Monday, August 1, 2005
Splitting the Difference
AGUSTAWESTLAND IS SET TO PROSPER FROM PAST efforts to develop civil products that split traditional aircraft market niches while it simultaneously refines its technological strengths and works to identify the most fruitful aircraft for future development.
Long a subcontractor and licensee to the world's other helicopter makers, the company's Italian component at Agusta made a major move in 1998 when it teamed with Bell Helicopter to develop the AB139 medium twin helicopter and the BA609 civil tilt-rotor.
That move is paying off handsomely now as the AB139 enters service and the company begins ramping up production of it.
As it does so, AgustaWestland is building on its technological strengths as a producer of helicopter transmissions and is bolstering its capabilities in the critical area of systems integration.
The company aims to leave as many options open as possible--developing new aircraft on its own, partnering with other manufacturers, co-producing helicopters and subcontracting on some platforms. In that sense, it is the embodiment of what business-school wags call "co-opetition"--teaming with another company on one project, then vying with them on the next.
"We are retaining the capability of a prime [contractor] without precluding the opportunity to work with whomever we choose," said Roberto Garavaglia, AgustaWestland's marketing director.
I had the opportunity to visit AgustaWestland's headquarters here as well as nearby plants recently and observed a company intent on honing its technological prowess in its own way.
The company has invested heavily in greater capabilities to develop critical systems software on its own and to integrate that with other avionics and airframes and components in high-tech labs. It has built new, versatile test stands to investigate and refine innovations in power distribution.
Yet in the transmission shop here, a place of pride for Agusta, you'll find little evidence of the management trends like lean manufacturing, six sigma and kaizan that have swept through production facilities around the world.
There is nary a shadow-box tool set or focused manufacturing cell in sight. The place has the feel of a 1950s factory floor where everyone knows where everything goes because their fathers did the jobs before them. Yet the shop is advanced and professional enough to convince the FBI, U.S. Secret Service and the U.S. Naval Air Systems Command that transmissions for the next presidential helicopter should be built here.
A common feeling among executives here is that the company is on solid ground because Finmeccanica, the Italian conglomerate that controls it, is committed to the aerospace and defense markets and to AgustaWestland's future. Finmeccanica Pier Francesco Guarguaglini explained at the recent Paris Air Show that he has little patience for inaction or a lack of commitment. He said the British company GKN's lack of confidence in the EH101 bid for the U.S. presidential helicopter contract was a key reason why he pushed to buy out that partner and gain full control of AgustaWestland.
If executives of the company like Guarguaglini's enthusiastic support, they're in for more of it. Finmeccanica's shareholders in mid-July reappointed him as chairman of the board of directors and chief executive.
As far as executives like Garavaglia are concerned, there is plenty to be enthusiastic about.
In addition to the presidential helicopter win, AgustaWestland has one helicopter that has great appeal in the market place (in the AB139) and another that it expects to do the same (the recently certificated Grand). Beyond that is the BA609, which recently resumed a glacial flight test program and may, just may be, the revolutionary aircraft its advocates promise.
"We still don't know," Garavaglia said, "but it may be revolutionary as the jet engine was for the fixed-wing world in the early 1960s."
The BA609 certainly got a boost last month when U.S. Marine Corps evaluators recommended that its military cousin, the V-22 Osprey, be cleared for operational use after an extensive redesign and rehabilitation program.
AgustaWestland has a strategic view of the helicopter market as a series of segments defined by categories of maximum gross takeoff weight. Rather than confronting competitors head-on, it has identified gaps in the market and moved to fill them with its products. As Rotor & Wing's veteran correspondent Ron Bower has observed, there was not a civil helicopter in the seven-ton range until the AB139 came along.
As Bower noted, in its "between" market slot, the AB139 should appeal to both operators looking at smaller aircraft like the Sikorsky S-76 and Eurocopter EC155 and larger ones like the S-92 and Super Puma.
AgustaWestland clearly sees the AB139 as an aircraft of promise. For instance, other than a few A119 sales to Tex-Air in the Gulf of Mexico, the company really had no market position in the offshore segment. That changed with the AB139, which was ordered initially by ChevronTexaco and Evergreen and later by CHC Helicopter Corp. In February, Seacor Holdings, parent of Tex-Air and Era Aviation, placed a blockbuster order for 20 AB139s. That was the largest order for the aircraft to that point, and was clearly a vote of confidence in it as an offshore platform. Seacor is to get its first AB139s this year.
