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Monday, March 1, 2004

Bridging the Divide Between PMAs and OEMs

- James Careless

Many original equipment manufacturers (OEMs) resist the growing tide of parts made under FAA parts manufacturer approval (PMA) rules, but some PMA companies have found a way to keep the OEMs happy with high-quality PMA parts.

In the circus that is today's aviation maintenance market, the McKechnie Aerospace Aftermarket Group (McKechnie) is definitely a high-wire artiste. The reason? McKechnie's success is founded on the aerospace components it builds under FAA PMA (parts manufacturer approval). These PMA parts are the aerospace equivalent to aftermarket auto parts: the kind that replace OEM original components. Yet, rather than attacking McKechnie as a competitor, many OEMs whose parts McKechnie is supplanting are happy to cooperate with this U.K.-headquartered company and even to buy parts from it.

McKechnie's Strategy

Founded in the 1990s, today's McKechnie Aerospace Aftermarket Group is comprised of three established MRO suppliers: Arger Enterprises, Aero Quality Sales, and HASCO. Arger Enterprises of Reno, Nevada is the actual PMA heart of McKechnie. Established in 1977 to serve the commercial and general aviation aftermarket, Arger/McKechnie has designed more than 10,000 PMA parts in the last 25 years.

Since 1977, Arger/McKechnie has been driven by a simple market strategy: build PMA parts that are better than the parts they replace. "We want to reduce the cost of aircraft ownership by increasing the reliability of some key components on the aircraft," explained Stephen Henderson, McKechnie Aerospace Aftermarket Group's president. "This doesn't mean that our PMAs are cheaper in per-unit cost. Instead, where the airlines save money is by having to replace these parts less often, thus avoiding substantial unexpected maintenance costs and aircraft downtime."

McKechnie calls this process Solutioneering. As described on the website at www.mckechnieaerospace.com, "Solutioneering is the delivery vehicle of McKechnie Aerospace benefits, i.e. the fulfillment of opportunities through pioneering solutions in products and services to deliver the lowest possible cost of ownership.

An example of Solutioneering in action is McKechnie's replacement runner blocks for the Pratt & Whitney 4000-series turbofan. "The P&W 4000 runner blocks cost a little over $1,000 and are relatively simple small parts that hold the engine in place," said Henderson. "But when they fail unexpectedly, the aircraft has to go into the shop and have the engine taken off the wing for servicing. The cost in man-hours, material, and lost airtime can approach up to $1 million in such instances, all because a $1,000 runner block had failed."

How McKechnie Does It

McKechnie's market strategy is so simple, one would expect any PMA firm to be able to adopt it. But that's the catch: philosophizing about improving on OEM parts and assemblies is easy. Actually doing so is not.

The process begins with detective work: sifting through repair records to identify small parts that cause big problems when they fail before their scheduled replacement.

"We look at the airlines' parts usage rates, plus the total costs of replacing these parts," said Henderson. "In some cases, replacing a relatively inexpensive component can mean tearing down an aircraft for hours, which is very expensive both in shop time and AOG losses. These are the kinds of parts we try to improve, to substantially cut such costs."

Of course, sifting through records isn't enough. To accurately identify which OEM parts are candidates for PMA upgrades, McKechnie personnel talk to mechanics. The McKechnie team is well-rounded; Henderson has 12 years MRO industry experience as president and CEO of aerospace companies such as Ryder, Goodrich, FLS Aerospace, and GE. "We've built quite a good team that understands the airline industry," Henderson said. "Many come from an airline background, or the MRO world.

Once a candidate for PMA upgrading has been found, the big challenge is to actually improve it. In the case of the PW 4000 runner block, "We began by investigating the cause of the block's failure," Henderson said. "In the process of doing so, we discovered that if we changed some of the material used to make the block, we could substantially reduce the instances of premature inflight failure. In turn, this would save-and does save-our airline customers a couple of million dollars annually in unplanned visits to the shop."

After a solution has been found, the next steps are to manufacture a prototype, debug it, then bring the commercial version of the PMA part to market. From here, the rest is marketing: convincing airlines, OEMs, and other MROs that the PMA replacement is worth the expense. "We don't sell on price; we sell on reliability," said Henderson. "This is why our last challenge is to convince the decision makers that it is worth spending some money on a PMA part now, rather than leaving the OEM component in place and risking premature failure."

Why OEMs Like McKechnie

Logically, McKechnie's PMA parts must cut into the OEMs' sales of replacement parts. So why do the OEMs like this company?

Answer: today's aircraft operators are watching their MRO budgets as never before. OEMs know this; this is why they want their aircraft to be as reliable as possible. So if a McKechnie PMA part can improve an OEM's overall product reliability-whether in the aftermarket or even during the initial manufacturing process-the OEMs are happy to see it. "This is why they are willing to cooperate with us in developing better components," Henderson said. "The OEMs know that improved reliability helps their sales and improves their overall image."

