Rejuvenated MD Helicopters looks toward a brighter future

 - November 26, 2007, 11:22 AM

After less than three years as a stand-alone company, MD Helicopters Inc. (MDHI) has doubled its workforce to more than 400 and expects revenues of at least $150 million this year. Since being sold to Dutch industrial conglomerate RDM Technology Holding, the former Boeing civil helicopter business has become a company far different from the small commercial operation of a large military helicopter firm, itself a minor component of an immense aerospace corporation.

Freed from a cumbersome corporate bureaucracy and the burden of overhead costs shared with the military product line, MDHI has become a more productive, market-oriented operation focused on assembling its current helicopter line as quickly, efficiently and cost effectively as possible. Now enjoying short lines of decision-making, the Mesa, Ariz. company has adopted a number of innovations, most notably that of doing at least 95 percent of its new helicopter completion work in-house.

Earlier this year MDHI completed its acquisition of all the Boeing facilities at Mesa Falcon Field, buying the former AH-64 Apache attack helicopter training and delivery center, remodeling it and making it a new, larger completion and delivery center (CDC). MDHI also constructed a 35,000-sq-ft materials-management center and transferred into it the entire parts inventory previously stored in a leased building at the Boeing plant across the road. MDHI’s chief operations officer, Albert Halder, said the building is “not a warehouse but a parts-transfer center” because the automated facility is designed to minimize stagnant inventory.

Employees Highly Motivated
During a visit last month by AIN, Halder proudly noted that during the massive parts transfer, the helicopter assembly line did not miss a beat because the process was well organized. He praised all the employees involved for their willingness to complete the task, regardless of the time and effort required.

That motivation was evident during a tour of the entire facility. Halder said it starkly contrasts with the employee morale in late 1998 when he arrived as COO of the newly formed MDHI to participate in the transition from Boeing ownership.

Boeing had announced early that year it was selling the light helicopter business, and employees had been in limbo while the U.S. Justice Department shot down a sale to Bell Helicopter Textron on antitrust grounds. Worse, customer interest had virtually evaporated, Halder recalled, in the face of uncertainty about the product line’s future.

Today, however, enthusiasm is palpable from top executives to assembly technicians. One reason was evident during a walk-through of the assembly, completion and material management buildings. Everywhere, employees greeted Halder by his first name and he responded in kind. The operations chief explained, “All the executives here–from Henk Schaeken, our president, on down–are not sitting in an ivory tower.
We have direct contact to the floor level. My door is always open, and that means open to other opinions–even if I disagree with them. I’m willing to consider and discuss anything.”

He added that the open-door policy enables MDHI to have “short communication and decision lines. Our people know they can come to me any time and get an answer. We don’t waste much time in meetings.” As a result, he said, “Most of our people are highly motivated and company oriented.”

One of the first tasks Halder undertook upon arriving in Arizona was a major revamping of production and assembly processes. That involved, among other things, less manufacturing and more assembly. Virtually all the parts, components and subassemblies that go into the MD Helicopters line are vendor provided, now that the original two-year agreement with Boeing to supply rotor blades and certain other structures has expired. “We are an assembly company. We can’t have manufacturing overhead if we are to be profitable,” Halder noted during the tour.

Drawing on expertise gained as director of MBB’s helicopter assembly and completion center, the native of Germany added some of his own ideas to redesign and reorganize the assembly lines (one for single-engine helicopters and another for MD Explorers). The result: dramatically reduced production man-hours and total start-to-finish time per helicopter.

“The first time I looked at Boeing’s production lines,” he recalled, “it was obvious that we would have to change many things to become competitive. Boeing’s manufacturing was based on three workstations for the Explorer and four for the single-engine types, with voluminous work packages allocated to each station. The high-man-hour requirements in space-limited areas had an adverse effect on aircraft cycle time.” The first step was to analyze the entire work envelope, with emphasis on bottleneck areas, man-hours per workstation and number of technicians per station.

Halder noticed that often up to four technicians were taking turns working on the same small area of a helicopter. “This made no sense. On the engine deck, for instance, one guy installed only a few hoses. Another then stepped up to install the transmission; a third installed the hydraulic pumps or the fire hose. Now we have put all these items on one job card so the same technician can install all the components that go in a given area of the ship. We divided the aircraft into eight sections for this purpose.

“We focused in detail on single work packages per workstation. We found that many not directly related to production could be moved into our backshop areas or built off the production line by suppliers.” Halder also increased the number of workstations on both lines to seven, reducing the number of tasks performed at each, thus making it possible to post more specific task descriptions, parts and man-hour requirements and completion dates. It also increased the line’s flexibility to do a work-around if an unavailable item dictates. For example, on the day of AIN’s visit, the single-engine line’s Station 1 was doing some Station 4 tasks while awaiting a subassembly.

