Wednesday, May 1, 2013
One-on-One with Heads of Sikorsky, Avincis Group and Breeze-Eastern [Full Version]
Rotor & Wing editors recently sat down with Sikorsky President Mick Maurer, Avincis Group CEO James Drummond and Breeze-Eastern’s Brad Pedersen for interviews as part of our ongoing Q&A series with industry leaders.
What do the chief executives of a longstanding U.S. helicopter manufacturer, a London-based emergency medical services, offshore and SAR operator, and a hoist and winch supplier from New Jersey have in common? All of them sat down with Rotor & Wing during Heli-Expo in March for exclusive interviews that are part of our ongoing series featuring CEOs from the top companies around the helicopter industry.
Sikorsky President Mick Maurer
Rotor & Wing: To what do you attribute Sikorsky’s success during 2012?
Maurer: We have some pretty solid franchises, in terms of products. The single biggest order is the multi-year contract with the U.S. government on the H-60s, the Army and Navy contract for Black Hawks and Sea Hawks. It’s very nice to have that base volume, to have that predictability, which allows you to invest in some other things. It also allows you to use that product to sell into other countries.
If you look at the global war on terror, it has turned into a helicopter war. The use of helicopters over the last 10 years has grown, the tactics have been validated and the effectiveness of the Black Hawk has been proven, and so we’ve seen a lot of demand come as a result of that. Then in the other two major product platforms that we have, the S-92 and S-76—a lot of it depends on the oil business. The oil and gas industry is doing well, the demand is there and also the need to have larger aircraft that can fly farther out to oil rigs as they explore deeper and deeper, that’s been a real positive.
Then with the S-76 we transitioned from the C++ to the D, so on a relative basis we went out of production on the C++ and down to pretty low volume as we transitioned, and now we’re ramping back up on the D. We’ve also been pretty strong on aftermarket. It’s kind of been spread around, there’s not one single element.
Rotor & Wing: What impact will sequestration have on Sikorsky?
Maurer: It won’t be good, and it will probably affect our spares and aftermarket business a little sooner than the other sectors. But with or without sequestration, there’s going to be a general downward pressure on U.S. military budgets. We have to be ready for that. The problem with sequestration is that it’s a little tough from an uncertainty standpoint, but to the extent that the other pressures unfold slowly and predictably enough, we should be able to compensate. Aerospace is a cyclical business, they tend to be long cycles. We’ve been around for 90 years, and we’ll still be around.
Rotor & Wing: What’s the forecast look like for the commercial sector?
Maurer: There are two levels. On a relative basis, we’ll experience a big increase because we’re introducing the S-76D. On an absolute basis, it still looks very strong going forward because the oil market is the biggest, but we’re also seeing lots of interest from search and rescue, and that’s for both the S-92 and the S-76. We’re getting demand from parapublic-type missions—interior ministries, homeland defense, coastguards, things like that—so pretty good trends in a number of areas. The other thing we’re starting to see, and it will take a while, is that the S-92 is a multi-role utility aircraft that could be used [in an armed role], and there are some militaries that are starting to look at that. We think there’s some potential there, essentially taking a base aircraft and modifying it for military applications.
Rotor & Wing: Has Sikorsky examined any commercial applications for the X2/S-97 Raider?
Maurer: We’re considering that, but I wouldn’t put that as a front-burner item. You’ve got to have a lot of fortitude to go out and speculatively develop a commercial aircraft of any kind.
Without some major launch customer or group of orders to pull from, it doesn’t happen often, while that approach is much more typical on the military side. So long-term, absolutely—we’re in the commercial business and over time we have to introduce new products and there’s no doubt that we’ll continue to do that. But in terms of some front-burner commercial application for X2, probably not, it looks like the military is going to be first for that.
Rotor & Wing: How did the partnership with Boeing on Future Vertical Lift develop?
Maurer: We’ve always had relationships with Boeing over the years, not just on new aircraft but with the aftermarket. We looked at where the Future Vertical Lift/Joint Multi-Role was going and just started to have conversations about “Where do you see it going? What’s your appetite for investment?” and that sort of thing. It really started as a much about a business deal as opposed to a discussion about whether we’re going to go with a certain aircraft configuration.
