Cost pressures caused by high inflation and rises in real wages are forcing Ameco Beijing to focus on productivity and to invest in training.
Maintenance, repair and overhaul firms calculate price based on "a multiplication of man-hours cost and man-hours used plus materials", says Andreas Meisel, general manager of the Air China and Lufthansa MRO joint venture based in Beijing. "Our challenge is to compensate for the salary increases with more productivity and efficiency," he says.
China's inflation rate last year was 4.8% and inflation now is around 8%, he adds. Higher inflation has put pressure on wages, particularly in China's larger cities, where the cost of living is higher.
Meisel says wages last year in Beijing rose 10% on average according to a study by global human resources company Mercer.
Higher wages "bring a lot of cost pressure to companies. I don't know exactly what the outcome will be this year, but we will have a salary conference in the second quarter and are discussing the salary increase for this year." Last year the salary increase at Ameco was around 8%.
Annual staff turnover is less than 2% overall, although it is higher in some areas. "We have problems on the line maintenance side with highly qualified mechanics, and we have problems on the EDP [electronic data processing] side with SAP [systems applications and products] specialists, and we have problems with finance and sales guys," says Meisel.
STAFF IN DEMAND
He says there is a demand at start-up carriers for highly qualified line maintenance people, while SAP specialists are in strong demand because SAP software is used in several industries, providing specialists with a wealth of job opportunities. Furthermore, original equipment manufacturers establishing offices in China are poaching staff, he adds.
Against that, Ameco has high staff retention rates in its overhaul department and among hangar workers, says Meisel. So far, he adds, other MRO firms in Asia have refrained from poaching, despite the fact that they all have ambitious growth plans.
Ameco's own ambitions are reflected in a newly opened hangar that can house four Airbus A380s simultaneously, while in this year's fourth quarter it will complete construction of a new Boeing 747 hangar.
The company handles heavy and light maintenance - mostly for Air China, Lufthansa and United Airlines - and aims to attract more third-party work. It has set a goal of increasing its heavy maintenance work to 70% from the current 50%.
To take on more third-party work and cope with the growth in Air China's fleet, Ameco needs to increase its workforce and plans to meet this challenge by boosting its in-house training capabilities.
It has around 220 apprentices and that number will double after the Ameco Aviation College (AAC) completes its expansion, says Walter Inkermann, who heads the AAC with Gao Hongjie.
Gao says the organisation is changing the way it recruits apprentices so it can attract more gifted students and increase the number of apprentices. Traditionally, Ameco has recruited junior middle school students aged 15 or 16, who undertake a three-year apprenticeship.
NEW TRAINING SYSTEM
"Our training facility [capacity] is limited so we wanted to build up a new training system and work together with tertiary institutions," Gao says.
He says Ameco is selecting senior middle school students who are 18 years old, and these students are then enrolled for two years either at the Civil Aviation Flight University of China in Sichuan province or the Civil Aviation University of China in Tianjin.
"They do the theoretical training according to our syllabus [so as] to fulfil our needs later on," says Inkermann.
In the third year these students will go to Ameco's college to complete their final year and undertake more practical training. Upon graduation they will work at Ameco and be bonded for several years.
Gao says "having people with a high-education background is necessary" and technicians must be able to read and speak English.
The first batch of 150 students - under the new system - were enrolled in September 2006 and will join AAC this September, by which time the AAC will have completed or almost completed its expansion.
Ameco is spending $7 million on a 7,500m2 (80,7002ft) building extension that will house a main practice workshop, five electrical/avionics laboratories, two hydraulics laboratories, two composite materials training workshops, 25 multifunction classrooms, six computer-based training classrooms and one tool room.
With the expansion of AAC, Ameco looks set to gain a strong competitive advantage because it will have a steady supply of skilled and qualified maintenance workers.
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Air China and Lufthansa's maintenance, repair and overhaul business Ameco Beijing is set to grow considerably. This is due in part to the opening in March of a third passenger terminal at Beijing Capital International airport, where the business is based. The terminal has brought growing air traffic and more line maintenance work, but Ameco is not content - the company hopes to attract more heavy maintenance work, while plans to start freighter conversions are on the horizon. The MRO has built a 70,450m2 (760,000ft2) hangar - at a cost of 700 million yuan ($99 million) - making it Ameco's largest investment to date. This building is to be used exclusively for line maintenance and has room for several Airbus A380s, making it one of the largest commercial aircraft hangars in the world. The company's other hangars will be devoted to heavy maintenance and it is building one more Boeing 747 heavy maintenance facility that will also double as an aircraft paintshop. Once this is completed in the fourth quarter, Ameco's total hangar capacity will be enough to cope with 15 widebodies and 11 narrowbodies simultaneously. The expansion of hangar capacity is in anticipation of the heavy maintenance third-party work Ameco hopes to win from airlines in Europe and North America. The company's freighter-conversion ambitions centre on 747-400 work using the supplemental type certificate of either Boeing or Israel's Bedek Aviation. Ameco Beijing general manager Andreas Meisel says the company has spoken to Bedek and Boeing, but has yet to make a final decision on whether to convert 747s. "Freighter conversions are a product we always think about, but there is a lot of investment involved in terms of training people and getting the equipment," he says. "How many freighter conversion can you get?" he asks. "If you only have two or three from a customer like Air China, for example, it makes no sense." However, according to Flight's ACAS database, Air China has a dozen 747-400s that could be converted to full-freighters, so if Ameco Beijing goes ahead with freighter conversions, the prospects of its joint owner giving it more than three aircraft to convert seen reasonable. Furthermore, Li Jiaxiang, director general of the Civil Aviation Administration of China and until recently chairman of Air China, has been encouraging Air China and other state-owned carriers to boost freighter operations.
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Source: Flight International
