Saturday, May 1, 2004
Flying Hot and High
With two new procurement programs set to begin and money being parceled out more evenly, the helicopter industry is optimistic about its future with the Army.
When the Army scrapped Comanche last February, there was much hand-wringing and gnashing of teeth. Everybody lamented the demise of the helicopter industry's most significant and most technologically advanced procurement in a generation. The loss of manufacturing jobs, the displacement of highly skilled labor, the unfulfilled promise of new and beneficial technologies-all were cited as serious cause for concern. Even the survival and well being of the industry itself was said to be at risk.
But while the impact on Sikorsky and its team of subcontractors is undeniably bad, the helicopter industry overall is remarkably quiescent about the Comanche's demise. In fact, a sense of real relief and understated optimism is palpable.
That's because industry insiders think the Army will put at least as many dollars back into the helicopter business as it is taking out of the Comanche program. Moreover, they say, the Army's aviation investment now promises to be more evenly distributed throughout the industry rather than concentrated overwhelmingly within the Boeing-Sikorsky team.
"Those dollars will serve a greater number of companies rather than the few companies that were involved in the Comanche program… I think more products will bleed out of that into the civil industry within a few years," explained David A. George, a retired Army helicopter pilot and vice president for Boundary Layer Research, Inc. in Everett, Washington. The company manufactures helicopter tailboom strake kits for several Bell model rotorcraft.
"Comanche was sucking the oxygen out of all new technology development programs; it's demise, albeit unfortunate, opens up opportunity for innovation," added Chuck Jarnot, an Afghan War veteran and chief of Army requirements for Piasecki Aircraft Corporation in Essington, Pennsylvania. Piasecki has developed proprietary compound helicopter technology that is now being tested and evaluated by the U.S. military.
"We're disappointed about the termination of Comanche; nevertheless we are saluting our [Army] customer," said Rhett Flater, executive director of the American Helicopter Society (AHS) in Alexandria, Virginia.
"By canceling Comanche," he noted, "the Army facilitates modernization of a full-spectrum of air vehicles." These include Boeing's AH-64D Apache Longbow and CH-47 Chinook, Sikorsky's UH-60 Black Hawk, MD Helicopter's MH-6 Mission Enhanced Little Bird (MELB), and the Northrop Grumman-Schweizer RQ-8B FireScout UAV. (See "Back to the Future," Rotor & Wing, April 2004.)
Rolls-Royce's annual analysis of the rotorcraft industry confirms this optimism. The analysis was done in conjunction with the Teal Group in Fairfax, Virginia; unveiled at Heli-Expo 2004 in Las Vegas; and it takes into account the Comanche cancellation.
"Monetary-wise it's a wash," said Alex Youngs, Rolls-Royce's business development manager for rotorcraft. "What the Army and the Comanche team intend to do is transfer a lot of the technology, including the avionics and the T800-LHT-802 engine, to other programs."
Rolls-Royce predicts that the military rotorcraft market will "benefit from substantial re-equipment over the [2004-2013] period and the eventual entry into service of rotary-wing UAVs." However, these gains will be "offset by cutbacks in a number of big-ticket programs, notably the Boeing-Sikorsky RAH-66 Comanche."
"I think you'll find that sentiment is widely shared" within the industry, said Scott M. Fitzgerald, Bell Helicopter Textron's director of foreign military sales.
To be sure, Bell may benefit enormously from the Comanche cancellation. With the exception of the TH-67 Creek training helicopter, the company has taken no new Army rotorcraft orders in more than a generation. (Bell's OH-58D Kiowa Warrior is a remanufactured aircraft that the Army procured in the 1980s and '90s as an interim, armed scout helicopter in lieu of Comanche.)
That now promises to change. The Army is pushing ahead with two new procurements, a light utility helicopter (LUH) and a light reconnaissance helicopter (LRH), and is looking to accelerate its purchase of UAVs and a joint heavy-lift rotorcraft. And like most other companies that have been locked out of Army aviation, Bell is eager to enter the fray.
"We have a rare second-chance to get back into Army aviation… and we take it very, very seriously," said Mark Gibson, Bell's analyst for future systems. "We're going to listen to our customer and offer them a range of affordable and cost-effective options."
Affordability is key. Army helicopters are the most high-demand assets in Iraq and Afghanistan. The service, therefore, requires aircraft that it can field now, not five or 10 years from now a la Comanche. But with limited budgets and myriad competing requirements-from aircraft survivability equipment to body armor for the troops-the Army simply cannot afford a long, drawn-out procurement.
"We're not looking at a 25-year procurement; we're looking at a three-to-five-year program. This is something we plan to do now," said Brig. Gen. E.J. Sinclair, Commanding General, Army Aviation Center, Ft. Rucker, Alabama.