Organizational Chart Streamlined
Halder also streamlined the organizational chart of his entire operation to ensure that each executive, manager and supervisor involved in a project understands and agrees to, from the start, each step with which he or she would be involved. “In every case, we use a precise, specific goals statement against which to carefully review, evaluate and analyze a task so that we can accurately determine how long it will take and how much it will cost. ‘What you can measure you can control’ is my motto,” he said. He noted that each project flow chart identifies each person responsible for a task by name, with a precise description and timeframe for completion.

This is particularly useful in the completions area, where supplemental type certificate (STC) work is often necessary. “To be sure that sales and marketing commitments to the customer are honored, we first have to fully understand and accept that commitment,” Halder said. In first-time installations, he went on, “preparation is of paramount importance to ensure that we can meet a promised delivery date.”

He said the purpose of the CDC is to provide a wide array of customer-specified “boutique options.” “Our primary objective is customer satisfaction. We never say ‘no.’ We will sit down person-to-person and advise a customer on the best equipment necessary for his mission. No customer has exactly the same requirements, so we have developed the ability to listen to the customer,” Halder said. “This was not so in the past.”

An optional equipment installation is often supplemented by an initial spares package tailored to meet a customer’s specific required availability percentage for his particular mission.

For production, but especially for completions, a joint FAA-MDHI “Partnership For Safety Plan” instituted in September last year has proved valuable, Halder said. Its purposes, he explained, are creating mutual confidence and trust, standardizing STC procedures and expediting certification and manu- facturing by focusing on important safety issues. Significantly, the pact binds not only MDHI and the Los Angeles aircraft certification office, but its counterpart in Fort Worth, which has long handled helicopter certifications, as well as the local Scottsdale, Ariz. Flight Standards District Office.

Among other things, the partnership binds the FAA to specific turnaround times for STC paperwork, and MDHI to provide the FAA with advance advisory of its intent to do a first-time installation requiring an STC or type certificate amendment. “This agreement,” said Halder, “goes beyond our quality-assurance manual and beyond our previous agreement with Boeing. It contains specifics, not boilerplate. By providing a framework for mutual commitment to timeframes, for instance, it leaves less room for interpretation and misunderstanding.”

Cracking the Offshore Market
In a recent example of custom CDC work, P.T. Airfast Indonesia and MDHI have signed an agreement for two MD Explorers to be used exclusively for offshore-oil support missions in the Java Sea. Airfast Indonesia, a U.S.-based firm whose sole customer is British Petroleum, is reportedly planning additional MD Explorer purchases for other Indonesian offshore support contracts later this year.

The selection marks MDHI’s first offshore-oil market application. Deliveries began last month. The Explorers are to operate daily with guaranteed 98.5-percent reliability. Frank Reuneker, president-director of Airfast Indonesia, said, “Only the MD Explorer had the payload, passenger space and safety features we were looking for.” Some of those features, for which STCs have been gained, were an Apical segmented float system approved for up to sea state five, and a previously unavailable eight-person life raft with an automatic deployment and inflation system.

The MD Explorers will also have rescue hoists for search-and-rescue missions and cargo hooks for logistics support.

MD Explorer Stymied
Chasing Global Speed Mark

Englishman Simon Oliphant-Hope, piloting an MD 900 Explorer, left England September 4 seeking to smash a seven-year-old around-the-world elapsed time record for helicopters. Despite losing two days when U.S. airspace was closed following the September 11 terrorist assault, Oliphant-Hope, 38, of Worthing, England, arrived in Alaska on September 14, then still on pace to eclipse Texan Ron Bower’s previous world record of 24 days set in 1994.

Oliphant-Hope owns Eastern Atlantic Helicopters, the designated UK distributorship for MDHI rotorcraft. (However, Specialist Aviation Services is the UK distributor for law-enforcement- and aeromedical-equipped Explorers.)

His eastward route passed through Europe and Russia, across the Bering Strait into Alaska and Canada. He was scheduled to reach MDHI’s Arizona plant on September 16, but the continuing ban on VFR flight in the U.S. barred Oliphant-Hope from U.S. airspace. He was to have criss-crossed the U.S., continuing on through Greenland, flying 10 to 12 hr a day in his quest for the record. At press time, Oliphant-Hope’s plan was to carry on through Canada (which has no VFR restriction) and then fly on to Greenland, making his way to England in time for the Helitech rotorcraft exposition, which was set for Duxford from September 25 to 28. Oliphant-Hope has been flying helicopters since 1988 and has piloted at least 10 different models, including all five MDHI helicopters.

MDHI loaned Oliphant-Hope the MD 900 Explorer N902IU (S/N 42) for the record attempt. The Explorer was equipped with a variety of special equipment, including a 220-gal ferry fuel tank, satcom phone, satcom e-mail (with position plotter), two GPS maps, standby compass, underwater breathing apparatus, raft and other survival gear.

The Pratt & Whitney Canada PW206E-powered Explorer had a total fuel capacity of 2,700 lb. At cruise speed, the aircraft burned 500 pph. The max endurance was 5.4 hr at an average speed of about 112 ktas, for a no-reserves range of 600 nm.