Global Change by Mike Hirschberg, Executive Director He Global Helicopter Industry Has Gone Consolidation Over the Past Few Years

Global Change By Mike Hirschberg, Executive Director he global helicopter industry has gone consolidation over the past few years. through significant changes in recent Goodrich and Hamilton Sundstrand were Tyears. merged in 2012 to form UTC Aerospace Western helicopter production has been Systems. GKN purchased Fokker in 2014. adversely affected by a number of macro Triumph Group has acquired dozens influences, including the end of major of companies over the past few years, involvement in Iraq and Afghanistan and the including big names like Vought, Fairchild, resultant world-wide reductions in defense Allied Aerospace Industries and Primus spending; the global economic downturn of Composites, to name a few. Helicopter the Great Recession, followed by the lowest suppliers like BAE Systems, Northrop oil prices in a decade; the rise of indigenous Grumman, Raytheon, Safran and Thales have helicopter production in Asia and elsewhere; also grown larger by acquisitions. and the reemergence of the Russian With defense budgets in the US and helicopter industry as a major producer. around the world under pressure, and sales In the US, the current administration cut of larger commercial helicopters stagnated defense spending by $487B for the decade after previous high demand from the oil and 2013-2023, in addition to the threat of gas producers, the global rotorcraft industry Defense Department cuts of an additional is looking at a 25-30% reduction in annual $560B from the budget cuts known as sales from its peak in 2014 to the Forecast “sequestration.” International prediction for a decade later. These global influences have significantly As the world becomes both more global challenged the helicopter manufacturing and more dangerous, the need for highly- industry, leading to changes in both capable military rotorcraft has never been corporate leadership and structures. Global defense mergers and acquisitions greater, but most of the world’s military Changes in corporate leadership have also reached an all-time record in 2015 aircraft fielded today are modernized been broad and cut across the global (based on purchase prices). Shortly after the versions of designs originally created in the rotorcraft community. In addition to Sikorsky acquisition was approved by federal 1960s and 1970s. Aging aircraft need to be the widely-publicized Lockheed Martin regulators in September, US Secretary of upgraded in the near-term with modern acquisition of Sikorsky and the executive Defense Ashton Carter repeated that it was platforms, and replaced in the long-term level changes at Bell Helicopter, executive “important to avoid excessive consolidation with advanced systems capable of reaching management changes have affected just in the defense industry, to the point where the full potential for the future of vertical about every prime helicopter manufacturer. we did not have multiple vendors who flight. Since 2010, the leaders of could compete with one another on many Without strong commitment from AgustaWestland, Airbus Helicopters/ programs.” Further cuts to the defense governments to invest in military rotorcraft, Eurocopter, Avicopter, Bell Helicopter, budget could nonetheless bring his fear to the Western rotorcraft industrial base could Boeing Vertical Lift, Enstrom Helicopter, HAL reality. see further consolidation. Cancellation of Helicopter Complex, Robinson Helicopter, While there have not been any major several large acquisition programs over the Russian Helicopters and Sikorsky — as well helicopter OEM mergers since the creation past decade or so has exacerbated the issue. as subsidiaries such as AgustaWestland of Russian Helicopters in 2006 (the If companies continue to invest hundreds North America, AgustaWestland Philadelphia AgustaWestland merger was in 2000 and of millions of dollars in new military aircraft Company, American Eurocopter, Bell Schweizer was acquired by Sikorsky in 2004), without production contracts, eventually Helicopter Canada and Eurocopter Canada several helicopter companies have changed they won’t have the resources to develop — have all turned over; some have even ownership or corporate structure. While new aircraft. had three or four heads during this period. Lockheed was not an OEM, it is one of the AHS International works to advocate for There is, in fact, only one leader of a major world’s largest suppliers to the helicopter greater investment in vertical flight to ensure helicopter producer who was in charge then industry, and this corporate restructuring that the rotorcraft of today and tomorrow and still is today: Lynn Tilton, the Chairman will have major impacts since the company is can reach their full potential, both from and CEO of MD Helicopters, who just apparently looking to save $150M in annual a technological perspective and through celebrated a decade of leading the company. “synergies.” EADS/Airbus also concluded greater application. Government leaders There have been many reasons for these a massive restructuring/rebranding at need to recognize the incredible benefits departures — five years is a long time for the beginning of 2015 and Finmeccanica/ and capabilities of military and civil rotorcraft company heads — including retirements for AgustaWestland recently unveiled similar with policies that support the growth of the age or health reasons. But the turmoil in the plans for 2016. vertical flight industry. global aerospace/defense industry has made More importantly, however, the supplier What do you think? Let us know at the changes in leadership nearly universal in base has seen continued significant [email protected]! the helicopter business. 4 VERTIFLITE January/February 2016.

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