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Tuesday, November 1, 2011

Garrison: ‘Laser Focus’ on V-22, Five Commercial Variants   

Head of the Fort Worth, Texas-based helicopter manufacturer sat down with Rotor & Wing during the AUSA Meeting & Exposition to discuss the current state of Bell's military, commercial and aftermarket support offerings.

By Andrew Parker, Senior Editor

Bell has turned its tiltrotor attention to the V-22, as the manufacturer is in the final stages of selling its interest in the BA609 joint venture to AgustaWestland. Bell Photos

Bell Helicopter CEO John Garrison knew exactly what he wanted to talk about when sitting down for an Oct. 11 interview at AUSA—the V-22 Osprey and the big picture at the company, which has taken a “laser focused” approach to its inventory of helicopter models. “We’re really trying to execute on our balanced business strategy of our military business, our commercial business and our aftermarket services and support business,” he explained. “It’s important to highlight the success that Bell-Boeing, NAVAIR and the USAF is having with the V-22 program.”

Noting the V-22’s record in combat as the “safest aircraft in the Marines inventory for the past 10 years,” Garrison pointed out that Bell-Boeing recently submitted its Multiyear II proposal to the government. “We’re right in the middle of Multiyear I—which goes through the 2015 timeframe—so despite the budgetary environment we find ourselves in, we’re under a multi-year contract.”

Bell-Boeing is working on the “next generation tiltrotor” for the military’s Joint Multi-Role (JMR) program, which is targeting development by 2030.

“If you look at the requirements that we’re talking about for the joint multi-role—speed, range—we’re already there,” Garrison said. “We’ve got those. We already nailed it today [with] the capabilities of the V-22.” Bell-Boeing will be working on “a system tailored for that joint multi-role, specifically the Army medium, and continuing to use all the things we’ve learned on the V-22 and the BA609 going forward, to drive cost-effectiveness.”

The Marines have completed several studies that show the V-22 is a cost-effective platform, and that bodes well for the JMR submission, Garrison continued. “You’re going to need a very cost-effective solution. If you’re going to replace a $25-million Black Hawk, you can’t do it with a $75-million aircraft.”

Bell’s AH-1Z recently deployed with the 1st Marine Expeditionary Unit (MEU).
Garrison has a good reason to focus on the V-22, as Bell is in the final stages of selling the interests to another other cooperative tiltrotor design, this one with AgustaWestland—the BA609, now known as the AW609.

“It’s very important, first of all—we’re not selling the technology, we’re selling the programs,” Garrison said. “We’re not selling tiltrotor technology, or any V-22 technology. Basically we’re selling our equity interest in the joint venture program. We’ve been joint venture partners now for many years.” 

That teamwork will continue in the form of an engineering and services contract, and the manufacturing of some 609 components, according to Garrison.

“The transaction hasn’t closed yet. We’re still finalizing approvals. We expect it to close here, probably fourth quarter,” he said. “But we’re continuing the development effort with AgustaWestland as our partners, they’re just taking over the whole equity interest in the program.”

Why did Bell decide to divest itself from the BA609? Garrison pointed to a “significant investment” of time and money required to get the tiltrotor through the certification process.

“The 609 is a great aircraft, but we’re not quite sure how big the market niche is for it over time, and we thought that our resources could be better utilized really doing two things,” he explained. “Number one, continuing to invest in the JMR technology, in the future tiltrotor, and to invest in our conventional product line, to ensure that it is still world-class and leading. So it’s really an allocation decision that we made, and a strategic decision given the market size for the 609.”

Garrison was quick to stress that Bell is cheering for the continued advancement of the variant. “We’ll be thrilled when the AW609 is a wildly successful program,” he said. “We want it to be successful. Because anything that helps the tiltrotor market is a good thing for us on the tiltrotor side.”

Commercial Focus

Similar to the way the company is turning its attention to the V-22 while pulling back from the AW609 in the military market, in the commercial sector Bell has applied its resources to four commercial models—the 429, 407, 412 and 206L4—plus a yet-unannounced fifth variant known as the “Magellan” program. Over the past few years, the company has phased out production of the 206B3, 427, 430 and 210.

