GA equipment suppliers hone strategies in face of slowdown

 - July 8, 2008, 8:37 AM

Given the recent sharp drop in shipments of GA piston-powered airplanes, it’s not surprising that some equipment suppliers have begun to look to other markets to boost their bottom lines.

Shadin Avionics is a prime example of the trend. Founded 30 years ago as a supplier of fuel flow systems for the general aviation aftermarket, the company has expanded its product portfolio to include engine trend monitoring systems, altitude management systems, air-data computers, converters and other instrumentation for a range of piston and turbine airplanes and helicopters. Today, Shadin is in the midst of a transformation aimed at focusing more attention on government and business aviation markets.

“The GA aftermarket is still important to us, but in the current economic climate we have to find new niches,” said Allan Kramer, Shadin’s recently appointed CEO. “To offset the downturn in GA that we see continuing for the next year or two at least, we need to be focusing on the growth of other business” outside the light airplane market.

Existing OEM contracts with business jet makers and increasing activity on government and military programs will allow Shadin to weather what has been a 2- to 3-percent decline in the GA market for the last few years, Kramer said. He blamed the high cost of fuel and the U.S. credit market crisis for putting a squeeze on would-be buyers of light piston airplanes. Despite rapidly rising jet fuel prices, the same downward market pressure has yet to hit business aviation, and the government/military side of Shadin’s business continues to grow, he noted.

Private investment group TWG bought Shadin three years ago and brought in a new management team tasked with confronting the “new and existing challenges” facing the Minneapolis-based firm. TWG was founded by Robert Wright, a Dallas entrepreneur who is involved primarily with businesses in healthcare, oil and real estate, but who also owns the Business Jet Center FBOs in Oakland, Calif., and Dallas and an aircraft management firm in Dallas. “He knows business aviation,” Kramer said.

At the time of Shadin’s purchase, the focus was put on enhancing the company’s engineering, manufacturing, reliability and support capabilities while slashing downtime for repairs. The name was also changed from Shadin to Shadin Avionics. With the recent downturn in the GA market (shipments of general aviation airplanes dropped 26 percent in the first quarter of this year compared with last year’s first quarter), the firm has opted to place more emphasis on its relationships with business jet makers, including Cessna and Hawker Beechcraft, while at the same time seeking lucrative contracts for upgrades of aging military aircraft.

The strategy appears to be paying off. Shadin was recently awarded a $3.4 million contract to replace the fuel quantity conditioning units on the Air Force’s fleet of A-10s. The company has also scored a number of contract wins with business aircraft OEMs and helicopter makers. Kramer said Shadin will continue the strategy for the foreseeable future, while also exploring acquisitions of other avionics firms and preparing for the introduction of a new product or two in the coming year. “I think the management and other changes we’ve been making have been an acknowledgement that our strategy is correct,” he said. “Business aircraft OEMs and government are where the growth is, and that’s where we are putting our focus.”

Shadin isn’t the only maker of GA avionics that has sought to diversify its product line. Garmin has been steadily moving up in the market with its G1000 integrated avionics system, selected as optional equipment in dozens of piston types as well as by Cessna for the Citation Mustang and Embraer for the Phenom 100 and 300. The U.S. Navy has tapped Chelton Flight Systems to upgrade the cockpits of its Bell TH-57 trainer fleet, opening the door to a new market for the Cobham
subsidiary. The program calls for 125 Navy trainers, based on the Bell 206, to receive integrated avionics built around Chelton technology.