Bill Boisture is chairman and chief executive of Hawker Beechcraft. He joined the business and general aviation aircraft manufacturer two years ago and has helped to steer the US airframer through the worst economic downturn for 70 years. The former president of NetJets, Gulfstream and British Aerospace Corporate Jets tells Flight Evening News about the difficult decisions he has made during this challenging period and what plans he has for one of the industry's oldest aircraft builders.
What steps have you taken to limit the economic impact on Hawker Beechcraft?
We have had to make some very tough decisions. The downturn has hit the business aviation market hard - without exception. We have had to cut our production rate and reduce our staff numbers, which was a very difficult thing to do. We also made the decision to become a smaller, more focused and efficient company. In the past, we would manufacture everything that was needed to assemble the aircraft, but we had to make some aggressive, broad strokes to realign the company.
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What has this entailed?
We have put measures in place to change our US footprint by up to 93,000m² (1 million ft²) and to shift the production of parts and components to US suppliers and our new expanding base in Mexico. This decision wasn't taken lightly. In Mexico, we will produce high quality parts for all our aircraft - apart from the T6 trainer - at a lower cost. They will then be shipped to Wichita, which will be home to final assembly, completions and delivery.
Does Hawker Beechcraft still have a future in Wichita?
Of course. We have strong, historical ties with Wichita. We secured a $45 million incentive package late last year from the state of Kansas and Sedgwick County, which has enabled us to retain our production lines in Wichita, preserve a long-term presence here and give security to our employees.
How will the money be allocated?
Around $35 million will be used for new and existing product development and improvement projects over a five-year period and the remaining $10 million will be dedicated to education and training for our employees. Some of this will be undertaken at Wichita's National Center for Aviation Training, which is dedicated to hands-on training in general aviation manufacturing, aircraft and engines. We want our people to have more than one skill so they can move from one job to another. At the moment, we have more than 240 people in college level courses. Our vision is to have the best-trained and most efficient workforce within 36 months.
Having invested huge sums skilling your workforce, what is to stop them moving to competitors?
It is always a gamble they will move on. However, we involve our employees in the day-to-day operations of the company and they share in its success. If we reach certain targets, they are rewarded financially. With our focus of safety and training, we hope they feel valued.
There are mixed reports about the health of the business aircraft market. What is your view?
Economic conditions are still tough. We are starting to see signs of recovery in the midsize and light-cabin sectors, but it is slow. Traditional buyers of these categories of aircraft are midsize companies and wealthy individuals for whom aircraft purchases and operating costs are major decisions. The top end of the market has been cushioned largely as the typical buyers of these aircraft types - governments, large companies and very wealthy individuals - are not faced with these concerns.
How is Hawker Beechcraft trying to stimulate sales of its product line?
We are expanding our presence in the international growth markets - notably Africa, Middle East, India, China and Russia - which we expect to drive the market recovery. To help us expand our share within these regions we have divided the world into three key areas - Europe, Middle East and Africa; the Americas, and the Asia Pacific - each dedicated to selling, distributing and supporting our customers. Within these regions, we have introduced aircraft demonstrators and expanded the number of field service representatives last year by 34%. We plan to grow this number by 24% in 2011. Added to this, Hawker Beechcraft has expanded spare parts inventory by 200% in the past year and opened bases in Dallas, Dubai, London and Singapore. This year the inventory will increase by another 140% to support the Hawker Beechcraft fleet worldwide.
How does the international market compare with the US sector?
It is much stronger. Over the past year, the international marketplace has accounted for between 60% and 70% of our business, but we expect this ratio to stabilise at 50:50 once the US market recovers. But it is sluggish now and the inventory of used aircraft is high. Buyer confidence has to be re-established before prices begin to rise. This will give the banking community more certainty about aircraft residual values and they will start lending again. A percentage of our buyers need to borrow.
The business aircraft market is very competitive and crowded. What is Hawker Beechcraft doing to attract and retain customers?
We have introduced 23 new variants and aircraft to the mix since 2003 - including three new King Air models in the last three years and the 800XPR and 400XPR upgrade programmes. Development of the Hawker 200 - formerly the Premier II - is well under way and we are on target to certificate the light business jet in the fourth quarter of 2012. Also under way is our $50 million Hawker 4000 upgrade programme targeted at the aircraft's 40-plus owners. This is huge investment on our part and includes improvements to the cabin and aircraft systems.
Hawker Beechcraft has hinted it may enter the single-engined turboprop market. Can you confirm this is your plan?
Yes. But I won't say when. There are opportunities in the single-engined turboprop market. In light of escalating fuel prices there is a compelling case for a low-cost, high-speed aircraft with sophisticated, but not complex avionics. The ruggedness and simplicity of a turboprop single is ideal for developing markets.
Source: Flight Daily News
