Eurocopter braces for delivery stumble
Eurocopter CEO Lutz Bertling said the company is basking “in an exploding market with a booming turnover,” but he sounded a cautious tone with respect to the challenge of delivering its helicopters on time.
Eurocopter, the undisputed world leader in parapublic sector helicopter sales, enjoys a $14.5 billion backlog and saw its sales jump 50 percent last year, from 401 to 615 units. But to hear Bertling tell it, this is not the time to celebrate. “Feeling comfortable is the first sign [that you could] lose,” he admitted at a press breakfast here yesterday. “We need to make sure that we don’t overheat.”
Bertling said Eurocopter is moving aggressively, but prudently, to expand its global “industrial footprint,” investing heavily in foreign production facilities, particularly in Spain and the U.S. During the last two years, Eurocopter invested $302 million in “industrial systems,” according to Bertling, and that includes $35 million in Spain and $40 million at American Eurocopter’s Columbus, Miss. plant, where the U.S. Army’s UH-72A Lakota is now in partial production and is scheduled to enter full production in 2008.
The Columbus plant will grow to 219,000 sq ft by the end of summer, while American Eurocopter’s main plant, in Grand Prairie, Texas, will expand employment from 500 to 750, said Marc Paganini, president of American Eurocopter.
“We don’t think we can do all this business from Germany and France,” Bertling said.
He added that the company has made significant inroads into the Australian and Asian markets and sees the Russian market coming back, driven by demand for VIP and oil exploration helicopters.
Pushing Supply Chain
Bertling also said that most of the company’s supply chain is “double-sourced,” save for major components such as engines. He expressed confidence that Eurocopter’s principal engine source, Turbomeca, can meet demand and said that Eurocopter started working with the engine maker to ramp up production beginning in 2004.
“The whole supply chain is ramping up very fast,” he said. Nevertheless, he added that “the supply chain is limiting our growth.”
Bertling said that, despite the huge multibillion-euro losses and massive layoffs announced by its parent company, EADS, mostly in conjunction with hemorrhaging from the Airbus A380 jumbo jet program, Eurocopter is increasing R&D spending at a rate of 40 percent per year. “The current cash needs at EADS, mainly at Airbus, are not limiting our growth for the future,” he said.
Nevertheless, Bertling said R&D would be tempered by “our customers’ need to make money with our product. Innovation makes sense only if it creates added value for the customer.”
One R&D area Bertling hinted at was continuing noise-reduction efforts. “Noise will become more and more important. There is no way out,” he said.
Bertling admitted that customer service and support continues to be an area of concern where the company needs to show improvement, frankly admitting, “We are number one in sales, but we are not number one in customer support. We intend to increase our level of customer support significantly in the coming year.” He also pledged, “We will not let customer support suffer because we need the spares to build new helicopters.”