With the AB139, Bell and AgustaWestland, the partners in Bell/Agusta Aerospace, are betting that offshore operations will be driven in part by more efficient exploration and production further out from shore. "The offshore market is moving toward less capacity and more range," Garavaglia said. That view is opposite that of Sikorsky, which built the S-92 in part as an offshore bus.
A surprising amount of demand for the AB139 has come from two market segments, Garavaglia said: private operators and the emergency medical community.
"The interesting thing is that we're now getting requests also from private operators who have seen the enormous capabilities the 139 has, in terms of range, in terms of comfort," Garavaglia said.
The same is true of the interest from the EMS community. Fifteen or 20 years ago, EMS aircraft were delivered as derivatives of existing types, as afterthoughts, Garavaglia said. "We're now thinking of public-service EMS from Day One in the design of an aircraft. It's no secret that the Grand has been thought of as an aircraft for the EMS market."
At the Paris Air Show, Bell/Agusta exhibited the first AB139 equipped for emergency medical service operations. The aircraft, operated by the Italian company Airgreen, is planned for EMS applications during the 2006 Winter Olympic Games in Torino, Italy.
EMS operators are drawn by the AB139's large and unobstructed cabin and its flat floor and ceiling. Litters can be arranged in either two- or four-rack configurations.
The AB139 does, however, suffer from the same affliction as every other helicopter. "What is still lacking in the helicop ter business," Garavaglia said, "is a true all-weather capability, the capability to really dispatch every day, all year long."
For that reason, the AB139 partners are committed to developing and installing deicing equipment for that aircraft. "It's due to overwhelming demand, both from the offshore sector, especially operators in Europe, and from corporate operators. It's heavy and expensive. But operational reliability is important for the top management of the company, who will fly a helicopter only if they are certain that they can plan on departing at that time and coming back at the other time.
"If they are not very confident that they can make it back with the helicopter, they will choose another means of transportation, which will prevent the helicopter from being used."
The Grand, the latest version of the A109 Power, typifies AgustaWestland approach of splitting market segments.
The company bills it as "the new intermediate-size helicopter with light twin economics." Upgraded for improved performance, cabin space and accessibility, the Grand is targeted at the VIP, EMS, law enforcement and offshore segments. The aircraft won European Aviation Safety Agency certification for IFR single-pilot operations on June 1.
The Grand is an addition to AgustaWestland's product line at the upper end of the light twin FAR/JAR 27 segment. It has a maximum take-off weight of 7,000 lb. (3,175 kg.), and is powered by 815-shp., new-generation Pratt & Whitney PW207C turboshaft engines with full-authority digital electronic controller and an uprated transmission.
The Grand has a 's spacious and easily accessible cabin features an unobstructed 7ft., 7 in. (2.30 m.) long passenger section and 4 ft., 7 in. (1.40 m.) wide sliding cabin doors.
With the AB139, "the first really new design in 20 years," and the Grand, AgustaWestland is in a good position, Garavaglia said.
"We are now coming into the market with some new products," he said. "In the next five years, we will have the most modern products for the commercial business. We are quite comfortable that we will be able to consolidate upon this and enter new segments as we wish."
Not At An End
But that doesn't mean the company's work is at an end. AgustaWestland is now starting to look at what the various helicopter segments will want in terms of new aircraft over the next 20-30 years and what types of aircraft make the most sense to build. With a lead time of 8-10 years or more from inception of a helicopter design to certification, the need to settle such questions becomes more urgent with each passing day. Still, Garavaglia and others here said, AgustaWestland is well positioned to compete in tomorrow's market.
"We have the technological capability to really be a prime," he said. "We are able to do on our own the core technologies around the helicopter." The company has mastered systems integration, he argued, and has "a very powerful avionics integration capability, both in Agusta and in Westland.
"We are developing our own automated flight control systems."
When a company has such capabilities in house, he said, "the development time is typically shorter and the risk of dealing with outside suppliers is diminished.