Canadian Defence Review
Date: January 27, 2012
Title: StandardAero: renewed focus on defence
Sub-title: This global provider of aircraft MRO services is looking to substantially boost its defence sector presence.
One of the advantages of defence maintenance, repair and overhaul work is that contracts tend to be long-term. Even better, once a company wins a multi-year deal, they build significant incumbent advantages that help them in renewal competitions. The downside is that aircraft maintenance, repair and overhaul players like StandardAero Limited, that want to broaden their sector presence, often have to wait until new projects come up for bid, to have an equal chance of getting their feet in the door.
According to Harinder Grewal, the company’s senior vice-president (government and military sector), the current period provides such a window. That is because The Department of National Defence is in the midst of a vast procurement effort, which when completed will completely upgrade the country’s air fleet. And those aircraft will need to be kept in running order.
Standard Aero, which recently opened an Ottawa office to help boost its defence sector presence, is perfectly positioned to help says Grewal. The company is part of Dubai Aerospace Enterprise, and thus has access to a global network of 12 primary facilities, situated in Canada, the U.S., Europe, Singapore and Australia, as well as 14 regionally located service and support facilities. As a result, the unit, which employs 1,500 people it its Winnipeg locale alone and billed close to $1.5 billion, has the infrastructure and human capital to take on new work, as it has been doing steadily in recent years.
A renewed push into defence
Opening the Ottawa office, which will be staffed by Jim Miller, vice-president marketing and business development (government and military sector) and Jason DiTomasso, who focuses on Canadian strategy, was a key to the company’s growth strategy. The move gets StandardAero, which last year celebrated its 100th anniversary, a visible presence in a key decision center during a period when considerable work is expected to be handed out to aerospace contractors, related to programs such as FWSAR, the CC-147 Chinook and the holy grail of them all the Joint Strike Fighter initiative.
“We have generated explosive growth in the commercial aerospace markets, by, for example, picking up the license to support the GE CFM 56 engines that are used on WestJet’s entire fleet of 737s,” says Grewal. “As a result, we are now the largest aircraft engine maintenance, repair and overhaul facility in the country and one of the largest in the world. However because we were so busy on the civilian side we let our defence efforts slip somewhat. That’s going to change.”
Grewal, who took up responsibility for StandardAero’s defence sector performance objectives, customer satisfaction and business development activities in 2007, has been with the company for two decades. During that time, he has held a host of positions of increasing responsibility, which have given him unique insight into sector developments on both a corporate and global scale.
“Our main competitive advantages in our push into the defence sector stems from our impressive infrastructure footprint and the considerable expertise and talent that we acquired working on civilian aircraft engines, whether it be in the business aviation, airlines and fleets, helicopter programs and energy & industrial sectors,” says Grewal. “However we also have a long-term relationship with DND that we are keen to build on.”
The core: MRO work on Rolls-Royce’s T56/501D engines
StandardAero’s core business on the defence side stems from MRO work that it does on the Rolls Royce T56/501D family of engines, which power the CC-130 Hercules and CP-140 Aurora. This work alone, of which close to 90 percent is export related, generates close to a quarter of the unit’s billings and employs close to 350 people. In 1993, the company bought the licence to do work on the AE2100 engine, a “grandchild” of the T56/501D, which powers the C-130J Hercules transport aircraft that DND recently acquired. (Canada will take delivery of the last of 17 C-130Js that it ordered in 2008 later this year).
According to Miller, who heads StandardAero’s international marketing and business development efforts, the Department of National Defence’s support has a key factor in the defence unit’s success. “We started work on this class of engines due to industrial and regional benefits offset contracts that we got in the 1960s and have built our competencies from there,” says Miller. “So kudos to DND for that, as a result, we are now the world’s largest T-56 MRO provider, accounting for 60% of the global market.”
According to Miller, a considerable part of StandardAero’s global success relates to work that the company has done to support engines on Australia’s fleet of C-130Js, which it has been doing on a sub-contract basis. “Much of this is pure exports,” says Miller. “Although we have a unit on the ground there, when major work is required on an engine, we just fly it into Winnipeg and take care of it there. This is a win-win situation because it creates jobs here at home. For their part, the Australians tell us that their fleet has the highest availability rate in recent memory.”
FWSAR, Chinook CH-147, JSF
Despite StandardAero’s considerable focus on aircraft engine maintenance, repair and overhaul work, Miller refuses to be slotted as a one trick pony. “We provide nose-to-tail services that include avionics, engineering, general airframe, interior refurbishments, and paint facilities and technical services for business and general aviation, air transport and military aircraft,” says Miller. “Our focus is on the client. We work with them to determine what their needs are, and then structure our operations to provide them.”
