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Saturday, January 1, 2005

Midcoast Magic

This dynamic business aviation maintenance outfit plunged full speed ahead into the marketplace during the past few years, and now the entire Midcoast team and the customers are reaping the benefits.

There is a unique atmosphere at Midcoast Aviation, subtle, hard to put your finger on, but real and almost palpable as one enters the facilities at the St. Louis Downtown Airport. Perhaps it started with the mid-west work ethic that is such a part of the area, or it could be the sense of pride at the tremendous growth and success of the company recently even in the face of troubled economic times. Maybe it is the strong sense of family and community among the employees, many of whom have been with the company 20 years or more and refer to those with only 10 years of service as newcomers. Whatever it is, the Midcoast environment is the kind of magic other companies would like to be able to capture.

The Midcoast magic is part of a team effort headed up by dynamic leader Kurt Sutterer, recently promoted to president over all four locations, Lambert-St. Louis International Airport, St. Louis Downtown Airport in Cahokia, Illinois, Spirit of St. Louis in Chesterfield, Missouri, and Perryville Municipal Airport in Perryville, Missouri.

Sutterer, forthright and direct with an intensely focused mind, has led Midcoast to its current level of success by making bold decisions and overcoming the "it's never been done before" mentality of any business. With many successes of this nature to his credit, his employees now seem to have a sense of invincibility when it comes to the next idea from their leader.

The Midcoasters have left that old mentality behind for something akin to the wild abandon one experiences on a rollercoaster ride--this is scary but it's going to be fun. That is a testament to the trust Sutterer has garnered as a result of asking his people to take risks, supporting them during the effort, and having those risks pay off. "When the economy was down," he said, "we added $1 million in overhead to the company in salaries direct. When others were cutting back, we were building hangars and investing in tools such as the new 3-D engineering software and CNC routers for the cabinetry and sheet metal shops." Those strategic moves have helped Midcoast grow more than 30 percent each of the last two years.

Embracing change

In some ways, Midcoast is a miniature version of a big OEM. Touring the facilities one could easily imagine any of the Midcoast specialty shops (sheet-metal, upholstery, cabinetry) at one of the OEMs. Sutterer said that one of the cornerstones of Midcoast's success is its in-house engineering department consisting of 45 engineers. "Engineering is often looked at as discretionary overhead. We look at it as an opportunity building cost," Sutterer said. He added that having its own engineering department has allowed the company to take advantage of significant opportunities, and to efficiently manage the joint accountability between engineering, production, and the customer.

The engineering department gives Midcoast flexibility, and quick reaction times when a customer wants to make changes. "We aren't fighting change here," Sutterer said, "we are embracing it. A change to an engineering order hamstrings throughput in the OEM manufacturing completions process. But even on short notice, we can make changes pretty rapidly here."

Midcoast also encourages customers to come and stay during a completion or refurb. "Some companies discourage that, but we don't," said Gary Driggers, vice chairman and 17-year Midcoast veteran. "We beg our customers to stay. It helps us keep short lead times on changes that inevitably happen. If the customer is here, we can do the engineering and get a sign-off from the customer immediately."

"We spend a lot of energy building relationships with our customers," Sutterer added. "We spend time getting to know the individual." One method Midcoast employs is the position of project administrator. "These individuals are like hybrid account managers. They are relationship-building portals who are experts in the aircraft but also take the time to get to know their customers."

These project administrators spend some of their time simply managing customers' expectations by explaining processes and how complex a completion or refurbishment project can be. "Sometimes there are difficult situations in this business but we can't afford to have breeches in our relationships with our customers," Sutterer said. The position has been so successful that Midcoast will be adding more project administrators in the future.

Custom house

Midcoast is also working closely with Bombardier. "I think Bombardier is particularly intelligent to use us as a custom house," Sutterer said. "It's a business niche for us because there will always be a certain number of their clients that are going to need that. Instead of running from that we have run to that."

Midcoast has also made it a part of its goals to produce fast, high quality, specialized interiors. "Sixteen to twenty weeks to complete a custom airplane is pretty standard for us," he said, adding, "One thing I am confident of is that we are the fastest that anybody can do it because of our internal engineering." Midcoast claims to have never delivered late on a Bombardier completion. Sutterer is also quick to brag that a Midcoast Challenger 604 interior is one of the lightest in the industry, without sacrificing quality or soundproofing. "We are always looking for ways to pull out weight. It becomes a performance opportunity," said Sutterer. "If you can pull out 200 pounds, that's one more passenger. With our engineering staff we can research and develop on the fly and reducing weight just becomes a part of the process."

Driggers, a former customer, brings a different perspective to Midcoast and is a polar opposite to Sutterer. Easygoing and jovial, he has a tremendous depth of knowledge. Driggers brought his corporate aircraft to Midcoast for years before joining the team. Almost everything Driggers talks about is related to how it will impact the customer. For example, he pointed out the newly refurbished FBO building. "We just spent $700,000 to refurb the FBO," he said. "We want customers to feel welcome here. We want their first impression when they arrive to be a good one." The refurb was long overdue and has already made a difference since its completion in August. "We tested the new facility out during the World Series. We had over 100 aircraft on the ramp. It worked perfectly,"

Midcoast is also an authorized service center for Dassault, Raytheon, and Bombardier. Driggers noted that Midcoast is the only North American factory-authorized service facility for the Global Express that is not owned by Bombardier.

