Although Piper Aircraft's new owner lives halfway around the world, new chief executive Simon Caldecott never has to look farther than his conference room wall in Vero Beach to see who he works for. Presiding over the Florida plant, via a large elegantly framed photograph, is Hassanal Bolkiah, the Sultan of Brunei.
On paper, the government of Brunei owns Piper. However, the Sultan has full executive power over the oil-rich southeast Asian country (his official title takes 223 characters to type out, almost two Twitter messages), making his desk the place where the "buck" really does stop.
Brunei purchased Piper in 2009 via Imprimis, an indigenous investment firm that helped to operate the company. In December, the government cut out the middle man.
"Now and going forward, Piper senior leadership has a direct relationship to the ownership, which enhances communications, decision-making and financial accountability," the company stated.
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The seemingly complex relationship comes down to a basic quid pro quo between Caldecott and the Sultan. "As long as we show a positive return and increase the value of the asset, they'll continue to invest in it," Caldecott said.
Brunei's commitment appeared to have flagged in October, when Piper unexpectedly announced it would cancel its flagship programme, the PiperJet Altaire personal jet, which meant laying off 150 engineers.
Launched in the high times of 2006, when forecasts showed a pent-up demand for about 1,200 very-light jets (VLJs) a year, the project had gone through its critical design review before the cancellation, resulting in 80% of the detailed design being finished.
Caldecott, who took over as chief executive in October when Altaire's fate was being decided, defends the decision as the only prudent thing to do. He came to Piper in October 2009 as chief of production for the PiperJet, before moving up to vice-president of operations for the whole company a year later. Caldecott has 38 years in the aerospace industry, most of it working on Hawker business jets.
"There's no [VLJ] market out there right now," he said. "The last reports out now call for a maximum of 240 units a year. It has shrunk by 80%. Do I really want to be investing to get into such a small market?"
In addition to wrapping up the programme in a way that will allow for a restart at some point, market pending, Caldecott also retained some of the engineers he hired for the Altaire to bring in a new revenue stream for Piper - engineering technical services featuring Piper's manufacturing capability.
"We've had a lot of inquiries and are about to invoice for our first job, an engineering services task," said Caldecott. He did not identify the client other than to admit it is an operator or a fixed-base operator that had contracted for repair services. Along with repairs, potential work coming into the factory includes engineering services, supplemental type certification programmes and production of certain components or parts at Piper's plant in Vero Beach.
"There's a lot of potential," he said. "We're absolutely amazed at the number of inquiries we're getting right now."
More broadly, Caldecott is in the thick of a two-year, three-phase project to improve in-house performance and costs, including reducing the hours it takes to build each aircraft, freeing up capacity to take on more work.
During the past 10 years, Piper has cycled between having 6% to 19% of the worldwide piston-powered market in terms of annual deliveries, according to General Aviation Manufacturers Association (GAMA) figures.
The company delivered 135 aircraft in 2010, representing a 15% market share. Caldecott said backlog is "the strongest it's been in four years" and sales are "looking pretty good" going into next year.
The first phase of the improvement project, completed last year, was to "stabilise the process", said Caldecott. In part, that meant figuring out how to level-load production rate, removing the inefficiencies of the "hockey stick" delivery profile that typically favours fourth-quarter production.
"It's better to build backlog than to have that spike," he said. "We've put some processes in place in the last year that match the production to the sales."
Through the first three quarters of 2011, Piper delivered 93 aircraft - 26, 33 and 34 per quarter respectively, as assessed by GAMA.
Phase two, which is under way, includes improvement projects to allow for more capacity to take on new markets. Phase three focuses on how to grow the business.
"My goal is two years from now to be selling more, and producing more aircraft," Caldecott said.
Source: Flight International