Army aviation also has suffered extraordinarily high operation and support (O&S) costs. Indeed, O&S costs are "increasing substantially and it's breaking the Army," said CH-47 Chinook Program Manager Col. William T. Crosby.
The service, consequently, is seeking commercial off-the-shelf aircraft rather than new military-designed helicopters. Commercial aircraft are available immediately; they're less expensive to procure; and they have substantially lower O&S costs.
"The commercial market has been evolving quite rapidly on its own and has much better aircraft available than anything that the military has," explained John F. Zugschwert, a former AHS president and retired Army aviation acquisition official.
Conceptually at least, this means that a vast array of commercial off-the-shelf helicopters are potential Army enlistees.
"Anyone who produces a helicopter-Robinson, Kaman, Schweizer, Enstrom, Bell, Boeing, MD [Helicopters], Sikorsky, Eurocopter, AgustaWestland-they all have a shot," said Col. Robert Birmingham (Ret.), who stepped down as Comanche program manager last summer.
Birmingham said the Army is making a virtue of necessity. Given the service's troubled history with Comanche, procurement of a new military-designed helicopter is not practical, he argued.
"Let's face it," he said: "Industry is not feeling very confident that anything the Army puts money into they're going to stick with. Our track record is not very good."
This helps to explain the Army's desire for commercial, off-the-shelf aircraft, as well as industry's newfound optimism. The Army, after all, may not have fielded a genuinely new helicopter in decades; however, the commercial market has been a relative font of innovation and dynamism.
"There are whole new product lines of state-of-the-art rotorcraft from several different companies that provide the Army with exactly what it is looking for" in an LUH or LRH helicopter, Zugschwert said. In fact, helicopter airframe manufacturers have offered virtually their entire fleet of aircraft to the Army.
Nonetheless, clear frontrunners already have emerged. The Bell 210 is an early favorite for the LUH mission while MD Helicopters' MH-6 has the edge in the LRH competition.
Both helicopter types have the advantage of being well-known to the Army. The 210, for instance, is an FAA-certified UH-1H Huey with dynamic components from the Bell 212. The Huey has been in service since the Vietnam War. There are roughly 10,000 UH-1s internationally; more than 400 used by the Army.
Thus, the 210 can be procured now at a cost of less than $3 million and delivered to the Army within eight months after certification, Bell's Fitzgerald said.
The aircraft's O&S costs also are some 10 percent less than the older Huey and half as expensive as the Black Hawk-an estimated $541/hour for the 210 versus $1,312/hour for the Black Hawk, according to Conklin & de Decker, an independent aviation research firm in Arlington, Texas.
The savings could be substantially greater if the dynamic components on the 210 significantly reduce the time between overhaul, the firm added. That is why, according to Bell, the 210 will have O&S some 42 percent less than the older Huey.
Additionally, Bell is offering the Army "performance-based logistics," whereby the company provides all logistics and support services while guaranteeing certain operational readiness rates.
"In terms of cost, the Army couldn't do much better than the Huey," said Richard Aboulafia, an analyst with the Teal Group in Fairfax, Virginia. "There are so many [of these helicopters] in service, and [LUH] has never been a requirement the Army wanted to spend money on."
The Army's requirement for a light utility helicopter has existed since 1996; however, it has never been funded, Gen. Sinclair said. According to deputy chief of staff for operations, Lt. Gen. Richard A. Cody, that's because the service faced a funding shortfall of some five billion dollars annually for most of the past decade.
This specifically meant shortchanging Army modernization initiatives like the Apache Longbow, aircraft survivability equipment, the Patriot Missile system, Bradley tanks-"all of the big stuff that it takes to run an Army," Cody said. "The Army had to make some tough calls every year," he noted.
This year, by contrast, for the first time in recent memory, Army aviation has not a single un-funded requirement.
If cost is the Army's biggest concern, then the service may opt to procure the PT6-powered Huey, which is even less expensive than the Bell 210. The PT6 Huey is being produced by DynCorps International and Global Helicopter Technology, Inc. The aircraft features the Pratt & Whitney PT6-67D engine and, at roughly one million dollars a copy, is one-third the procurement cost of the Honeywell T-53-17B-powered 210.
However, unlike the 210, the PT6 Huey will be not be remanufactured as a zero-time aircraft with new dynamic components. Yet, with new dynamic components, "in most cases, you double or triple the component times for overhaul," Fitzgerald said.
The PT6 features an improved tailrotor for enhanced directional control. "The standard Huey is known for lack of tailrotor power," said Scott Gardner, Global Helicopter Technology's vice president for operations.
