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Monday, July 1, 2013

Not Worth the Gamble; But Maybe the Right Move?

By Andrew Drwiega

EADS North America proactively withdrew from the U.S. Army’s Joint Multi-Role (JMR) Technology Demonstrator competition because the requirement for the transfer of Intellectual Property (IP) rights was too high a price to pay in the current climate of sequestration, said Eurocopter’s new President and CEO Guillaume Faury at a press conference during the Paris Air Show in June. One senior Eurocopter figure who also attended the event added that when this was combined with the high price of investment (EADS North America, Eurocopter’s parent company, would have to invest $3 to every $1 put in by the U.S. Department of Defense during the project), it became difficult to justify the economic outlay that would allow the European OEM to continue.

Other factors were also likely weighed and the decision will not have been taken lightly. To turn away from JMR, which ultimately leads to medium Future Vertical Lift (basically the replacement of all of the military’s 4,000 medium helicopters throughout the U.S. Army, Navy and Air Force), there is a gamble that EADS subsidiary Eurocopter could lose out in the massive replacement contracts that would come from the U.S. armed forces for aircraft post-2035.

But did EADS North America really have a realistic chance? Its competition comes from the now combined industrial muscle of the Boeing/Sikorsky partnership (currently in the process of shaping their agreement) and Bell Helicopter Textron, whose tiltrotor technology has already been praised by senior figures within the Army. A third untested American competitor is also still in the mix, AVX Aircraft, who was selected early as a Category 1 choice for the JMR Technology Demonstrator (to many a puzzling player as it has no track record or established manufacturing base). Even when times are not as hard as they currently are, U.S. politicians are likely to line-up behind American companies with such a big deal “on the table,” no matter how much the package was presented including the emphasis of American Eurocopter’s manufacturing base in Columbus, Miss. Faury said he believed that the EADS North America bid could have been a winning one.

Confidence in the DoD has been dented with its recent decision to cut 31 out of 41 of the final UH-72A Lakotas that were to be delivered by American Eurocopter from a program that has been continually and roundly praised for delivering on or ahead of time and to budget. The conclusion of the program with the delivery of the remaining helicopters is something that the company has pledged to continue to fight for.

The self-proclaimed successful tour of the United States last summer by Eurocopter’s X3 hybrid technology demonstrator aircraft – which performed flight demonstrations for and with Army pilots at USAACE in Fort Rucker, Ala., on the way – was seemingly paving the way for bigger things (no doubt with the DoD being given a further glimpse of what Eurocopter proposed as a follow-on). But the feedback has obviously not been enough to satisfy EADS North America that the gamble is one worth taking.

It is now feasible that the challenge of developing a JMR-type helicopter may be taken up by Eurocopter itself, running at its own R&D pace and not that dictated by the U.S. Army. Indeed the JMR project has still not got buy-in from the U.S. Navy or Air Force. At the recent Forum 69 of the American Helicopter Society in Phoenix, Rear Admiral Paul Grosklags, the U.S. Navy Program Executive Officer (PEO) for Air SW, said that the Navy was still not onboard with the JMR and seemed concerned that the Army would go too far down the preparation road without the Navy’s buy-in. “I think it needs to be a melding of efforts. We need to go forward together. Any effort by any other service to go independently once we have started this joint path is going to cause of great deal of skepticism within OSD [Office of the Secretary of Defense]. But clearly the ball is in the Navy’s court to step up to the plate to truly make this a joint effort. I am hopeful that the collective bargaining agreement (CBA) has initiated that process and will generate an increased level of resource interest, but I’ve got to be honest and say the jury is still out on that.”

So the potential for a ponderous JMR process may yet hinder the might of the U.S. players and leave a window for Eurocopter to develop its own future concept significantly in advance of its OEM rivals. Incidentally, Eurocopter casually announced earlier in the week that its Turbomeca RTM322-powered X3 had broken the rotorcraft speed record, clocking up 255 knots (472 km/hr) in level flight on June 7. Eurocopter test pilot Herve Jammayrac stated: “While flying at both 255 knots and 263 knots (in a dive), the X3 performed exactly as it has throughout its flight envelope, exhibiting outstanding stability and providing a low vibration level without any anti-vibration system.”

Related: Procurement/Acquisitions News

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