Exec shakeup shocks Enstrom Helicopter

 - February 5, 2008, 4:54 AM

It came as suddenly as a northern Michigan blizzard. One minute Steve Daniels–a former Kaman Aerospace executive who had taken the reins last year as president of Enstrom Helicopter and was doing his job scant weeks after painting a rosy, ambitious portrait of Enstrom’s future during a refreshingly candid presentation at February’s HAI Heli-Expo–was in office. Then came a phone call from former Enstrom president Bob Tuttle telling Daniels he was fired. Also dismissed was vice president Frank Gallagher, another ex-Kaman official, who had accompanied Daniels when he came to rejuvenate the moribund rotorcraft maker from Menominee, Mich.

At Heli-Expo in February, Daniels was full of hope and plans for what many have long considered an undervalued, underappreciated helicopter product line. Marking his first Heli-Expo, Daniels announced sales that would bring the company’s current order count to 12 out of a planned production run this year of 15 rotorcraft. This total showed a substantial increase in deliveries from the company’s average of seven aircraft per year since 1992, and served as evidence that Enstrom was on target for Daniels’ goal of 30 deliveries next year.

Keys to meeting this ambitious goal are the reestablishment of a dealer network in the U.S. and Canada, a new customer-service and support organization, product improvements and new management and production agreements with Asian companies.

Daniels’ proposed moves were greeted with applause by Enstrom aficionados. But before he had time to further implement his program, the termination ax fell. Tuttle, acting on behalf of the anonymous Swiss national that owns a controlling interest in Enstrom, was relieving Daniels and Gallagher of their jobs, citing “communication problems.”

Details are still murky but sources close to the story assert that Daniels’ pressure for increased production volumes of Enstrom’s various models met opposition when the company’s owners realized it would cost an estimated $2+ million in advance layout for parts, components and powerplants before production could proceed. Arguments as to the wisdom of the increased production rate flared. The shortfall in parts soon threatened to close down the factory altogether.

For his part, Daniels cited poor record keeping within Enstrom, so poor that he and his management team were unaware the company was not in possession of the components required for the intended increased production. “The system told us there was more stock on hand than there turned out to be,” Daniels said. “When we established what the actual level was, we knew we needed an injection of cash– about $2.1 million. Clearly our plan to quadruple production there was in jeopardy. Somewhere during the latter stages of negotiations was where these ‘communication problems’ took hold.”

The rapidity with which events blindsided Daniels was evidenced by the fact that he was granting interviews to the press outlining his master plan for Enstrom’s financial salvation roughly 72 hours before the ax fell. Peter Parsinen, a long-time colleague of Daniels who did consulting work for Daniels and Gallagher at Kaman, was tapped as interim president.