The PT6 Huey also has received FAA certification. "How fast Bell says they can push that through the FAA-all I can is good luck, because we spent three years at it," Gardner said. Global Helicopter Technology did the certification work and produces the aircraft's Tail Rotor Enhancement Kit. Bell officials said they expect that the 210 will be FAA certified no later than the middle of next year.
Bell also is touting its ability to support the Army with "OEM-certified parts." But it is unclear how much this matters to the Army. According to Fitzgerald, only Bell can provide parts warrantees and fixed lifecycle costs with virtually no risk to Uncle Sam. "There's no guesswork here; we know what it costs to maintain a 212 component," he said.
But as Gardner observed, the Army owns a huge inventory of Huey parts. The service, he said, probably doesn't want to spend more money to procure additional spares, when it already has these abundantly available in its own depots.
For that reason, DynCorps and Global dispute the notion that O&S costs for the PT6 Huey are significantly higher. "Yes, it is true that a larger pool of spares is required. But the economics of the existing parts, even with a shorter life is, without doubt, less than the quite expensive 210 components," Gardner said.
Bell officials disagreed, but acknowledged that the PT6 Huey's up-front procurement cost is markedly less than the 210. However, they said the company is offering similarly-priced Huey II upgrade, which is just as good as the PT6 variant.
In any case, a number of commercial utility aircraft other than the Huey also are potential LUH solutions. By Aboulafia's count, these include the MD Explorer, Bell 427, Bell/Agusta Aerospace AB139, AgustaWestland A109, Eurocopter EC135, and Sikorsky S-76.
The S-76 is surely too big and too costly for the LUH mission; however, given the political ramifications of this procurement, it cannot be ruled out, analysts said.
Touting the S-76
Indeed, now that Sikorsky no longer has Comanche, the Army may feel obligated to offer the company some sort of compensatory helicopter type, and that would have to be the S-76, they noted. The only other helicopter that Sikorsky has available is the UH-60, and the Army already has deemed the Black Hawk ill-suited for the LUH mission.
Sikorsky officials, clearly stunned by the Comanche cancellation, are saying little about their company's future prospects. But when pushed, they tout the S-76.
The S-76 is "built by a company that's very versed in military helicopters; it's fairly well marinized; it's utilized all over the world right now; and it's fast: It's got a lot of capability," said Jeffrey P. Pino, Sikorsky's senior vice president for marketing and commercial programs.
And, as far as O&S costs are concerned, "We didn't sell 60 airplanes [since December 2002] to guys who have to earn money using it because we have a high cost of operation. I mean, the customers have voted with their pocketbooks on utility S-76s."
MD Helicopters, Eurocopter and AgustaWestland all have a long history of involvement with the U.S. military and sizable, multi-million-dollar U.S. manufacturing facilities. However, given the current political environment, the election season, and the heightened scrutiny of Army aviation, it is doubtful that the service would select a European-designed airframe, analysts said.
If it did, the Army most certainly would select a helicopter type already produced in the United States, they noted. That way, the service could rebut the charge that it is "outsourcing" American jobs overseas.
This helps to explain AgustaWestland's decision, announced in March, that it is building a new $6.8-million, 40,000 square-foot manufacturing facility in Philadelphia for production and final assembly of the A119 Koala. Customization and support of the A109 has been underway in Philadelphia for more than 20 years.
AgustaWestland is eager to secure additional U.S. customers. "We're not outsourcing jobs," said Bruno Spagnolini, the company's senior vice president for sales and marketing. "We come to the United States to buy half-a-billion dollars worth of goods and services. We create jobs here in America."
A desire to gain market share in the United States also helps to explain why Bell/Agusta Aerospace announced in March that it intends to open a second AB139 production line in Amarillo, Texas. The aircraft's current, sole production line is in Vergiate, Italy.
"The manufacturing addition in Amarillo could have a significant impact on the area, bringing a still-to-be-determined number of new jobs to Amarillo," said the company's managing director, Lou Bartolotta.
The foreign pedigree of MD Helicopters is considerably less problematic. For starters, the Army already employs MD's MH-6 Little Bird, and the service is quite satisfied with this aircraft. That's why the 160th Special Operations Aviation Regiment is procuring an estimated 100 new MH-6s.
Moreover, MD's parent company, RDM Holding, Inc. is a Dutch holding company; and final assembly of the aircraft is performed at MD's headquarters in Mesa, Arizona.
"All of the intellectual property, all of the rights to the helicopters are in the United States; they're nowhere else," said MD's president, Henk Schaeken. "All of the engineering support, the know-how, the client support-it's all in Mesa."
