universal Stainless and Alloy Products did not respond to our request for comment.

This thread only touches on some of what we found. For the full article and disclosures go to hntrbrk.com/usap/

Towards the end of our interview, Ryan Smith, a former maintenance supervisor at Universal Stainless’ Dunkirk facility in New York, added that he would drive his kids to Disney World rather than fly. "The fact that their stuff was going on the plane” would "absolutely” be a concern."