A case in point: McKechnie recently designed and released new PMA ducting seals for Airbus pneumatic, anti-ice, and air-conditioning systems. The Airbus one-piece seals tended to leak, which hurt aircraft performance, caused more downtime, and pushed up operating costs due to unscheduled seal replacements. In contrast, the new seals are two-piece polymer models that are stiffer and more reliable. The PMA seal's two-piece design means that they can be flexed into the sealing groove without damaging the seal. It was this flexing during installation that weakened the Airbus one-piece seal.

The market for McKechnie's Airbus seal is vast: all A300, A310, A319, A320, A321, A330, and A340 aircraft produced prior to 2002.�As for those made afterwards? Airbus started installing the McKechnie two-piece seals at its factory in 2002. One final point: in its service bulletins, Airbus tells its airline clients that the McKechnie PMA seals will "reduce troubleshooting and maintenance expenses and will improve the dispatch reliability of the aircraft."

Lessons Learned

The success of the McKechnie Aerospace Aftermarket Group offers many lessons about the right way to do business.

Lesson One. Identify a niche where your company can make a difference. In McKechnie's case, the insight that better-built PMAs can cut overall unexpected maintenance costs was a brainwave and the first step in the company's path to profits.

Lesson Two. Select your product targets carefully, in line with your company's niche advantage. McKechnie has resisted the temptation to make all kinds of PMA components, focusing instead on those parts that fit within its business strategy. This has maintained the value of its brand to aircraft operators and OEMs alike. Not only does this help at sales time, but it also gives McKechnie credibility when designing new parts and trying to get OEM support.

Lesson Three. Quality, quality, quality. The history books are littered with the shells of dead companies that started out well, but then traded off quality for quantity in the pursuit of big money. The McKechnie Aerospace Aftermarket Group has resisted this temptation.

Next Stop, World

With its roots in the U.K. and many of its plants in the U.S., McKechnie is already a serious international contender. However, Stephen Henderson's sights are set on true global distribution. "The North American PMA market is pretty mature, but we foresee the European market starting to open up," he said. "We also believe that there are lots of opportunities in Asia. In fact, we see the world's airlines, OEMs, and MROs as potential clients."

This said, the airline industry's money troubles can make it hard to generate new customers. "The toughest part is cutting through all the corporate levels to sell decision makers on your credibility as a supplier," Henderson said. "You have to reach these people and make them understand that you're selling more than just a price-sensitive commodity; you're selling reduced costs and downtime."�

McKechnie PMAs Solve Operator Problems

Improving on OEM (original equipment manufacturer) parts; this is what McKechnie Aerospace Aftermarket Group and its member companies-Arger, Aero Quality, and Hasco-have built their PMA parts reputation on. So how does McKechnie do it? Here are three examples:

Turnbuckle to the Rescue: The OEM link assembly on General Electric's CF6-80C2 engine caused mechanics no end of grief. As originally designed, part numbers 1333M76G04 through G13 provided proper bearing pre-load pressure in 22 locations on the FADEC and PMC manifold, using a rod with one fixed end and one adjustable end. Each rod end was machined into a clevis, each of which cupped a bearing. The problem was that this part's restricted adjustment range meant that some bearings were too tight, while others were too loose. Fixing the problem required removing the hardware, which consumed hours of labor.

To solve the problem, McKechnie devised a turnbuckle mid-rod adjustment feature on its PMA part, which it labeled the JL00016-03. Simply put, mechanics can micro-adjust the JL00016-03's tension and position by lengthening or shortening the rod as required using the turnbuckle. No longer do mechanics have to remove the whole assembly for servicing, a change that has vastly reduced shop-time. Today, the JL00016-03 has become a standard upgrade during all major CF80-C2 engine overhauls.

Don't Crack Up: Used in both Airbuses and Boeings, the CF6-80C2's OEM LPT cooling manifold was plagued by cracking problems caused by heat distress and engine vibration. To solve the problem, Corry Manufacturing Company (an Arger supplier) devised its own version of the GE/Elano LPT manifold design. The Corry LPT Manifold, as it is now known, dealt with the cracking� issues by adding metal bracing between the manifold's cooling tubes, using more welded joints (as opposed to brazed), and installing end caps to the unit's small tubes.

The result? The Corry LPT Manifold is more rugged and less prone to failure. When problems do occur, its welded frame is quicker to repair, and the unit's 12-piece design make field replacement of seals less time-consuming.

Can't We Spend $125,000 On Something Else? In a bid to improve performance and fuel efficiency, CFM International introduced an improved aero design of the HPC stator configuration for its CFM56-5A engines (Airbus A319/A320). Unfortunately, after many engines had been introduced with this part, it became apparent that the improved component was unable to meet its specs. So CFMI pulled it off the market, and returned to its original non-aero design.

In doing so, CFMI ceased to support the inner shroud segments in the aero configuration. Unfortunately, replacing these small parts cost $125,000 per engine, because the customer had no choice but to convert their engines to the non-aero design.

Arger reverse-engineered the aero inner shroud segments to develop a replacement part that could be easily installed without converting the engine. The result? No longer does replacing the inner shroud segments require a $125,000 engine conversion.

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