been smoking. For more than a MARKET ANALYSIS decade now, we’ve been hearing rumors about projects from Toyota and Honda that never seem to This is War materialize into real products. There have been vague sightings of intriguing aircraft and reports How Toyota plans to seize the world GA about piston and jet engine market. Cessna and Piper should be projects and now along comes Munro stitching it all together with listening; these guys may be serious. a fantastic theory of how the Japanese view business as war and by Paul Bertorelli quality aircraft from Japanese how they’ll use military discipline companies, says Munro, will drive to take over the world of GA. Cessna is toast, Piper is road kill the U.S. light aircraft industry to Munro is the principal in Munro and Mooney? Fuggedabout it. The ruin in a few short years, paving Associates, a Michigan-based way A. Sandy Munro sees it, the the way to seizure of the real prize: consulting company with expertise established U.S. GA industry has a dominance in business and com- in the automotive and manufactur- couple of years—a half decade at mercial transport aircraft. ing sector. He came up through the best—to reform or face being gutted By the end of the decade and machine tool industry, did a stint by the same people who dominate perhaps sooner, familiar GA as a Ford auto engineer and is a the auto industry, steelmaking and manufacturers in the U.S. might be keen student of the way Japanese machine tools: the Japanese. gone for good, not just flitting in companies do business. He’s also According to Munro’s blueprint and out of bankruptcy or intimately familiar with the work for the 21st century of general downsizing the workforce to offset of famed industrial quality guru aviation, Toyota and Honda—and the vagaries of market demand. W. Edwards Deming who intro- maybe some Japanese companies Munro says there’s still time for duced manufacturing reforms to you’ve never even heard of—are the U.S. industry to respond to and Japan after World War II. Deming poised to come out of the ground blunt the Japanese challenge, but is widely credited with making any day now with aircraft that, only if U.S. manufacturers reform Japan the economic powerhouse while not necessarily revolution- quickly, instituting cost controls, that it is today, its current fiscal ary, will be so favorably priced and manufacturing efficiencies and, doldrums notwithstanding. of such irresistible value that the above all, improved quality. That’s a In a riveting paper presented to used aircraft market will be change we would all welcome but an SAE aviation conference in reduced to a shambles. The we aren’t holding our breath. We’ve April, 2002, Munro sketched out onslaught of inexpensive, high seen hidebound and its name is what he believes will be the general aviation manufacturing. Japanese plan of attack in wresting dominance of aircraft manufactur- Toyota’s proof-of-concept TAA in ing from the U.S. It would be easy flight over California. It’s believed Who Is This Guy? to dismiss Munro as just another to be Lycoming powered but a You might rightfully ask who futurist crank, save for the fact that diesel version may emerge. Sandy Munro is and what he’s Americans who have and are working with the Japanese on aviation projects in the U.S. agree that he may be right. None of them seem to have Munro’s overarching view of Japan’s world conquering ambitions, but the bits and pieces of the puzzle fit together in an intriguing way. Munro believes the Japanese will enter the GA market first with an aggressive presence that will stun the established industry. He says Japanese companies will sell light aircraft at prices substantially below what U.S. manufacturers are currently offering, with compa- rable performance and with fit, finish, quality and customer support comparable to at least mid-priced or luxury automobiles.

26 The Aviation Consumer • October 2002 www.aviationconsumer.com He believes Japanese companies— thus far, Toyota, in our estima- tion—are willing to sell airplanes at a loss for as many years as it takes to rid the market of competi- tion. Given the chronic weakness and hand-to-mouth nature of the U.S. light aircraft industry, we would guess if the Japanese really decide to do this, it’ll be akin to mugging a drunk in a dark alley. Good business sense has never been in surplus supply in the boardrooms of GA manufacturers. Unless it responds forthrightly, Munro gives the U.S. GA industry two to five years after the Japanese onslaught begins.

