Hawker Beechcraft filed for Chapter 11 bankruptcy protection in May and is currently in exclusive negotiations with Superior Aviation Beijing, which has placed a stalking-horse bid to buy Hawker Beechcraft for $1.79 billion. However, the Wichita-based aircraft manufacturer will ultimately be sold in a public auction, meaning it is still very much up for grabs.
Cessna Aircraft parent company Textron and Brazilian aircraft manufacturer Embraer were believed to be among the interested bidders during the closed-bid process in which Superior Aviation prevailed. But the sale of Hawker Beechcraft, which was founded in Wichita by Walter Beech in 1932, to a Chinese company doesn’t sit well with many. Likewise, selling it to another general/business aviation aircraft manufacturer will just result in fewer competitors, which really isn’t good for customers, the supplier base or even the overall industry.
That’s why I believe that an American company that has extensive manufacturing experience, but isn’t currently involved in the GA/bizav industry, should make a serious play for Hawker Beechcraft during the public auction. And who better than Ford Motor?
Here’s a list of 10 reasons why I think that Ford should place a bid for Hawker Beechcraft:
1) By manufacturing airplanes, Ford would regain a piece of its history. In 1925 Henry Ford bought Stout Metal Airplane Co. and its aircraft designs. He turned a single-engine Stout design into the three-engine Ford Tri Motor, an all-metal aircraft that was built with then-advanced construction techniques. A total of 199 Ford Tri Motors were built between 1926 and 1933. Ford hasn’t mass produced any civil aircraft since the Tri Motor, though it did build Consolidated B-24 Liberators under license, as well as airplane engines for the British government, during World War II.
2) Ford is an American icon. So is Hawker Beechcraft.
3) Ford can afford to buy Hawker Beechcraft and invest in new products. During the first half of this year, the automotive company posted $2.8 billion in after-tax profits. With this amount alone, it could buy Hawker Beechcraft for $1.8 billion and invest a couple of hundred million in R&D for new aircraft, and it’d still have money left over.
4) Ford CEO Alan Mulally knows airplanes and aircraft manufacturing. Before joining Ford he was the executive vice president of Boeing and the CEO of Boeing Commercial Airplanes (BCA). Mulally began his career with Boeing as an aircraft engineer in 1969 and rose through the ranks. In the 2000s he was credited with Boeing’s resurgence against Airbus. Just imagine what he could do with Hawker Beechcraft.
5) Quality still is “job one” at Ford, even though the company no longer uses that as a marketing slogan. “Quality is part of Ford’s DNA, and the Ford team is dedicated to continually finding new ways to please our customers,” Bennie Fowler, Ford’s group vice president of global quality and new model launch, said last year when accepting the 2010 Quality Leader of the Year Award from the American Society for Quality. Hawker Beechcraft also strives for the “highest standards of quality,” but Ford could raise the bar even higher at the aircraft manufacturer.
6) Supply-chain synergies. Automotive manufacturing is a high-volume business, so Ford can buy in bulk at lower prices. General aviation aircraft manufacturing is generally a low-volume business, so Hawker Beechcraft buys in small batches and doesn’t get much of a price break. Under Ford, Hawker Beechcraft could leverage Ford’s supplier base to reap bigger discounts. And Ford might also be able to strike automotive supply deals with some existing Hawker Beechcraft suppliers to bring down prices of other components. It wouldn’t work for everything, but there certainly are synergies and savings to be had here. For example, if Ford had a high-volume supply deal with Garmin for a built-in navigation system in its cars, it could piggyback this volume discount toward Garmin avionics systems for Hawker Beechcraft aircraft.
7) Engineering synergies. Ford has a cadre of engineers and, to a smaller extent, so does Hawker Beechcraft. Both groups can learn something from one another and even work together on some projects. Hawker Beechcraft’s engineers are experts at using Catia computer-aided design software and can transfer this knowledge to Ford’s engineers. Likewise, Ford engineers work on a higher volume of projects, so they have a broader experience base that they can share with Hawker Beechcraft’s engineers. An automotive engineer could bring a lot to the table when it comes to aircraft design, and vice versa.
8) Ford could once again revolutionize aircraft manufacturing. Using its vast expertise in manufacturing workflows, automation and management, Ford could bring Hawker Beechcraft’s manufacturing plants into the 21st century. Every time I’ve visited Hawker Beechcraft’s metal aircraft and wing manufacturing lines, I feel like I’m stepping back in time to the 1950s. The facility is very manual-labor intensive and virtually nothing is automated. And while the aircraft manufacturer does use automation to produce the composite fuselages for the Premier and Hawker 4000, it still requires a lot more manual labor than Ford’s automated car plants.
9) Technology transfer. There are many technologies developed for aircraft that have filtered down to automobiles: GPS navigation, enhanced vision, on-board entertainment systems and so on. Ford could incubate new technologies in Hawker Beechcraft airplanes and transfer them to Ford cars when they are perfected. This could give Ford’s auto products a technological edge over competitors.
10) By employing automotive designs, Ford could lower the costs of cabin interiors for Hawker Beechcraft aircraft while at the same time improving their fit and finish. Compare the cabin of the Hawker Beechcraft Bonanza and that of Ford’s Lincoln MKX crossover vehicle, and you’ll see exactly what I mean. The innovative cabin of the in-development HondaJet has drawn heavily on automotive interior expertise at Honda Motor, as well as its Acura luxury car division. So there’s no reason that Ford, and its Lincoln luxury division, couldn’t do the same for Hawker Beechcraft airplanes.
Please use the comment section below to add your thoughts on why Ford should or should not buy Hawker Beechcraft.