Improving supply chain a priority for MDHI leader

 - December 19, 2006, 3:51 AM

Charles Vehlow, newly appointed president of MD Helicopters, hopes to become the strong link in a broken supply chain that has plagued the Mesa, Ariz.-based manufacturer.

“A year ago, we had a couple of hundred aircraft grounded due to lack of parts,” Vehlow told AIN. “We’ve decreased that number by more than 90 percent. In some cases as we looked through our supply chain, we found there were suppliers that were no longer providing the part, or were providing parts not of the quality to ensure they could be used dependably. In some cases suppliers were going out of business. We’ve refreshed the supply chain and brought in new suppliers. We’ve worked with them by finding new materials.”

A key source of those materials, Vehlow said, will be the 60-plus companies owned by Patriarch Partners, the private investment firm that holds a controlling interest in MD Helicopters. Vehlow said he met Lynn Tilton, CEO of Patriarch Partners and MD Helicopters, about a year ago and worked with the company as a consultant until Tilton invited him to come aboard full-time in November.

According to Vehlow, MD Helicopters was able to establish a fuselage assembly facility in Monterey, Mexico, because of the business relationships Tilton has with various companies in that country. Vehlow said that facility was expected to deliver the first MD 500-series fuselage by the end of last year and will produce about 30 airframes–for the 500 series and the 600N–by the end of this year.

Last February Patriarch Partners purchased a controlling interest in Heritage Aviation, a helicopter completions company based in Grand Prairie, Texas. “This transaction galvanizes the intent of our purchase of MD Helicopters,” Tilton said in a press release announcing the acquisition. “We are creating an aerospace platform that not only produces aircraft, but one that also controls its own destiny by bringing much of its supply chain under its own umbrella–an umbrella that now includes state-of-the-art completion and refurbishment services.”

Vehlow graduated from West Point in 1968 and flew Cobras and OH-6s in Vietnam. He continued working in the Army and at the Pentagon until the early 1980s, when he moved to Mesa and joined McDonnell Douglas. He rose within the company to serve eventually as vice president of the AH-64D Apache Longbow program. Vehlow left Boeing (which had absorbed McDD) in 2001 to work with several start-up companies, most recently Metal Storm, a ballistics technology company in Arlington, Va.

Though the majority of Vehlow’s professional experience is in the military sector, he said he is excited about serving a more varied customer base. “Our biggest challenge continues to be at the tactical level, in ensuring that suppliers believe that we’re real and are capable of satisfying commitments that we’ve made in terms of customer deliveries and support,” he said, noting that MD’s trademark Notar system requires high-cost components with long lead times.

“The MD product has an almost cult-like following,” Vehlow asserted. “People who are involved with the aircraft pick up an indirect commitment and a love for the aircraft. As we’re resuming our journey and responding more to customers and meeting our customer commitments better, those folks are pleased to see that and in some cases are increasing orders.”

While Vehlow did not provide specific numbers of confirmed orders, he said that last year the company doubled its 2005 production numbers and expects to sell four times as many aircraft this year as it did last year.