And, he added, "if you look at our single engines, I think you can safely say we have 99.9% U.S. content. The Little Bird is a completely American-made aircraft."
Schaeken acknowledged that MD has encountered serious difficulties with aircraft systems integration and that such work is best contracted to another company.
This is important because the Army's new LRH promises to be a highly sophisticated helicopter, with state-of-the-art avionics. The service's newly revised FY05 budget, in fact, appropriates $20 million for digitization of the Little Birds.
Competition From Kiowa
Schaeken said MD expects to announce a systems integration partner in April. (At press time, a decision had not been announced.) Because of its close geographic proximity to MD, as well as its prior ownership of the MD helicopter line, Boeing has been touted as a likely partner. Boeing's Mesa, Arizona, facility manufactures the Apache literally across the street from MD Helicopters.
Boeing "is one of the more interesting candidates from our perspective, obviously," Schaeken said. "If you look at the way the Apache is being built… they integrate, actually, a lot of the components supplied by Lockheed Martin, Northrop Grumman and so on… Boeing also controls the Future Combat System as a systems integrator. So they're certainly a possibility," he noted.
MD Helicopters may be in the driver's seat for LRH; however, the company will face stiff competition from Bell, which is proposing a revitalized OH-58D Kiowa Warrior.
"The Kiowa was the airframe of choice for providing security and observation for ground forces over cities during Operation Iraqi Freedom," said Maj. Gen. David Petraeus, commander of the 101st Airborne Div., Air Assault, during the Army Aviation Association of America's annual conference in Nashville, Tennessee, March 25-27.
"It is difficult to imagine how many enemy attacks were prevented by the nearly constant presence of Kiowa Warriors over the city of Mosul, but their impact is unquestionably significant," he added.
The Kiowa Warrior performed well, but Army pilots complain that it is far too weighty and thus prone to hard landings. Very fine piloting can avert this problem, but often at the expense of over-torquing the engine.
In short, the OH-58 requires much greater power, more modern sensors, and new electronic integrative capabilities for the modern battlefield. Bell is proposing a "serious upgrade to the airplane" to realize these improvements, said Bell's Gibson.
However, it is unlikely that Bell would be awarded both the LRH and LUH contracts. The Pentagon has an interest in maintaining a viable and competitive defense helicopter industry in the United States. This means that contracts usually are parceled out among at least a few different companies. Bell already stands to benefit enormously from the V-22 Osprey should that program succeed.
The Army is not procuring the Osprey; but Gen. Schoomaker has spoken admiringly of tiltrotor aircraft. And he's expressed serious interest in procuring a tiltrotor variant to address joint heavy-lift requirements in the next decade. (See "Vertical Envelopment," March 2004.)
That's because, analysts said, operations in Iraq and Afghanistan highlight the increasing importance of a fast, versatile, and long-range troop transport helicopter capable of operating in distant and austere environment with no runways.
"We used to have the luxury of preparing for a conflict months ahead of time," but not anymore Youngs said. "These days, with the anti-terrorism role… you need to get from point A to point B very quickly, with a fair load of men and equipment, to catch the bad guys unaware." The V-22, should it prove itself airworthy, can do this far better than any other aircraft, he noted.
The Army's heightened interest in UAVs also is a potential boon to the helicopter industry. The variety of UAVs it makes includes Bell's Eagle Eye, Frontier Aviation's A160 Hummingbird, Boeing's Canard Rotor/ Wing concept demonstrator, and the Unmanned Combat Armed Rotorcraft contenders of Northrop Grumman-Kaman and Lockheed Martin-Bell. In all, the Army is spending $390 million to speed up UAV procurement, Cody said.
Another source of optimism for industry is the joint transport rotorcraft. "It's getting time to either fish or cut bait, and I think we're finally going to play ball," said Col. Ellis Golson, director of the Combat Development Directorate at Ft. Rucker.
Both Sikorsky and Boeing, he observed, have informed the Army that, with existing technology, they can build by 2012 a heavy-lift rotorcraft that can fly a 500 km. roundtrip at speeds in excess of 200 kt.
"The implication is out there that we can't do this, certainly not that soon, and I'm here to tell you that we can," said retired Army Col. Waldo Carmona, who now leads Boeing's advanced rotorcraft research efforts.
Equally important to the industry are all of the smaller-scale aircraft improvements, which have long been neglected, but which now are being funded. Aircraft survivability equipment, for instance, is now the "number one priority" of Army aviation. Yet, the service conspicuously failed to appropriate money for ASE in its FY03, 04 and 05 budgets.
"The deck's been shuffled; and so a lot of ideas that have been pushed to the side are now under consideration," said Piasecki Jarnot. "This is an industry that's looking ahead, not backwards."