This is War manufacturers in the U.S. (In our This TAA variant appears to be In his paper, Munro says the view, “marginal” fairly describes fixed gear but could obviously be Japanese laugh at Americans not the entire industry, in terms of built as a retractable. Speeds are out of disrespect but because they profitability if not competitiveness.) said to be in the 140-knot range. can’t understand why Americans And when will this happen? just don’t catch on to the fact that Munro says the Japanese like “business and war are a single dramatic introductions at major This is consistent with Munro’s entity.” He describes three kinds of events where all competitors will observation that companies like companies: those that make things be: His guess is Oshkosh at the Toyota and Honda have strategic happen, those that watch things 100th anniversary of powered business plans extending as far out happen and those that wonder flight. In case you’re rusty on the as 50 years. One American engi- what happened. history, that’s 2003. neer told us he was astonished to Ford was one of the latter in the learn that Toyota even has a 200- 1970s when it ceded the small car Is This Real? year plan. “Hell,” he added, “in market to the Japanese because this country, we’re not looking everyone knew there was no profit If the Japanese are about to burst beyond next month.” in small cars. But a couple of years full-blown into the world GA Most of what we know about later, Ford was shocked to see that market, wouldn’t there at least be Japanese companies had bagged a some clues about what they’re up To get its feet wet in aviation, large share of Ford’s market by to? There would and there are. Toyota certified its V-8 Lexus underselling cars of better quality. Although Japanese companies engine as an aircraft powerplant. Munro says they’ll do the same have been extraordinarily secretive It flew in a Malibu and also in a in the aviation industry, beginning about their plans—this is, after all, Rutan-designed experimental. with light aircraft. They’ll do it by war—as Munro contends, a canvassing current and would-be number of U.S. aviation buyers to determine the market’s professionals have and are wants and needs, hiring the best doing developmental work engineering talent around, fielding for the Japanese. All of an army of round-eyed lobbyists to these experts have non- pressure Congress for aviation- disclosure agreements and friendly reforms and exhaustively none we talked to were testing prototypes before rolling willing to go on the record, out the production models. at least in detail. These aircraft will be sold Nonetheless, we’ve automotive style, with showrooms learned enough to reveal at and in-stock delivery options at least some of what may be prices low enough to attract frugal in the works. One executive buyers who wouldn’t normally we spoke to told us Japa- look twice at anything new. This, nese involvement in GA says Munro, will devastate the began far earlier than most used aircraft market in the U.S. people believe, probably and spell the end of marginal GA reaching back to the 1970s.

The Aviation Consumer • October 2002 27 www.aviationconsumer.com In reality, will also have Japanese-designed according to one user-friendly avionics similar to insider we spoke what’s found in luxury cars such to, Toyota may as the Lexus. have had no When and how much? Rutan intention of demurred, referring us to Toyota’s producing the Torrance, California headquarters, engine for aircraft which is overseeing the project use in the first with a staff of about 40 people in place. “These the U.S. A spokesman for Toyota companies take the offered no additional detail, other long view. They’re than to confirm Toyota’s interest. very patient. I One source told us Toyota has think they looked committed some 1000 people at it as purely a worldwide to the GA development Oshkosh in 2003—the 100th year of learning experience. They wanted project which, if true, is a measure powered flight—is expected to be a to get some experience in aircraft of its seriousness. As for perfor- major venue for new products. and certification projects,” he said. mance of the prototype, little Look for a Toyota booth. Another engineer involved in confirmed data exists. AINonline the project told us the FV4000 was reported that the prototype cruised Japanese GA activity has come “a great engine, quiet, smooth and at 140 knots with a follow-on through brief glimpses, rumor and FADEC-controlled.” Further, product to deliver 160 knots. At speculation. We do know that Toyota left many with the impres- first blush, this is none-too-impres- between 1992 and 1995, Toyota sion that it’s a reputable company sive but speed may only be part of funded an engine research project to do business with. It paid its bills the Toyota plan, if indeed any plan to explore the conversion of its and did what it said it would. goes forward at all. sophisticated Lexus V-8 engine to aircraft use. This became the FV4000, a 360- Toyota Flies Cheap, Cheap, Cheap