It wasn’t about that [compound vs. tiltrotor or other design], it was about do Boeing and Sikorsky want to collaborate on medium lift? Because we’re both in there now, we both would like to stay there and it’s just a massive program—right now, the government’s ability to invest is a lot less than it used to be. So if you look at our collective ability to invest, tolerance for risk, things like that, we thought that collaborating in this program made a lot of sense.
We’re going with an X2 configuration, but it’s bigger. From a gross weight standpoint, it’s roughly three times what an S-97 Raider is. That’s one of the big things that we’re going to have to prove out in the JMR technology demonstrator program, and that’s one of the questions the customer has—is this thing scalable to something that big?
Rotor & Wing: As CEO, what are your personal goals for Sikorsky?
Maurer: I’ve talked about having these big franchises. We really have to do well in executing and introducing the CH-53K so that we have that fourth pillar in the business. That’s critically important in the long term, the way we’re going to win or compete on anything else in the U.S. government—they’re going to look at past performance and the 53K is really our key. We want to have a real program we can hold up and say, “Here’s how to do it.” That will help us with any other competition we have. So I look at that, and with FVL, it will happen long after I’m gone, but I want to make sure that whatever replaces the Black Hawk, that it’s us.
The other thing is anything to do with globalization. We’ve evolved from being really centered around the U.S. military while being an opportunistic exporter, to now where we need to become a real multi-local company that has an industrial presence in key parts of the world. That is part of the fabric in our key markets that we don’t just ship things there—we make things there, we service things there, we develop products there, and we start to expand the footprint of the company so that we operate in these other international markets. So I’d put that as my top three.
Related: Airframe News
Avincis Group CEO James Drummond
Rotor & Wing: Please elaborate on the recent restructuring of the company.
Drummond: When I joined the business in July 2011, we actually had two groups of companies—there was the Inaer group of companies and the Bond group. They were held under a financial controlling company called World Helicopter Group. One of the things we had to do quickly was work out what to do with the two groups, and we decided that we only needed one group of companies [under a single umbrella]. So we created the Avincis Group. We think it’s very important to maintain the individual operating companies within the group, and that’s why the group is branded Avincis, but we’re retaining Inaer, Bond, Australian Helicopters and Norsk Helikopter Service (NHS), because we firmly believe that proximity to the customer is really important. They need to understand [local needs] at a very deep level. The customers know that that responsibility’s sitting right next to them—it’s not sitting somewhere remote in some centralized location, but it’s where they are, and that’s really important. But there are clearly advantages of scale that we can deliver to the operating companies, and that’s the purpose of Avincis Group—we determine the strategy and deliver the advantages of scale to the operating companies so they can provide better value to the customers. The most obvious is in terms of fleet strategy and acquisition costs, services, insurance and the like. We can manage that on a global basis and deliver that benefit to the operating companies. Similarly, we make sure that the operating companies have everything they need.
Rotor & Wing: How did you come up with the Avincis name?
Drummond: It was one of the more difficult decisions in the last two years. The board decided on the strategy for the group, and that was far easier than deciding what we were going to call it.
What I thought would be a 30-minute discussion turned into something a great deal longer and more difficult than that. In the end, we decided to put the question to everyone in the company, please tell us what you think the group should be called, and whoever picks the name that the board thinks is the best gets dinner for two at a restaurant of your choice and a bottle of champagne.
One of our people in Spain picked the name, he thought of it in the context of Leonardo da Vinci, the concept design for helicopters and also the concept of advancing. He thought Avincis sounded pretty good, and we agreed.
Rotor & Wing: What have you been hearing about new Sikorsky S-92 that just entered service with NHS?
Drummond: We took delivery of [two S-92s] in early February, and they went into revenue service in early March. We’re very excited about it, it’s a great helicopter and it provides vital diversity to the fleet. Our previous heavy fleet had been entirely Eurocopter—of course we have tremendous confidence in Eurocopter and they will always be a part of the future of the business, no question—but as we grew the business, we needed some diversity within the fleet to avoid overly concentrating the risk of the business.
Rotor & Wing: What are the global trends you’re watching and where do you foresee growth in emerging markets?
