Sikorsky writes off commercial market

 - May 7, 2008, 5:36 AM

When it comes to selling helicopters for one of the leading helo makers, it’s difficult to find a job that Jeff Pino hasn’t done. In his 17 years with Bell, he was vice president of sales and marketing, executive director for Europe, director for Latin America and regional manager for South America. Previous assignments also include program manager for the Bell Helicopter team bidding on the LHX competition, and program manager on the OH-58D and the AH-1s.

When he hasn’t been selling for Bell he’s been flying for Uncle Sam as a Master Army Aviator and serving in the U.S. Army as an operational pilot and development test pilot/project officer on the Army’s OH-58D Kiowa Warrior. He still serves in the Army National Guard (recently transferred from Texas to Connecticut, where he maintains currency as an Army helicopter pilot).

Pino holds a commercial pilot certificate, with instrument and flight instructor ratings in both helicopters and airplanes, and is an active aerobatic and airshow pilot. On top of all this, Pino is fluent in English, Spanish and Portuguese.

All of which is a way to say that when Pino comments on the future shape of the commercial helicopter industry, he speaks his mind with a candor and clarity that reminds one of the long-departed former president of American Eurocopter, Dave Smith. AIN caught up with Pino a few months into his new job at Sikorsky as senior v-p of marketing and commercial programs, when he took a break from a hectic schedule to address the Stratford, Conn. chapter of the American Helicopter Society, a gathering consisting mostly of Sikorsky engineers, to give his views on both the future of the helicopter business and Sikorsky’s role in it.

Pino began his presentation by outlining what he called “the four realities.”

“These apply to Sikorsky only, and they’re  governing our actions now and in the foreseeable future. Simply put, they are:

• You sell to the U.S. government and then adapt those designs to the needs of the commercial market as needed by that market. There are almost no exceptions to this rule.

• The commercial market is absolutely flat. You may see 1- and 2-percent annual increases in it, but other than that it is flat and will remain that way for some time.

• The way to sell helicopters to the government is to make them attractive to the “system of systems” strategy central to such programs as the U.S. Coast Guard’s Project Deepwater or the U.S., Army’s Advanced Combat Vehicle program, in which a given basic type of adaptable vehicle then serves as the central type for all the variants required for this mission.

• Understand that the helicopter market, both military and civilian, is going to stay flat for the next two to three years. The civil market is asleep and there are no large military procurement programs on the horizon until 2005, when some 100-plus programs will get under way.”

There’s a famous saying, variously assigned to different American politicians but most often the garrulous former senior Republican senator from Illinois, Everett Dirksen. He is believed to have said, “A billion here and a billion there. Before long you’re talking about real money.” Given the falling fortunes of so many other helicopter makers, it is sobering to hear that Sikorsky reaps $1 billion annually in aftermarket business alone.

“We have been able to turn that kind of income on the more than 2,000 Black Hawks and Black Hawk variants that are in service with so many militaries worldwide,” Pino said. “This sort of aftermarket business is essential. When you look at the American helicopter business, the only new military designs under development are our upgraded editions of the Black Hawk, the Comanche and the Bell Boeing V-22 Osprey tiltrotor, a program whose future is in real question.”

Watchful of the precarious position of the Bell Boeing convertiplane, Sikorsky has been quietly moving into position to make up for the U.S. Marines’ loss of vertical-lift capability the cancellation of the tiltrotor would represent. “We repositioned to take advantage of V-22 cancellation with a balance of SH-92s and CH-53Es that could do much of what the proposed Osprey fleet could do,” Pino said.

Coming as he does from a long career at Bell Helicopter during years when that company’s share of much of the world’s military vertical-lift transport capability was in the process of switching from the formerly ubiquitous UH-1 Huey and its many subvariants, Pino knows well the problems of meeting the needs of the civil side.

Let Bell and Eurocopter Slug It Out

“There’s so little room for growth in the civil market for a large multi-product manufacturer,” he said. “Our competitors are beating their brains out, and at the end of the day no one makes a dime. For the foreseeable future, let Bell and Eurocopter slug it out over small slivers of market share. We’re in positions to concentrate on bigger deals over longer terms, like the MH-60 Sea Hawk, which when the U.S. Navy’s business is totaled up with the signed and expected overseas sales will total some 600 helicopters.

