November 2012
PF: What areas at Piper need strengthening right now?
SC: I took over as CEO last October; the first thing I did was stabilize the business. I had already been working on that in my previous role on the operations side in terms of leveling out production schedule—getting the production demand to match our sales need.
Then we launched a series of improvement programs at the end of last year in order to attack every part of the business that we felt needed strengthening. We actually have about 50 projects on the go right now and every one of the senior staff—director and above—is responsible for one or more projects. And it covers everything from product development, to meeting the needs of our customers, and looking at our cost controls so we can build a strong company.
Probably our biggest one is actually attacking the markets that we’re not really playing in. I call that “new market development,” and I mean markets like Australia, India, China. We haven’t been addressing those markets properly as a company for a long time. I see that as a big growth opportunity.
PF: How do you do that?
SC: A combination of things; setting up dealerships… With regard to China, we already have a regional sales manager—Dana Cox—who covers all that section of the globe.
But China itself is such a big country that we just recently hired a regional sales manager for China. His name is Jeremy Post; he’s a French guy but he speaks eight languages, including Mandarin, so we decided to hire him and he’s going to be focused on developing the China market.
PF: Have the Chinese come to Piper?
SC: No. I have been approached at least once a week by some entrepreneur who thinks he can do some good for us, but I’ve got other ideas right now.
PF: What areas is Piper doing well in now?
SC: I think we’re getting stronger in a lot of areas. M-Class has been doing well, particularly the Mirage. The Mirage has been selling a lot stronger than we anticipated this year; I think we added nine additional ones to the schedule this year. Of course, we are the only six-place pressurized piston aircraft out there.
We are selling more trainers, and our twin trainers sold out pretty early in the year.
These are good indicators but I’m just going to be very cautious before we start building too many planes. My philosophy is “go sell them and then we’ll build them.”
Jacqueline Carlon, Piper’s Director of Marketing: We have been surprised at our sales to the European market this year.
SC: A couple of days back, our dealer there sold a Meridian in France; I think we’ve done three in France, two in Germany, one in Belgium, and one in Spain.
JC: We did that Cannes AirShow; it’s called Euravia. We sold one at the show—and right after the show, they sold two more.
PF: Is the company stable and staying in Vero Beach?
SC: Absolutely. My intention is to keep it stable but at the same time, keep it growing. It’s a three-step process. First, stabilize; then improve—market development, product development and cost control. Then set ourselves up for the growth phase.
I’m not anticipating for another few years—I think this market is going to stay very flat between this year and next year. Hopefully the economy will start to pick up next year and we will start to see growth in 2014.
PF: So Vero Beach is home.
SC: I have no intention of moving the company and I have an intention of being there a lot longer.
PF: How about the PiperJet?
SC: It’s suspended. There are no plans to do anything with it right now. We captured all the intellectual property and it’s archived. The project is completely closed down right now. But we have the data.
While we might not move forward with it, our engineering team gained a lot of knowledge and experience from developing that project so we haven’t lost everything. Some of those engineers are now applying the ideas from that program across to our other programs in terms of how can we make it better; how can we make it lower-cost. So there are spin-offs from things like that.
PF: Do you have any plans to develop new airplanes, or you just going to continue to improve the airplanes you’re now building?
SC: If I told you that, Steve, I’d have to shoot you (laughs).
I am a firm believer in product development. We have to meet the needs of our customer base. There are a couple of ways to do that. One is to take our existing products and make sure they’re fresh and they meet the customer needs, and the other is to determine if there’s a niche or a new product we can design that makes good business sense and we’re going to continue to explore those. We have a team of engineers working behind the scenes looking at all those opportunities.
PF: To my knowledge, no airplane manufacturer has ever followed up on a common practice in the automobile industry of offering factory certified used aircraft. Has Piper considered anything like that?
SC: At my last company, we looked at offering factory certified used aircraft. We kicked it around and decided it wouldn’t pay. It’s not a model that will work in the aviation business like it does in the auto world.
PF: In the press conference earlier today you mentioned hiring a Director of Aftermarket Business . When a Piper Arrow owner at my airport (KPRB) found out I was going to interview you he told me he had needed to return two parts to the factory due to being mis-drilled and thereby unusable.
I didn’t have time to double-check his story, but this sounds like a quality control problem. Does Piper have a QC program in place?
SC: I don’t know the details of this part, but we do have a process in place and we do monitor those. Whenever a part comes back under warranty we look at it to see if we need to change our processes.
PF: At one time Piper did a lot of parts manufacturing in-house; is this still the way Piper manufactures airplanes?
SC: We are very vertically integrated; we manufacture the majority—in fact, 90 percent of all of our products are manufactured in house. So we control the quality. In many respects it’s better than using third-party parts because if you have a quality problem with a third-party part, it takes more time and more difficulty in the investigation.
We do have the ability to react to any quality issues.
PF: As I understand it, the Sultan of Brunei is the primary shareholder.
SC: Actually, it’s the Ministry of Finance of Brunei; it’s a division of the government there. It’s actually called the Brunei Investment Agency.
Brunei is a sovereign country and they decided back in the mid-1980s that the oil and gas would eventually run out and they needed some sort of portfolio to drive revenue in the long term.
That division of the government started investing offshore back in 1984 and invested in Piper back in 2009. They view it as an offshore investment with the view of providing a return over the long term.
PF: What about the future of Piper? Do you have a five-year plan? A 10-year plan?
SC: That’s a great question! One of the first things I wanted to do after taking over was create a vision for the company. The vision is to grow the business—that’s what our shareholder is looking for in revenue as well as margins.
What’s the five-year business plan? What does it tell us we’re doing? Piper hasn’t had a five-year business plan since 2005; it expired two years ago. The senior business team is in the process of putting together a five-year business plan.
My objective is to be here for the long term and obviously to grow Piper and strengthen it. To return the investment of the shareholder—that’s what they’re looking for.
Once we have the five-year business plan, that will become a routine annual process; after a year we’ll look at where we are relative to the plan. If we need to, we will refresh it—and we will continue to do that.
PF: Thanks for your time.
Steve Ells has been an A&P/IA for 39 years and is a commercial pilot with Instrument and Multi-Engine ratings. Ells also loves utility and bush-style airplanes and operations. He’s a former tech rep and editor for Cessna Pilots Association and served as Associate Editor for AOPA Pilot until 2008. Ells is the owner of Ells Aviation (EllsAviation.com) and the proud owner of a 1960 Piper Comanche. He lives in Paso Robles, Calif. with his wife Audrey. Send questions and comments to editor@www.piperflyer.com.
AUTHOR’S NOTES
The M-series airplanes Caldecott referred to include the PA-46-350P Mirage; the PA-46-500TP Meridian, and the PA-46R-350T Matrix. In 2011 Piper sold 136 aircraft; M-series airplanes accounted for 82 of those. The PA-34-220T Seneca V made up 21 sales.
Piston-powered single engine airplane sales included 15 PA-28-161 Warrior IIIs and one PA-28-181 Archer III.
According to a figures released in late July during a press conference at AirVenture, Piper’s sales numbers and revenues continue the upward swing that began during the second half of last year, with 73 aircraft delivered during the first half of 2012. This total is a 28 percent improvement over the same period in 2011. Of the 73 deliveries, 43 of these were M-series aircraft.
