Streamlining the production process might be
the long-term solution helicopter makers need to overcome the
myriad obstacles in getting their aircraft to market.
Bell Helicopter Textron, a Fort Worth, Texas,
subsidiary of Textron Inc., is turning to partnerships with
suppliers as a way to speed up the time between orders and
"We're looking at leaning out and
streamlining our supply base-reducing the number of suppliers
we have and changing the relationship from our supplier to our
partner," a company spokesman said. We want to do more sharing
in terms of our needs and their capabilities as suppliers. We
want to work with the supply chain so they can produce more and
we can produce more."
Any potential solution must start with
aluminum and titanium producers, who contribute in a big way to
the bottleneck due to the lack of raw materials needed to
produce helicopters. This backlog is creating a lag time of 18
to 24 months between order entry and delivery of the finished
product to customers.
"Nobody can produce at the pace needed," the
Bell spokesman said. "We have increased our production rates
every year for the past several years but there are lead times
for everything, so we can't ramp up production as much as we
would like, or based on demand, because we need to wait up to
two years for some parts."
Outside of wait times, the rising cost of raw
materials will continue to plague helicopter producers as they
struggle to keep pace with increasing demand for offshore oil
"Not just in aluminum, but the price of all
metals are rising and this has affected our production costs,"
the spokesman said. "Also, because of the overall boom in
aerospace-with Boeing's 787 and civilian aircraft-all of this
is making raw materials harder to come by. And when less
material is available, you have to pay more to get what you
Bell's revenue, split evenly between military
and commercial helicopters, is expected to double in the next
five years on surging demand, although it declined to provide
exact figures. Bell's civilian helicopter market share averaged
around 30 percent between 1992 and 1998, said Richard
Aboulafia, vice president of aerospace and defense industry
research analysis firm Teal Group Corp. That share fell to
about 17 percent between 2002 to 2006, but growth in civilian
programs in the next few years is expected to push the share to
more than 21.5 percent by 2011.
CHC Helicopter Corp., Richmond, British
Columbia, faces similar issues in its efforts to provide
transportation in emerging offshore oil regions. As oil
companies stretch their exploration efforts, the largest
helicopter service provider to the oil and gas industry-with
aircraft operating in more than 30 countries around the
globe-is set to see its order books overflow.
"Exploration and extraction is getting more
expensive as operators look to more distant oilfields and mine
sites to meet growing raw material needs," Aboulafia said. "CHC
Helicopter, the largest helicopter service supplier to the oil
and gas industry, serves as an appropriate bellwether for this
Revenue from helicopter transportation
services for the oil and gas industry accounted for 88 percent
of CHC's total revenue of nearly Canadian $1.15 billion ($1.09
billion) during the fiscal year ended April 30, up from 87
percent of total revenue of C$997.1 million the previous
The company cited continued fleet growth and
expansion for the 15.2-percent year-on-year revenue gain, the
highest annual revenue figure in the company's history.
In late June, CHC was awarded two major
contracts-one extending over five years and the other seven
years-by Norway's Statoil ASA for the provision of helicopter
services in the Norwegian Sea. Valued at approximately C$1.1
billion ($1.05 billion), the company said it believed it was
the largest bundle of helicopter service contracts ever
In early July, the company also renewed two
contracts with Statoil and GDF Production Nederland BV,
Zoetermeer, the Netherlands, for services in the North Sea that
are expected to generate revenue of up to C$170 million ($161.7
million) and C$55 million ($74.6 million), respectively, over
the five-year extension periods.
CHC currently operates about 250 helicopters,
and has plans to add another 70 to its fleet within five years.
In response to intense customer demand, the company added 40
aircraft to its fleet in fiscal 2007, although this was offset
by the sale, disposal or return to lessors of 18 aircraft,
resulting in a net increase of 22 aircraft.
The company, which is the largest operator in
the North Sea-one of the biggest oil-producing regions in the
world-also has expanded to West Africa, South America and
various parts of Asia.
Both Bell and CHC will face new production
challenges going forward as offshore oil platforms move further
offshore, demanding increased range capabilities and new
technologies to service drilling operations.
Despite analyst views that growth in the
offshore oil drilling industry has peaked, Bell is gearing up
for higher, and more specialized, demand. "We don't see a
drop-off in offshore, but maybe a change in the type of
aircraft they need. As the platforms move further and further
out, the range of the helicopter has to increase, so you have
to have a larger helicopter to service those rigs," the Bell
spokesman said. While the company declined to discuss specific
material changes being explored, it acknowledged that
composites could play a larger role in the bigger, lighter
One thing is certain, though-fabricating
larger helicopters will mean higher production costs and will
result in an even tighter squeeze on the availability of raw
materials, boosting pressure on helicopter companies to find a
solution to the issue of long lead times for parts.