Wings Magazine

Features MRO
Canadian MRO Review

Opportunities and Challenges


October 15, 2007
By James Careless

Topics

wso2Every year at this time, WINGS magazine looks at the health of the Canadian MRO (Maintenance, Repair and Overhaul) industry, by interviewing the companies who keep Canada’s aircraft flying. This year we’re doing the same, in a “round table” format that allows MRO execs to share their views in full.
Our executives are Barry Aylward, president of Kitchener Aero; Glen Latour, owner of Glen’s Terryair Inc.; and Ian Smart, vice-president, strategy, of Standard Aero.

How has the last year been for your company, and the MRO industry in general?
Aylward: Stunning. Setting records and breaking them. And every good facility of every type that I know of is similarly busy. These are “the Good Old Days!”
Latour: The last year has been a good one for us. And the aviation businesses on the field here have been very busy.
Smart: The last year has been reasonably good for our company and the MRO industry in general. Although we have seen a downturn in the military market we have seen an upturn in the commercial markets.

What areas of the business are the busiest for you?
Aylward: Major avionics retrofits.
Latour: We have had a number of rebuilds of airframes and engines, but our bread-and-butter still remains to be with the general servicing end of the business.
Smart: Our commercially focused products have been the busiest for Standard Aero. Our CF34, AE3007, APU, RR250 and PT6 business are all expected to have a strong 2007.

What areas are slow, and why?
Aylward: None, really.
Latour: We haven’t had a slowdown this year. Normally things quiet down at the end of the year, but last year we were busy right through the holidays.
Smart: Our military-related businesses are slower than we have experienced in the past few years. Between cuts in US military spending and increased engine reliability we have provided to our military customers, we are now seeing decreased volumes in T56 MRO.

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In past years, we’ve seen an increased emphasis on owners keeping older aircraft flying. Is this still the case?
Aylward: Yes, but we are seeing lots of new aircraft as well. It’s a broad and healthy mix of business right now.
Latour: Keeping the older aircraft flying is a definite challenge, but most owners seem willing to rise to the challenge. Our biggest problems are obtaining parts at a reasonable cost.
Smart: We see this as an opportunity for our company. As aircraft owners are keeping older aircraft flying, the need for high quality and reliable engine maintenance increases, providing more opportunity for Standard Aero.

Finding qualified people has been an issue in years past. Is this still a problem?
Aylward: Yes, it is generally the biggest problem across the entire industry right now, but our own organization has found a bit of relief in this regard, for now at any rate. We have been lucky really. It is a widespread problem to be sure.
Latour: Finding and retaining good people is a continuing problem. We’re a small business so the problem isn’t so acute. I believe that if you treat your employees well and compensate them as well as you are able to, it goes a long way in the fight to keep them.
Smart: Finding qualified people is still an issue. As a result, Standard Aero has formed strategic partnerships with local aviation colleges to provide training specific to Standard Aero’s needs. Students receive training through the Colleges, some practical experience at Standard Aero and then are often provided full-time employment and Standard Aero when their education is complete.

What other challenges are you dealing with in the Canadian MRO business?
Aylward: I think the constantly growing regulatory burden is a huge problem.
The “Regulatory Overhead” in Canada continually weakens the ability of Canadian industry to compete with foreign entities. And Transport Canada is not sensitive to this.
Latour: The biggest challenge is to keep the customer happy. We lean over backwards to make it happen but with the increased costs involved it’s a continuing challenge.
Smart: Increased price pressure and parts availability are challenges MRO companies face on a daily basis. These challenges have caused firms like Standard Aero to be more creative in finding solutions to reduce long-term direct operating costs and in forming strategic material relationships to ensure OEM-approved parts are always available to meet customer needs.

What opportunities exist for growth?
Aylward: [There’s] no shortage of opportunities, but [they are] tempered by the availability of skilled manpower. And there is the question of when there will be a downturn in this economic cycle, which is of course inevitable.
Latour: If I were a younger man I would be expanding the business. But I’m happy the way things are now. I think with good service and attention to detail, you could be as busy as you want to be.
Smart: There are many opportunities for growth. These include providing additional value-added services like more component repair, field support, and servicing new engine lines. Additionally there are growth opportunities in many non-traditional aerospace MRO services. These include providing engineering and reliability centered maintenance services, industrial engineering and facility redesign services, as well as education and training services.

How will the advent of Very Light Jets (VLJs) affect your business?
Aylward: That is a very good question that nobody can answer. I for one don’t believe the market forecasts for one minute, and I don’t think they will really affect our particular business one way or another.
Smart: The advent of VLJs will have a positive effect on Standard Aero’s business. As a Pratt & Whitney Canada Designated Overhaul Facility (DOF) for the PW610F and PR615F engines, Standard Aero is looking forward to the development of the Air Taxi market and the explosive growth predicted in the VLJ market.
Latour: VLJs will have no effect on my business.