HP watercooled powerplant More recently and, in our view, of What would it take to ignite complete with fuel injection and greater import is the Toyota volume sales in GA? And by full-authority digital engine Advanced Aircraft project, the volume, we mean a sustainable controls that pioneered the current proof-of-concept for what Sandy world market of, say, 2500 or more round of engine control products Munro sees as the sharp end of the light aircraft. Many agree that just finding their way to market. Japanese wedge into the world GA price continues to be a major According to those familiar with market. barrier to more aircraft sales, if not the project, the FV4000 was a As the photos here show, the the only barrier. promising engine and was actually TAA is a four-place aircraft looking Munro contends that when the certified by the FAA, including very much like a Cirrus or a Japanese enter the market, they’ll type and production certificates. Lancair. It appears to be an all- sell at a loss and shock the compe- It was tested in a Piper Malibu composite design but could just as tition, just as they did in the and in a Burt Rutan-designed easily be made of metal or a automotive industry. When you’re single and could conceivably, with hybrid. This version appears to be willing to bleed a little—or a lot— further development, have re- fixed gear but there’s room to stow to seize market share, there’s no placed the ill-starred TIO-540 the wheels for a retractable model. downward limit on how cheap Lycoming used in the Mirage or Although we believe Toyota is prices can be. the TSIO-520 found in the original exploring a diesel powerplant, this If the Toyota airplane sold for Malibu. But when you’re an auto prototype is reportedly powered $160,000—a figure that has been company making 6 million cars a by a Lycoming 360-series engine. reported in the general press—and year, re-engining a few hundred It was widely reported that the proved to be a 160-knot cruiser, aging Malibus is lesser work than Toyota aircraft flew on May 31, with 900-pounds of useful load sweeping up shop tailings. 2002, from Burt Rutan’s Scaled and a modern avionics package, it In any case, the engine was said Composite facility at Mojave would certainly be a better value to be heavy, had some exhaust Airport. At Oshkosh, Rutan spoke than a new Cessna 172 costing problems and would have been briefly about the Toyota project about the same. This price point expensive to manufacture, on the and confirmed that Scaled has would challenge the domestic U.S. order of $100,000 per unit. (Admit- been hired to wring out what is manufacturers but we doubt if it tedly, to a Mirage owner looking at essentially a Japanese design. would put them under or lay his second engine in under 1000 Rutan says the airplane “has some waste to the used market. hours—as many owners have— aggressive composite manufactur- On the other hand, another $100,000 might look like mere ing” including single-cure technol- number we’ve heard—and one pocket change.) ogy for the wings and fuselage. It Munro believes may be feasible—

28 The Aviation Consumer • October 2002 www.aviationconsumer.com is under $100,000, say $95,000 for the same airplane specs described GA: A Monument to Inefficiency above. This would shift the equa- On Munro and Associates’ Web manufacturing techniques: “The tion dramatically. We know of no site, we found one of those clever goofiest thing I’ve ever seen in U.S. manufacturer who could 1940s-style graphics meant to my life.” compete with a deep-pocket convey an at-a-glance under- Munro believes GA’s manufac- company willing to undersell the standing how to manufacture turing woes are fundamental and market that aggressively to achieve quality products efficiently. chronic. “It’s the basic design quick dominance. And if you The cartoon depicts a line-up of that’s buggering everything up. happen to own a 20-year-old what goes into a manufactured It’s just too complicated; too many Bonanza worth $165,000, how will product; design, material, labor parts and parts that aren’t alike.” its value fare in the face of a brand and overhead and then Surely the advent of compos- new high-tech cruiser poses the question ites must be an improvement, costing a little more “who casts the biggest with wings and fuselages encom- than half as much? shadow.” Answer: the passing far fewer parts than in a We wonder if the design engineer. metal airplane. “It may be a U.S. industry would This notion encap- great idea. But I think we’re respond not with better sulates a concept finding composites aren’t neces- products and improved pushed by Munro sarily the best material for efficiency but with called DFM/DMA or airplanes. Look at all those guys pleas to Congress for design for manufac- poking sticks and rubbing and tariff protection, as ture/design for sanding to get a decent modulus; Harley-Davidson did in assembly. In a nutshell, that’s a killer.” Aluminum, he 1983. Of course, the it means that efficient, says, is even worse, with “the