“The MH-60 is a good example of what we mean by the term ‘system of systems.’ The Turkish navy, for instance, has purchased a dozen or so MH-60s. They’re equipping some for anti-submarine warfare and others for other naval uses. But the beauty of the core design is that it’s adaptable enough and robust enough so it can carry out all the missions the customer has in mind.”

That multifunctionality and the ability to bring an airframe into the factory every decade or so for a top-to-bottom remanufacturing will be the core of Sikorsky’s business strategy, with no word of any new models pending. “We are looking at programs with timetables like we have for the UH-60M, which with life extensions should be in active service until 2025.”

A New Marine One?

The Presidential helicopter fleet is “only eleven strong, which isn’t very much in the great scheme of things,” Pino said. “But those eleven helicopters are the most photographed helicopters in the world, so it’s good, highly visible business to go after.”

That “good business” is the pending replacement of the VIP transport helicopters of Marine squadron VMX-1, better known by their airborne callsign (only when the President is aboard) of Marine One. Sikorsky helicopters have served the White House’s short-hop travel needs since the Kennedy Administration, sometimes becoming backdrops for history, as in President Richard Nixon’s famed defiant double V-for-victory gesture just before boarding one of VMX-1’s Sikorsky VH-3Ds on that last wrenching day of his administration.

With some of the VH-3D fleet entering its fourth decade, Secret Service and other homeland defense officials are pressing for a newer, more capable White House and federal VIP vertical-lift fleet. Eager to keep the Presidential spotlight on its own products and taking encouragement from the more than 40 years of publicly trouble-free operation, Sikorsky is proposing a special Presidential edition of its S-92 medium twin. According to Pino, the requirement is about to be released; given the go-ahead, an operational VH-92 seating roughly 12 or more in ultra-VIP configuration could be ready by 2004. Sikorsky is still holding to its predicted S-92 certification of late third or early fourth quarter of this year.

Sikorsky is considering a fly-by-wire follow-on to the S-92 and has high hopes for sales of somewhere between 130 and 150 S-92s in response to a combat search-and-rescue requirement from the U.S. Air Force.

Unmanned

Getting the pilot out of the cockpit and therefore, designers hope, out of danger, is the new hot-button topic for military planner. And as far as Pino is concerned, it’s the way for military rotorcraft to go, even in some unconventional uses. “We’re looking at an unmanned combat rotorcraft that’s about half the size of our RAH-66 Comanche that could scout and feed that data back to manned, heavily armed helicopters that stay out of danger. Later versions could hunt for the enemy on their own.

“I even foresee unmanned cargo helicopters. Imagine taking the rotor dynamics from the CH-53E and just attaching them to a box, a big flying container. Make them fly-by-wire and connect the control cabling to a manned control ship. That pilot commands both of his cargo ‘barges’ through their flight, controls them to touchdown then casts off to fly another set. With more cockpit automation, a pilot could deliver twice as much cargo as before.”

What about the S-76?

Once upon a time, Sikorsky bravely charged into what looked like a booming civil/corporate helicopter market, full of confidence. The economy was booming, freeways were jammed, impatient executives yearned to vault the steaming masses of stalled traffic, the nation’s ATC system was filled to bursting and the low-level, point-to-point capabilities of rotorcraft as a business travel tool seemed like just another great idea waiting to be allowed to prove itself.

Accordingly, Sikorsky designed its first, from-the-wheels-up civil design. Unveiled with much hoopla, the S-76 sold reasonably well at first, its only real foe an unfortunate and extremely political engine choice, a selection that was righted as Pratt & Whitney Canada and Turbomeca corrected the situation with their own engines.

Major efforts by Sikorsky resulted in a much improved S-76 that has nonetheless failed to sell all that well in the final decade of the 20th century. Despite annual sales in only the high single digits, Sikorsky has declined to discontinue the S-76. “It’s our niche ship,” Pino explained. “It’s found a reasonable amount of success in a highly specialized market, and within that market, small as it is, it tends to sell itself. There just isn’t any particular reason to get rid of it. The S-76 gets sold in rather weird ways that I like to compare to one of those Japanese pachinko pinball machines in which the ball bounces from one pin to the other in what seems like a random pattern, only to score at the bottom.”

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