When Eurocopter signed a C$625 million ($653 million) deal back in March to buy Toronto-based helicopter and engine maintenance provider Vector Aerospace, the EADS rotorcraft division outlined three objectives for the acquisition: to drive growth in support and services for both civil and government customers, and for makes other than Eurocopter; to strengthen EADS's presence in North America and improve its natural US dollar hedge; and to boost corporate profitability.
Apart from making clear that Vector would be run as a separate unit and retain its name and management team, Eurocopter has so far been quiet about any specific development plans for the company, which in 2010 turned over C$545 million from operations in Canada, South Africa, the UK and the USA, which is about a quarter of Eurocopter's 2010 support and services revenue of €1.7 billion ($2.4 billion). The deal is also expected to increase the aftermarket share of Eurocopter's revenue from 35% in 2010 to 40% in 2012, and should boost profitability; Vector's 2010 operating profit margin was 8.2% - twice Eurocopter's.
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TRANSFORMATION
But Eurocopter UK managing director Markus Steinke, speaking at last month's Helitech exhibition at Duxford, near Cambridge, shed some light on how Vector fits into a dramatic transformation of the airframer's UK business, which may be setting a global template.
The first big shift in Eurocopter's UK presence came in November 2007, when it bought Oxford-based McAlpine Helicopters, says Steinke. The company, which had been Eurocopter's UK distributor for 30 years and sold more than 200 helicopters, was renamed Eurocopter UK.
At the time of the McAlpine acquisition, Eurocopter's UK and Ireland market share in the police and emergency medical services markets was 73%, and it commanded half of the commercial/private market. Prior to buying McAlpine, Eurocopter's UK head count was just two technical support people, but the deal raised its staff role to more than 170.
CULTIVATION
And, as Steinke puts it, the period also marked an expansion - and cultivation - of Eurocopter's attention to the civil market. That focus gathered greater momentum in 2010, with the opening of a £10 million ($16.1m) North Sea service centre in Aberdeen to support locally-based offshore operators that provide search and rescue operations, transportation to oil and gas platforms and aerial support for the emerging wind farm sector. The Aberdeen centre features a simulation training facility for EC225 Super Pumas, of which some 100 operate in the offshore region. An EC175 simulator may follow.
Steinke says the creation of a UK "national footprint" was instrumental in winning for Eurocopter a £300 million contract in 2009 to upgrade at least 28 Puma HC1s for the UK defence ministry; the first of these updated aircraft flew in June 2011.
In the context of such a growing UK civil and military presence, the Vector deal is still dramatic, adding 1,300 employees - taking the Eurocopter UK headcount to 1,700 - and, critically, expertise in supporting non-Eurocopter aircraft.
Vector, for example, co-operates with Sikorsky and is expected to continue this relationship. Steinke says Eurocopter and Vector will benefit from each other's expertise.
Steinke notes that for all airframers, helicopter sales have been few in the past three years, and the UK fleet size has fallen back to its 2006 level after peaking in 2008. So, he says, the key to running a successful business will be to hold, or increase, market share in support and services.
MARKET SHARE
But Eurocopter is doing more than merely adding a broad base of aftermarket business through the Vector acquisition. As the table shows, Eurocopter's UK market share has risen steadily during the period, although the UK fleet size peaked in 2008. Globally, it was in that year that Eurocopter's long-running command of half of world civil helicopter sales saw it overtake Bell as leader by market share.
Steinke is speaking of his UK market, but could equally be addressing the global helicopter business when he says: "There's no way around Eurocopter."
Source: Flight International