Japanese response to error-free manufactur- whole damn thing built with a 1/ that strategy is already ing begins at the 4-inch drill.” in place: the airplanes would be design stage, not when the shop Although he once thought the built not in Shimoyama or supervisor is handed a set of industry was a lost cause fueled Hokkaido but in French Lick, drawings and expected to build by passionate hobbyists, Munro Tennessee or some other nice little hundreds or thousands of a thing now believes there are efficiency U.S. berg happy to have an influx efficiently. gains to be made in aircraft of manufacturing jobs. (Toyota In Munro’s view, the aircraft manufacturing. already has nine plants in the U.S.) industry—at all levels—lacks Of late, he has been advising One point Sandy Munro’s paper even a vague understanding of one major aircraft company— doesn’t mention is that in the how to manufacture its products you’d know the name—and one of automotive and motorcycle efficiently with as few errors as the new-age start-ups making industries, the prize was volume possible. composite airplanes, where he eventually numbering in the “Airplane people are differ- says he found “a lot of 80 millions of units. Once the compe- ent,” says Munro, “they have a percenters,” an assembly task that tition was ruthlessly eliminated, totally different way of thinking could be done with 80 percent less there was money to be made. about things.” And it’s not effort. Further, he says, many Can the same be said of general necessarily a good way. assembly steps shouldn’t be done aviation, however? Does Toyota Munro told us he was dragged at all and are often artifacts of a think it can sell 20,000 airplanes a into the aviation industry reluc- design poorly suited for year or even 5000? Yes, says tantly, at the behest of colleagues manufacturability in the first Munro, they probably do. He working with NASA. His impres- place. believes the company envisions sion of general aviation—remark- This, argues Munro, is a lesson initial world-wide production of as ably accurate, in our view—was the Japanese have learned well. much as 5000 airplanes, perhaps of an industry where “companies And U.S. aircraft manufacturers increasing to 25,000 airplanes a die all the time, lose money, had better learn it, too, if they year by the third or fourth year of borrow some more and lose some hope to maintain a foothold in entry into the business. more.” His impression of aviation the world of building airplanes. “No,” says one of the U.S. project partners we spoke to, “they general achieving rapid world worth their effort. It seems to us were thinking in the 500 to 1500 a dominance in light aircraft manu- that there may be better industries year range.” facturing to be daunting at best. for a company to invest its re- While we’ll stipulate that Toyota sources in, even if the 50-year goal No Cake Walk has succeeded brilliantly in the car is to snatch the commercial market business and could probably apply away from Boeing and Airbus. If meeting that mass volume goal its acumen to the airplane market The fact remains that due to the is a must, we think the chances of with similar success, we wonder if unique confluence of stodgy Toyota or Honda or the Japanese in the sparse returns will make it government certification, low

The Aviation Consumer • October 2002 29 www.aviationconsumer.com volume, widely varying and heard this number from stubbornly ignore this, adopting economically sensitive demand marketeers before but the industry the over-optimistic, what-me- and complex manufacturing, has never come close to tapping worry view that once swept up by making a buck selling little air- even a respectable portion of it. the romantic notion of the “free- planes remains a difficult business. Although purchase and operat- dom” of flight, suffering the In his paper, Munro argues that ing cost is a significant gotcha for training to actually learn to fly it the Japanese will invent new rules, owning a new airplane, neither will be trivial. In reality, many use materials traditional manufac- U.S. nor foreign airplane makers buyers who can afford the airplane turers never thought of to create have proposed any serious ideas to don’t have the patience, time or unheard of manufacturing efficien- eliminate what we increasingly see aptitude to learn how to fly it. cies that will make cheap prices as the real barrier to GA expansion: In his paper, Munro identifies possible. Perhaps. Call us hopeful jumping through the training and the training issue as a sales show but skeptical, too. licensing hoops and reducing the stopper but in the next breath, he Munro told us his sweep at the sheer hassle of using a light aircraft seeks what many in the industry market reveals that 1 percent of the for meaningful transportation in will view as hopeless: “I am one of U.S. population—or about 2.8 complex, congested airspace. the new market and there are million—comprise the universe of People who venture into the hundreds of thousands of us who potential aircraft buyers. We’ve world of GA aircraft sales seem to don’t want to join your elite club of