Drummond: We operate in Chile and Peru right now, and we see Latin America as a very strong and attractive market for growth, not just for the energy services business, but also the life/rescue and firefighting business, both services we’re operating there right now. All the countries in the region are investing heavily in building infrastructure as their economies grow, and this is the part of that infrastructure that we’re providing. We continue to invest ourselves and see a good future there.
Other growth at the moment is in Australia and northern Europe. Those areas are we see most of the growth coming from in the medium term. Beyond that, there’s areas elsewhere like Africa, where there’s tons of investment going into infrastructure and energy services. But we can’t be everywhere all at once, so we will look at those markets in another 12 months’ time as we build the businesses in our current regions. Both Africa and India are really attractive. Southeast Asia is exciting, we just can’t get all of these regions at once, unfortunately.
Rotor & Wing: What are your personal goals as CEO for the company?
Drummond: The vision for the company is we want to be seen as the best mission-critical aviation service requirement in the world. And seen not by ourselves, but by our customers, regulators, our workforce and our competitors. That’s a fairly lofty goal, but I think it’s realistic and it’s achievable, and we believe we’re making progress with that, so the [U.S. Transportation Safety Institute] Moral Courage award is one example. It’s not the entirety, but it’s a very significant step and important recognition, Richard [Mintern, Bond CEO] and Simon [Stuart, Bond’s safety director] have done a great job.
That’s what we want to achieve. If we’re seen as the best services provider, we’re not going to have a problem growing the business. If we’re generally a very high standards operator, then we will not have a problem providing value to our customers, and making money. So that safety goal is not motherhood and apple pie, it’s a real objective and it requires real investment over a sustained period of time. That’s exactly what we’re doing.
Related: Operator News
Pedersen Hoists Breeze-Eastern to New Levels of Customer Support
By Andrew Drwiega, International Bureau Chief
Brad Pedersen is Breeze-Eastern’s new president and CEO and has been in place since the first week of June 2012. His aviation experience includes 17 years as a helicopter flight test engineer with Boeing, progressing to director of international Apache programs among other titles, and six years with Sikorsky where he was the Canadian Maritime Helicopter program manager, the UH-60M program manager and director of advanced programs. More recently he was president of the New Jersey-based Airborne Systems Group.
Pedersen says that his business sense started being accumulated from those early days. “We did flight testing off site and got to know that if I didn’t have something, often something small, then we couldn’t fly. So logistics and support were factors that I appreciated from an early stage.” At Breeze-Eastern he wants to ensure logistics and customer support are made cornerstones of the business: “Some components have lead times up to a year or more so we have to anticipate the demand and have to have our own orders in with suppliers.”
He emphasizes that expectations in business have changed, often from what we demand outside of work. “The people buying our parts, whether in Australia or wherever, are used to going online and buying a book, for example, and as soon as their order is in they receive a confirmation e-mail that the order has been placed. Then it’s in shipping—positive affirmation along the line. That’s what we need to aim for.” Pedersen states that he hopes to lead the company through a mindset change “to make sure that our customers questions have been answered when we go home at night.”
“We want to get 24-hour response time anywhere in the world. That takes work—our suppliers as well as distributors—to be in sync. You can’t do it right nine times, then get it wrong on the 10th time, because it is the last one your customers remember you by. You have to keep doing it right.”
He continued: “At Boeing and Sikorsky I learned the benefit of standard process. You need four things to make a change: the people; the organization; the tools; and the process. So the process serves the customer, not just individuals. If you don’t have all the pieces in place, change is difficult.”
Pedersen said that Breeze-Eastern is fortunate in that most of its suppliers are small companies and are fairly agile with the ability to respond. “Most of them are happy to support us in the direction we want to go. Every one of our distributors is on-board. Once we have shown them how much we are committed, they are prepared to respond.”
The new factory has allowed the company to better organize its customer support: “We get things focused in one line, not two separate groups. We can pool our spares and repair requirements. Operators can make better real-time decisions.”
He explained that the company is trying to introduce more transparency of where stock is being held. The objective is to release inventory quicker if customers have more visibility. “It’s not rocket science, the software is there we just need to apply it,” he states.
There have already been changes he pointed out. “A year ago, perhaps 18 months, overall repair turnaround times were 160-plus days—we are now down to 60 days (plus or minus). Our deliveries to people like Sikorsky have been close to 100 percent over the last six months.”
Related: Component News