Miller admits though that the company’s engine MRO efforts get the most attention. One way to get an idea of the scale of StandardAero’s presence in the sector, is to look at the a wide range of scenarios in Canada’s bid to upgrade its Fixed Wing Search And Rescue capabilities that could bring it new business. That because several of the leading bidders including Alenia, Lockheed Martin, Boeing and Airbus, are expected to suggest aircraft (the C-27J, C-130J, V-22 Osprey, C-295 respectively) that have engines which StandardAero has experience in servicing. This would give it a leg up in any maintenance repair and overhaul contracts, a key advantage, because a deal to purchase any one of those aircraft would require significant inputs from outside the country, which in turn would lead to industrial and regional benefit and offset opportunities here at home.
The good news is that the FWSAR initiative, which has been an on-again, off again program, now seems to be picking up steam says Miller. The Canadian government approved a memorandum to cabinet in December on the project and a Request for Proposal is expected to be issued by this summer.
StandrardAero has also been bidding to get sub-contract work on the CH-147 Chinook helicopters, which the Government of Canada has acquired and charged Boeing with the responsibility for building a Canadian supply base. According to Miller, at press time Boeing was putting out several work streams for bid, with StandardAero highly optimistic that it would land support, test equipment and engineering services work.
Of course the elephant in the room remains DND’s intentions regarding the Joint Strike Fighter, which will be its largest procurement in history. According to the Government of Canada, which in 2010 announced plans to buy 65 of the aircraft at a cost of $9 billion, so far 85 Canadian companies, research laboratories and universities have received more than $350 million in contracts related to the deal and far more are expected. “It’s a big opportunity that we fully expect to take advantage of,” says Miller. “Our infrastructure positions us to do a lot of the engine MRO assignments, as well as airframe and component work that will be required, either through Lockheed Martin itself, or through subcontract work with one of its suppliers.
Innovation and moving forward
That said, probably StandardAero’s biggest immediate challenge will be changing perceptions of defence industry players, which became somewhat anchored as the company added successes on the civilian side. “Some in the CF still think of us primarily as a big engine shop in the Prairies,” says Miller with a laugh. “But of course we are much more.”
One way to demonstrate the company’s renewed commitment to the defence sector adds Grewal, is by innovating further and focusing on customer service. Initiatives such as StandardAero’s seven Mobile Service Teams, which are strategically located throughout North America, which provide customers, who are unable to get their craft to an MRO facility, with scheduled maintenance and emergency repair provide a good example. “The fact that we are located with 250 miles of over 2,500 business aviation customers means that we can provide rapid response, with qualified experts that have the same technical capabilities, authorizations and quality systems, used in our repair centers,” says Grewal. “This gives customers greater flexibility, while keeping costs down.”
“These days almost all of our clients are focused on costs, more particularly on getting better value for every dollar they spend,” said Grewal. “As a result, we are constantly working to come up with more efficient and effective sustainment solutions that take into account not only the maintenance requirements set out in aircraft industry user manuals, but which also reflect their usage of the product, which may or many not differ from standard configurations,”
That said, Grewal continues to look to the future. “We have worked successfully with the Department of National Defence for decades,” said Grewal. “Standard Aero has been a great partner with the CF and continues to help Canadian men and women in uniform by ensuring their mission critical equipment is always in a state of operational readiness. We want to continue to do that in any way that we can.”
Name: StandardAero Limited Enterprise
Parent company: Dubai Aerospace
Key contacts: Jason Di Tomasso
Locations: Canada, the US, Asia, South Pacific
Markets: Government and military, airlines and fleets, business aviation, helicopters
Number of employees: 4,000 worldwide, including 1,400 in Winnipeg
Sales: $1.4 billion (2009)
Sidebar #2: Major capabilities
Engine maintenance, repair and overhaul: Services Honeywell, Rolls-Royce, General Electric, Boeing, Pratt & Whitney, Vericor and other engines. Flexible facilities to accommodate new projects.
Airframe: Provides a wide variety of services ranging from standard inspections to major alterations. Clients include Airbus Industries, Boeing Business Jet, Bombardier, Cessna, Dassault, Learjet.
Component repair and overhaul: Broad range of services including the repair and overhaul of numerous original equipment manufactures ranging from Rolls-Royce, to General Electric, Pratt & Whitney, Honeywell and many others.
Avionics: Authorizations include the FAA Organization Designation Authorization (ODA), Delegated Engineering Representatives (DER), Class 1,2,&3 Radio and Class 2&3 instrument ratings.
Engineering: Provides a broad array of services including reengineering, redesign for product workflow and efficiency management, an E-Pubs (electronic publications) group, inventory management, testing, training and other solutions.
Other services: Mobile service teams, Associated Air Center, Energy Services Group, completion and paint facilities, supplies Mobile Service Teams, interior completions, certification, component MRO.
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