Department of Defense anxieties over viability of manufacturing base prompts report on global rotorcraft industry

The US Department of Defense has commissioned a study of the financial health and future viability of the helicopter industry, at home and abroad, in response to growing concern that the manufacturing base cannot be sustained. The concerns follow a number of major military programmes facing serious development problems and delays.

"I think the helicopter industrial base has some problems," says Pete Aldridge, DoD undersecretary for acquisition, technology and logistics. "It is not being sustained at the right rate, and it may be that we have to make some type of adjustment," he adds. Last week, Aldridge was due to be briefed on the study by First Equity Development, an investment banking and financial advisory company specialising in aerospace and defence.

The report includes an analysis of US manufacturers Bell Helicopter, Boeing, Kaman and Sikorsky, and Europe's AgustaWestland and Eurocopter. Each company was asked to supply financial statements for the last five years, delivery numbers and revenue per product, orderbook, research and development expenditure and forward projections for the next three years. According to a letter obtained by Flight International, First Equity Development's study was specifically focused on:

Evaluating the importance of the helicopter industry to the parent companies, such as Bell's Textron or Sikorsky's United Technologies; The financial profile of the helicopter industry to 2005; Assessment of management performance over the last five years; Analysis of current or potential joint ventures; The impact of hypothetical programme cancellations on each firm.

The latter is seen as particularly pertinent, given the number of DoD rotary-wing programmes suffering development problems. Bell is perhaps the most seriously affected, with a series of software, structural and aerodynamic problems pushing up costs and delaying the start of low-rate initial production to fiscal year 2004 for its AH-1Z/UH-1Y upgrade programmes, while the Bell Boeing V-22 tiltrotor is not expected to enter service before 2005.

Aldridge, a known tiltrotorsceptic, has yet to clear V-22 flight testing to resume later this month after being grounded for more than 17 months. He says: "If we see some problems occurring early in the flight-test programme, we may not continue it, and we could stop and head off in another direction."

The delay to the V-22 programme has affected Bell/Agusta's planned BA609 civil tiltrotor development, which has been slowed. The V-22 has also hit Boeing which, as aresult of this and delays to the US Army's CH-47F remanufacturing programme, has been forced to make lay-offs. The army has also had to re-programme the development of the Boeing SikorskyRAH-66 Comanche as the result of development delays.

Source: Flight International