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Thursday, February 1, 2007

Now for the Price of Success

James T. McKenna

Is There No End In Sight?

No, there isn’t. At least according to Lynn Tilton. The helicopter industry is in the midst of unprecedented demand for its goods and services nearly across the board — just about everybody agrees on that. But as the helicopter industry prepares for its biggest annual gathering, the Helicopter Assn. International’s Heli-Expo (this year in Orlando, Fla. March 1-3), the provocative owner of MD Helicopters argues that what we are experiencing now is not merely a peak in the industry’s business cycle. It’s not just a boom made up of coincidental peaks in most industry component sectors, she said. It’s a permanent change in the business.

With economies growing around the world, fueled by the utility of the Internet, global trade pacts and the quest for greater efficiency, Tilton sees demand for rotorcraft and their services remaining steady and strong.

"We will never see the contraction we’ve seen in the past," Tilton told Rotor & Wing. She maintains that customers will remain hungry for helicopters, that new customers will blossom in underdeveloped markets and airframe makers will remain under pressure to find production capacity to meet that demand.

If accurate, that would have a dramatic trickle-down effect on the entire "food chain" of the industry, from engine and avionics makers to completions centers, overhaul shops, repair stations, flight schools and all their suppliers.

Of course, rotorcraft veterans will be skeptical of such a rosy outlook, given their painful experiences with past boom-and-bust cycles and their pragmatism (dare we say cynicism?) bred by years in the industry.

Still, in one respect, Tilton is indisputably right. Key airframe makers today are hard pressed to come up with ways to increase production to satisfy pent-up demand, torn between adding capacity that might be left idle by what pragmatists/cynics see as the inevitable near-term downturn in at least some market segments or continuing to frustrate customers who want helicopters now. Nearly to a person, top airframe executives at Heli-Expo last year said a top priority was speeding production and raw-materials deliveries to reduce order backlogs that had customers waiting 18-24 months for their helicopters. But customers are still waiting that long, if not longer.

Keeping your customers waiting more than a year for helicopters isn’t such a problem if your competitors are in the same predicament and the used-aircraft market is tight (which it is). You may be ticking those customers off, but at least you’re not losing them. The predicament also presents opportunities for manufacturers whose sales have been slack, like MD and Enstrom Helicopter. The president of Menominee, Mich.-based Enstrom, Jerry Mullins, was saying at last year’s Heli-Expo that he is seizing that opportunity, building helicopters on spec and guaranteeing customers delivery within 90 days or so of their orders. That predicament is driving Tilton to rejuvenate and streamline MD’s commercial production lines.

"Why would you wait until 2010 to get your helicopter when you could get an MD helicopter in 2008?" she asked, adding that MD is faced with a "Field of Dreams" proposition: "If we build helicopters, they will come."

Yet as equitable as today’s production constraints may be for most airframers, they are wearing thin. Tilton acknowledged as much when she refuted rumors that she was entertaining offers to take MD off her hands (see page 9). Overtures from Sikorsky Aircraft and AgustaWestland, each of which was turned away, were driven not by the intrinsic value of MD and its product lines, but by its production lines.

"They all want capacity," she said.

Helicopter makers are definitely feeling the pain of markets that want multiple new products fielded quickly as well as a lot more of the existing products. Heli-Expo will be without one of its more vibrant and engaging recent participants, Mike "Red" Redenbaugh, who resigned as president and CEO of Bell Helicopter.

"Bell Helicopter is at a pivotal point in its growth," said Lewis Campbell, chairman, president and CEO of Bell parent Textron. "We have generated a lot of customer enthusiasm for our products, which has resulted in increased sales and contracts that bode well for our future. What this means, however, is that we absolutely must step up our capabilities to meet our commitments to our customers in critical areas such as quality, delivery and cost. Now that they’ve placed their trust in us, we must demonstrate that we can deliver consistently and earn their business every day."

"Mike Redenbaugh and I have agreed that a different set of leadership skills are required to lead Bell into its next phase of growth."

Citing a need for "more effective operational performance" that is "intensifying in the face of mounting customer demand and a rapidly changing global marketplace," Campbell named Richard Millman, president of Textron Systems, to succeed Redenbaugh. "His track record of performance — on both the growth and operations management sides of the equation — is exemplary."

Bell has been struggling to get the U.S. Marine Corps H-1 upgrade program for Cobras and Hueys back on schedule and continued to incur higher than expected costs on that fixed-price contract. The U.S. Army’s showcase Armed Reconnaissance Helicopter program also is behind schedule. Bell is having problems integrating the target acquisition system based on FLIR Systems’s BriteStar forward-looking infrared. Also, Bell has dropped plans for an upgraded main rotor on that aircraft, which would have boosted performance. Army officials are not happy about the delays; their schedule to field the first equipped ARH-70A unit in late 2008 is critical to relieving tired, old OH-58D Kiowa Warriors doing yeoman’s combat duty in Iraq and Afghanistan. Staying on schedule is also a prerequisite for Army officials keeping their funding for the ARH program.