Ever watchful for ways to provide better service, Driggers said that Midcoast developed its own stairs for the Global, to be used while the aircraft is being worked on. "Each airstair door costs $1 million. When an aircraft is in for service, we are in and out of that cabin hundreds of times. Our engineers designed mobile stairs so the customer's stairs don't get any wear and tear while they are with us. Bombardier has expressed interest in having us manufacture these steps for their service facilities," he added.

Driggers also highlighted the recent achievement of obtaining Designated Alteration Station (DAS) status from the FAA as another milestone that will ultimately benefit its customers in numerous ways. "Basically, our DAS delegation means that Midcoast can issue STCs for virtually any airplane weighing under 100,000 pounds. That covers nearly every corporate aircraft on the market," said Driggers.

Niche markets

Midcoast has created several niche markets that have served the company well; one of which is major structural repairs. Back in 2001, Midcoast convinced the U. S. Marine Corps to repair a C-20G (GIV) that had been severely damaged in a tornado. Although the massive job was costly to the tune of $11 million, the repair ultimately saved the U. S. taxpayers millions, a fact that everyone at Midcoast is particularly proud of. "It would have cost $42 million to replace that aircraft with all the specialized equipment required," Sutterer said.

The company has gone on to repair other major structurally damaged aircraft such as a Falcon 900B that required both wings to be replaced. Midcoast became the first company outside the Dassault factory to perform a center wing plank installation.

Another niche Midcoast has begun to see success in is landing gear overhauls. "Raytheon changed their landing gear overhaul requirements for Hawker 700 and 800s. They imposed a calendar requirement versus cycles. So the company has invested in some full sets for inventory," said Kevin Gettemeier, director, accessories at Midcoast. Another homegrown manager, Gettemeier has 29 years with the company. He is preparing for what he referred to as "a tsunami of work" as the requirement change on the landing gear overhaul begins to impact Hawker operators. "We have added more than $1 million in assets to our rotables in this area," Sutterer concurred. "We consider ourselves to be the best shop to do this."

The accessories shop is one of the vertical integrations that Sutterer believes makes Midcoast so successful. "The guys in my shop are passionate about what they do," Gettemeier said. "They are professional. They understand time constraints and pricing." He said that a plane gets grounded not because a wing falls off, "it doesn't fly because a valve fails. That's what we work on and we have the resources to fix it right here."

Environment of believing

Sutterer sounds like a self-help guru when asked what he attributes his personal success to: "I bring an environment of believing we can do things we might not have considered possible before. Leadership has to have confidence to take risks and manage those risks. I have a quality of tenacity. I am not a quitter. I am not a timid person. I am not afraid of high levels of risk. I believe that the best chance for success can be found in the worst adversity." Sutterer, 42, is a graduate of Linn State Technical College and holds an A & P certificate. "I've also taken some business classes along the way, but I started out on the floor here at Midcoast," he said. Most people there remember when he was just starting out as an A&P, and that only adds to his credibility.

Core group

Quickly, however Sutterer turned the focus back to Midcoast as a whole. "Midcoast is successful for one reason. People--our team. It's not about these buildings, or technology but the quality of individuals this company has working for it. Anybody can put up brick and mortar but we are nothing without the quality and continuity of people we have working here. A lot of our managers are homegrown. Not too many companies have such consistent teams. We have actually tried to perpetuate that by learning more from professional business psychologists and a company called Leadership by Design. We are trying to build a more robust company by strengthening interpersonal relationships within the company and with customers." Midcoast has used formal training by that company to try to make its unique team spirit a living, measurable metric.

Midcoast employee Roxanne Hilboldt is a prime example of Midcoast's homegrown success. Hilboldt started out as the only female A&P in 1981. "They weren't sure about hiring a woman but I kept showing up," Hilboldt said. "They did hire me and put me to work on the floor. The guys took me under their wing." She has been with the company ever since and has progressed to the position of senior manager, completion sales. "Midcoast allows everyone to advance and improve themselves. They don't hold you back. I've wanted to experience different jobs and they have allowed me to do that. It's a family atmosphere. This is the same group I grew up with."

Sutterer also credited parent company Sabreliner's chairman and CEO Holmes Lamoreux as having the vision and support Midcoast needed for growth when Sabreliner bought the company in 1994. "He has a unique grasp on the strategic investments needed to match our core activities," Sutterer said. "He's got the confidence that his investments have paid off. He has been tremendously supportive. He's all in."

Midcoast is a big believer in continued training and supports such efforts as the PAMA Maintenance Olympics. The Midcoast team, the Arch Rivals, took home top honors at the 2004 PAMA Maintenance Olympics. Sutterer was so proud he surprised each team member with a substantial monetary reward.

Midcoast also plans to use incentive compensation based on specific criteria to reward its employees. "We have organizational critical results areas [CRAs] that cascade down into individual performance metrics," Sutterer said. "It goes all the way to supervisor level. These are individual tasks, tailored to that job, that a person has to do to be successful." These include measurable standards of behavior.

Midcoast has a lengthy document outlining its values, code of conduct, and acceptable behavior, and it is peppered with words like respect, integrity, honesty, and trust. This document was born out of a meeting in January 2004 where the management team tried to define that magic mentioned earlier in an effort to make sure those principles will continue to be a part of the fabric of the company. "I believe you can perpetuate it, that it is a living thing, and that Midcoast is always going to be personified by how we work together as a team," said Sutterer.

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