30 The Aviation Consumer • October 2002 www.aviationconsumer.com techno-geeks, masochists and dare profitability in aviation to suffer devils. I want to learn to fly a jet the pain of establishing a beach- (IFR) in a week; I don’t want to be head in a money-losing GA entry? a ‘pilot error’ statistic.” And if not now, when? Oh, is that all? From zero to IFR Our guess is as good—or bad— in a mere five days? We asked as yours. That said, we think Subscription Munro to elaborate. Not being a Toyota will come out of the ground pilot, he’s not intimately familiar with prototypes within three years. Service with the current regime of flight As Munro—and others—predict, training which, at best, entails they will test these extensively, For Aviation Consumer subscription weeks or months of often frustrat- sampling customer likes and services, contact us in one of three ing training. dislikes, then show another round ways: Munro told us he has seen two of prototypes. Munro is adamant radically new training approaches that Toyota isn’t just fishing; they’re 1. Via Web at: that may make it possible to learn serious about getting into GA. www.aviationconsumer.com. piloting skills in a mere fraction of We expected to see Toyota at As a registered web user, you can the current requirement. Because Oshkosh this year and one engi- of non-disclosure agreements, he neering insider told us the check your expire date, payment declined to elaborate. company’s original plan called for status, update your mailing or e-mail We don’t know if it’s possible to prototype introduction in 2000, but address or renew your subscription learn to fly a jet IFR in a week. this was delayed two to three on line, 24 hours a day.Click on Maybe Toyota can figure that out. years. We’ll be looking for the “Subscribers Only,” then the We do know that thus far, no one Toyota booth at Oshkosh next year Customer Service or Renew button. has come close to a fundamental or 2004 at the latest. Beyond that, revision in training doctrine that we can’t wait to see what Toyota 2. E-mail us subscription questions substantially reduces the time, decides when it comes to grips at: [email protected] effort and expense necessary to with the realities of selling little earn a plain-vanilla private-pilot airplanes and training people to fly 3. Mail this coupon (or a photocopy) rating, never mind an instrument them. rating. Munro told us he’s “100 percent to: Even at that, the would-be one- sure” Toyota will come into the Aviation Consumer week miracle pilot still has to land market, although he’s less certain PO Box 420235 the airplane in bumpy crosswinds, about timing. He sees this turn of Palm Coast FL 32142-0235 deal with scary weather and events as both a warning and an handle the inevitable abnormals opportunity for U.S. manufactur- To change your address, attach with enough coolness to survive. ers. your present mailing label to this In our view, if general aviation is He believes they’re being given form and enter your new address ever to be a practical semi-mass more time than other vanquished here: market as convenient and acces- industries had to institute quality sible as the automobile, this will be and cost controls and to generally Name______the most difficult nut to crack. improve their products before the We’re not saying it can’t be onslaught begins. If they do it Company______cracked, just that we don’t see how correctly, U.S. products will remain Street______it will be at this juncture. competitive with anything the City______Japanese do. State______Zip______Predictions Cirrus, Diamond and Lancair E-mail______have certainly made strides in Is Munro right? If the Japanese quality control, but as any new launch the attack, will they put the aircraft buyer can tell you, quality To order a new subscription or U.S. GA industry permanently to in general has much distance to extend your current subscription, rest? We think it’s a long shot but if cover for U.S. manufacturers. enter your name and address above Toyota and other Japanese compa- Cessna’s reintroduction of what and check the subscription term nies decide to move, history are, after all, half-century-old suggests Munro is correct. Yes, GA designs was beset with quality you prefer: is different than the machine tool shortfalls, not the least of which is One Year: $69 industry and the auto industry but the recent grounding of the 206 Two Years: $125 those industries also thought they fleet for crankshaft problems. GA had a unique understanding of buyers put up with this because These rates apply in the U.S. only. their own markets. they have no choice; there’s no For all other countries, 1 year is The larger question is will standard-setting paradigm of $84 via air mail, 2 years is $168. Toyota, Honda and others see excellence. If Sandy Munro is right, enough long-term growth and there soon may be.

The Aviation Consumer • October 2002 31 www.aviationconsumer.com