Hawker Beechcraft Adapting To Meet The Times
Asked recently how Hawker Beechcraft is doing, company chairman and CEO Bill Boisture’s answer of, “We’re doing all right,” was abbreviated at best. The long answer is more enlightening. “The progress we’re making in transformation of the company through Project Challenge is very significant,” Boisture said, answering more at length.
Project Challenge was launched in August 2010 and implemented “a large-scale transformation that would reduce annual operating costs through changing the structure of the company and repositioning for the future,” Boisture explained. And he added that the restructuring includes a reduction of facilities, outsourcing of noncore activity, supply chain rationalization and implementation of lean manufacturing initiatives.
Plant closings in Wichita have been proceeding, along with the transfer of some jobs to growing Hawker Beechcraft facilities in Chihuahua, Mexico. At the same time, a growing number of supplier parts have been outsourced to Mexico and to third-party vendors in Wichita and other parts of the U.S.
“We’re on schedule with that plan [and] while not all the jobs have been moved, a majority will be moved by year-end,” Boisture said. By the end of 2011, some one million square feet of Hawker Beechcraft space in Wichita will be closed, and by the February 2012 the Chihuahua facilities will total about 500,000 square feet. The workforce there, expected to total 1,000 by year-end, produced 14,000 parts in the last week of August alone, according to Boisture.
He also noted “a very good five-year agreement” completed with the International Aerospace Machinists union in August. “It fits the current times we are in and lets the union and company benefit from an upturn when it occurs. It has [the union] sharing in performance of the company with all of us when we hit our goals.”
Deal with State of Kansas
Another step toward stability came last December when Hawker Beechcraft signed an agreement with the state of Kansas that requires the presence of the company in Wichita over the next 10 years, and that it maintain current product lines there and retain at least 4,000 jobs. Also, part of the $40 million incentive package from the state is related to Kansas’s Impact educational assistance program and includes $10 million over three years for tuition reimbursement and training in the first year. It also calls for $5 million each year for the next four years as part of the state’s Major Project Investment program.
Boisture said in the last eight months since signing the agreement: 337 people have enrolled in the tuition reimbursement programs in degree or nondegree programs; approximately 400 people have gone through lean manufacturing refresher training; 215 went through technical training; and 190 went through project management training.
Programs Move Along
That said, Boisture turned to airplanes and production, noting FAA certification of the Hawker 800XPR in August, and certification by the agency in the same month for the “Load 20” avionics upgrade of the Hawker 4000. The Load 20 software upgrade from Honeywell is part of a more extensive and ongoing Hawker 4000 “upgrade and enhancement” program, which is free for existing Hawker 4000 owners. Certification by EASA of the Load 20 package on the 4000 is expected in November.
“We’re also in double-digit orders for the Hawker 200 program, with four airplanes now in the flight-test program,” he said. And he added that the flight tests are showing considerable improvement in the expected performance numbers, including lower fuel consumption, lower emissions and higher cruise speeds.
Now in production on the Hawker lines are the 4000, 900XP and 750 models. The Beechcraft production line includes the Premier IA; King Air models 350i, 350ER, 250, C90GTx; the Baron G58 and Bonanza G36. Production of the Hawker 200 will not begin until next year, when its predecessor the Premier IA goes out of production. “Suspension” in production of the 400XP was announced last year at the NBAA convention because of “the challenging market and weak demand being faced by all light-jet manufacturers.”
Boisture said that in terms of research and development, the company has no new aircraft in the works and is currently investing in upgrades to the existing fleet; “working off the good platforms we have and making improvements in aircraft variants like the [no longer in production] 800XPR” and the King Air 350, from which a special-mission variant was created and introduced in June at the Paris Air Show. The Hawker 400XPR upgrade of the Model 400 includes replacement of the original Pratt & Whitney Canada JT15D-5 engines with Williams International FJ44-4A-32s, winglets and optional Rockwell Collins Pro Line 21 avionics.
Global Customer Support
A major investment is being made in Global Customer Support (GCS), said Boisture. In September, the company announced the selection of new base locations for its Mobile Technical Support team’s fleet of ground support vehicles.
“Speed of response is critical,” said v-p of Global Customer Support Christi Tanahill. “Positioning of the teams in [other] locations complements the company’s extensive network of factory-owned and authorized service centers throughout the U.S.”
GCS has also finalized agreements with the Delaware River and Bay Authority and the Delaware Economic Development Office to open a new authorized aircraft maintenance facility at New Castle Airport in Wilmington. It is expected to open in the second quarter 2012. Also in the planning is “a new facility in the Northeast” that is expected to open in the second quarter 2012.
More “global” in nature is the authorization of ExecuJet in Lanseria, South Africa, as a Hawker Beechcraft service center. In 2010, ExecuJet was named an authorized sales center for King Air products.
Military programs continue to carry much of the revenue load at Hawker Beechcraft. Boisture pointed out that Hawker Beechcraft has already delivered more than 700 variants of its T-6C, high-performance turboprop trainer. More recently the company delivered 12 T-6C military trainers to the Royal Moroccan Air Force.
In July, Hawker Beechcraft was at the 40th Royal International Air Tattoo in at RAF Fairford in the UK, highlighting its T-6C and the AT-6 light attack/reconnaissance variant. The company was there to leverage its successes as a supplier of its T-6C to militaries around the world as a means of promoting the AT-6. Boisture said the company anticipates a good order book for the AT-6.
At NBAA, Hawker Beechcraft is highlighting its latest aircraft upgrades. On the static display line is a Hawker 4000, Hawker 900XP, Hawker 200 mockup, Hawker 400XPR and Premier IA. From the Beechcraft line is a King Air 350ER (special-mission demonstrator), a King Air 250 and a King Air 90GTx. On the smaller side are a Baron G58 and a Bonanza G36. The Hawker Beechcraft exhibit hall booth is devoted primarily to the company’s Global Customer Support organization.
While Boisture was limited in any forward-looking statements by Hawker Beechcraft’s financially public status, he did say the company is “making very good progress to reposition the company to cope with business in a smaller market.”
As for the current economic crisis and the possibility of a double-dip recession, he was reluctant to refer to the current industry gains as a recovery. “I don’t know what you call it, but I can tell you that the business and general aviation market is very slow. It’s a difficult environment. We had planned to do all this during the slower period of this downturn,” he concluded. “Unfortunately, we’re going to have longer than we expected to get it done.”