Bell: survival requires fewer vendors

 - July 23, 2007, 10:54 AM

Bell Helicopter’s commercial division knows as well as anyone about the challenge of making a living in a stagnant industry that appears unlikely to grow beyond generally accepted delivery projections of 400 to 500 helicopters a year. For years the only real avenue to sales growth lay in scratching for more market share–a circumstance unlikely to change in the near future. Constantly maneuvering for a competitive edge, Bell spends much of its energy on lowering costs and collecting as much research and development money from outside sources as possible. New projects such as its Modular Affordable Product Line (MAPL)–and indeed the very future of the company–depend on it.

A big part of the cost effort throughout the aerospace industry at large involves an accelerating trend toward lowering the number of small and medium-sized enterprises (SMEs) directly involved with the OEMs, sending component design work to second-tier suppliers and handing responsibility for integrating those components to others down the supply chain. So far Bell has done well on that score. It now maintains relationships with about 700 suppliers, compared with the 1,500 typically associated with helicopter OEMs, according to the company’s manager of business development, Michel Legault.

Speaking with AIN at the commercial division’s headquarters in Mirabel, Quebec, Legault seemed less than satisfied, however. “We want to get down to about 300 suppliers,” he said. “We’re still trying to find more integrators.”

Bombardier and Airbus have championed the philosophy for years. Now, the essence of Boeing’s new 7E7 sits on a similar foundation. Meanwhile, the SMEs must accept more financial responsibility–and risk–as Boeing, for example, sets tougher financial conditions such as withholding payment for a component until it delivers the aircraft.

Despite complaints of impenetrable government bureaucracy, companies building aircraft in Canada and particularly Quebec enjoy a lot of advantages, not least of which centers on loan guarantees for research and development from the federal government’s Technology Partnerships Canada. The TPC offers loans covering one third of R&D costs; Legault said Bell wants the provincial government’s Investissement Quebec to match that funding.

Bell could certainly use the help as its plans for the new line of MAPL small turbine-powered helicopters progress beyond mere studies. Still not an officially launched program, MAPL would consist of three size variants: first, the five-
passenger, single-engine 351; second, an eight-passenger single called the 381; and finally, a twin-engine, eight-passenger variant known as the 382, expected to borrow much of the technology used on the IFR-rated 427i, scheduled to fly for the first time in about two years.

Legault said Bell hopes to bring all three MAPL variants to market by 2012. Designed at the lower end to fill a perceived market gap between helicopters in the size range of the Robinson R44 and Bell’s own 206, the smallest MAPL variants would occupy a price range somewhere between $500,000 and $1 million. Finding that customers overwhelmingly base their buying decisions on price, Bell intends to pursue a modular design, theoretically keeping manufacturing costs in check through the use of the same components across the various models.

Legault stressed that more cost benefits would come from a 20-percent improvement in speed and useful-load capacity and a 99-percent dispatch reliability target. Bell also hopes to cut external noise by 10 dB. All told, the company targets a 20-percent drop in operating costs.

For its part, Bell has focused its R&D spending on improvements to the main rotor, drive train, autopilot and noise control. Engine improvements under study by Pratt &
Whitney Canada, Turbomeca and Honeywell would account for the balance of the improvements. Current customers will also benefit from the new technologies, said Legault, as Bell carries out a plan to adopt MAPL improvements in existing products.