“Our strategy is we believe that if we’re laser-focused on four, plus one new potential platform—five platforms, we can cover 80-plus percent of the commercial market,” Garrison said. “When you have 13 products to support, it gets to be a challenge on the support side. … So we’re not going to try to compete across 13 sectors. But we think we can be very aggressive in those sectors that cover a broad swath of the marketplace.”

Acknowledging that the commercial helicopter market in general is “still a little soft,” Garrison noted that Bell has “basically been about flat for the last year, as we’ve said. But we’re seeing growth.”

Two upgrades to the 407 unveiled in March 2011—the GX, which features the Garmin G1000H cockpit, and the AH, which is an armed variant intended for parapublic operators—are paying early dividends.

“The 407GX has really helped stimulate the market. We’re actually in a backlog situation now” with orders for around 60 helicopters, Garrison noted, adding that the 407AH has received interest around the world from parapublic, airborne law enforcement, drug interdiction and other public service operators. “It’s very cost-effective for what it provides foreign nations for an air assault capability.”

Despite challenging conditions in the commercial sector, the 429 is allowing Bell to reach markets “that we haven’t been able to break into,” he noted. “We’re starting to have a little bit of success in Europe, we’ve had some success in the Far East, and down in South America, which has traditionally been a strong point for us.”

Bell is aiming to uncover more details about Magellan at Heli-Expo 2012 in February. “We’re working very closely with customers on the development of the next platform,” Garrison noted. “What we’re trying to do is diversify our portfolio between military—we know that defense budgets are going down, so we’re investing in our commercial business, to ensure that the commercial business can provide the lift as we go forward.”

Garrison agrees that the government’s approach to funding military rotorcraft research and development (R&D) has changed, with OEMs having to foot the bill to advance new ideas in the military helicopter world.

Whether it’s commercial, military or in the aftermarket support segment of the business, he said, a balanced approach is needed “for a significant product to be successful in a technology innovation-driven industry, so we have to make investments in our engineering side.”

Because Bell “has the ability to invest in our commercial segment as well as the military segment,” Garrison continued, “we’re ensuring that our engineering and innovation organization is always on the cutting edge. We’re investing on the research side, but also on the development side and that’s the challenge—the more you develop, the better you get at it.” A company that fails to fund R&D will end up with performance, schedule and cost issues, he noted. “We’re investing significantly [in R&D], a 50 percent increase over time, and that’s to be competitive in a global marketplace—both for the commercial and military, and on the customer service and support side—from an engineering and innovation standpoint.”

Aftermarket Support

Bell Helicopter employees have been hearing Garrison use the phrase “one Bell, on a mission” for a while now. He explained that the company’s mission is to support the customer, with an eastern European hub coming online recently in Prague, a Singapore service facility expected to open early in 2012, and agreements in China and India on the horizon.

In Singapore, the helicopter maker plans to co-locate with its fixed-wing sister company, Cessna. Garrison explained that “Cessna will service their customers, we’ll service ours, so we’re not going to lose our brand identity,” adding that capital and overhead expenses to run the facility will be shared. The Singapore location will feature a training depot and a completion center.

“We’re looking at other opportunities in India through partnership, as well as China through partnership. It’s too early for me to talk about those, but we’re doing that on the customer service and support side,” Garrison said, adding that Brazil is another place where “there may be an opportunity.”

Describing Bell’s aftermarket support business as a “buffer as aircraft sales ebb and flow,” Garrison noted the company is investing in its overseas support network to expand the number of services available, and to “make sure as we’re going after market share and gaining market share back in regions that were lost over time—or markets that we haven’t traditionally been in like China—that we have a customer service footprint.”

According to Garrison, Bell is “heavily focused” on expanding into India, China and Brazil. “When you look at helicopters per capita in those market segments, they really don’t have EMS, very little airborne law enforcement applications and very little corporate—especially in China.”

Bell believes “that those markets can open up and grow,” Garrison said. “I was just in China a couple weeks ago and I think China’s going to move faster than we originally thought,” he continued, adding that the China market “could really explode.”

Garrison also talked sales in other global markets, including Europe, where the company is looking to re-establish its base. “Because of our market position it can be a growth market for Bell,” he said, adding that the company is adding to its sales force in Europe. The Middle East also offers a number of opportunities for the new 407 variants—the GX and AH, or armed version—the 429 and the 412 for close-in offshore operations, he added.

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