Sikorsky has had its own problems, ending 2006 under the gun from the Pentagon to fix quality and production problems on its UH-60L Black Hawk lines. Those problems were a direct result of the historic, six-week strike in early 2006 that Sikorsky President Jeff Pino acknowledged virtually shut down production. Another direct cause was Sikorsky’s drive to boost and streamline production capacity by farming out many major jobs, such as completions and customization. The production problems won Pino weekly visits to Sikorsky headquarters in Stratford, Conn. from Louis Chenevert, president of United Technologies Corp., the helicopter maker’s parent.

Eurocopter’s new chief also has his hands full. Lutz Bertling took over as that manufacturer’s president and CEO in November 2006 when Fabrice Brégier moved over to help bail out Airbus. The former CEO of Eurocopter Deutschland GmbH. faces the challenge this year of spooling up production of the NH90 military helicopters Eurocopter is building with AgustaWestland and Stork Aerospace. That program has been running behind schedule. The partners handed over the first three NH90 Tactical Transport Helicopters to the German army in December 2006. In addition to Germany, France, Italy, the Netherlands and Portugal, customers include Finland, Norway, Sweden, Greece, Oman, Australia and New Zealand. Spain and Belgium have also selected the NH90.

The perennial questions at Heli-Expo, it seems, are what astonishing delivery numbers will Robinson Helicopters post for last year and what will Frank Robinson have to say about a turbine-powered product.

Robinson last year presented the key for the 3,000th model R44 to Frank Leon of Segrave Aviation, 13 years after the first production R44 rolled off the assembly line. Located in North Carolina, Segrave has been an authorized Robinson R22 and R44 dealer for more than five years. The 3,000th R44 was sold by Segrave to real-estate developer Chris Bond, who plans to use the red helicopter for showing properties to clients.

At the show, Bell will be celebrating the 40th anniversary of its popular 206 model.

More than 4,800 206Bs and 1,700 206Ls have been produced since the introduction of the 206A JetRanger on Jan. 13, 1967, when the first two production aircraft were delivered to customers at the HAI show. Since then, Bell has delivered five different generations of commercial 206s with its 206A/B JetRangers and 206L/L1/L3/L4 LongRangers, making the 206 the most popular turbine helicopter ever built.

"The success of the Bell 206 can be directly attributed to several factors. Bell’s focus on listening to the customer and delivering the features they want in a helicopter. Bell’s approach is to continuously insert technologies into the aircraft and that has kept it at the forefront of helicopters in its class," said Bob Fitzpatrick, Bell’s senior vice president of marketing and sales.

Bell is developing the latest upgrade kit for the 206L-series, which is intended to improve its performance, boost payload, and reduce direct operating costs.

The Bell 206 fleet has recorded more than 55 million flight hours in more than 60 different countries. Its missions are diverse: utility, corporate, EMS and Homeland Security. The JetRanger also is commonly used as a training helicopter with hundreds delivered to the U.S. Navy and Army, as well as other international militaries. The Army recently logged the 1 millionth flight hour on its fleet of the 206-based TH-67 trainers.

Also at the show, Air Logistics and Appareo Systems will unveil a supplemental type certificate to install Appareo’s flight-monitoring system in Bell 206 and 407 aircraft.

Appareo develops portable consumer electronics combined with 3D graphics software for capturing, rendering and even replaying "the human experience." The company has worked on augmenting reality by creating visual systems that combine actual and synthetic scenes (overlaying a topographic map on satellite imagery of terrain, for instance, or building schematics on top of a visual image of the building).

It is applying that expertise to the flight-training market, pairing its lightweight flight recorders with its Flight Evaluator software in a tool kit aimed at letting flight instructors recreate and critique training flights in 3D. The company unveiled its $1,599 CFI Flight Debriefing Package at last year’s University Aviation Assn. Fall Education Conference in Anchorage, Alaska. It includes the hardware and five software licenses.

The heart of the package is a combination sensor and recording unit that weighs about as much as a deck of cards and fits in your pocket.

The Geospatial Awareness Unit 1000 (GAU 1000) includes three gyroscopes, three accelerometers, a barometric pressure sensor and a Wide Area Augmentation System-enabled GPS (all micro-electro-mechanical systems, or MEMS), a solid-state magnetic compass and a removable memory card that can capture 70 hr of flight data.

The WAAS-enabled GPS receiver offers improved vertical precision. The yaw, pitch and roll accelerometers are designed to capture true g forces and angle of attack.

The sensors are designed to allow the GAU 1000 to track movement about every axis 360 deg in any direction of roll, pitch, or yaw.

The 2.5-in. GAU 1000 comes with an active or passive antenna and can be mounted almost anywhere in the aircraft, according to the company.

The FCC-approved unit is designed to track turns at rates of rotation up to 450 deg/sec. It records position, ground speed, altitude, roll, pitch, yaw, GPS fix quality and magnetic heading. A rechargeable lithium ion battery is designed to allow the unit to record on battery power for 3.5-4 hr.

The unit can be mounted by suction cup on a window or Velcro on the instrument panel. That allows it to be moved from aircraft to aircraft.

Hillsboro Aviation, Inc., will talk about its recent retrofit of a Bell 206L-4 for the Chicago Police Dept. and the Cook County Sheriff’s Dept., which will use it as part of a joint Helicopter Task Force.

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