Post by andypspotter on Jan 11, 2018 22:14:17 GMT
On first appearance, Aerostar’s sprawling complex of buildings next to Bacau airport may reflect its heritage as a state-run enterprise focused on supporting the Romanian defence forces.
But the country’s biggest aerospace company, founded 65 years ago, has reinvented itself in the past two decades from a potentially rusting post-communist relic to a stalwart of the second tier of the aerospace supply chain with customers including GKN and Airbus unit Premium Aerotec.
The company, which employs around 2,200 people, also has a growing civil maintenance, repair and overhaul business specialising in Airbus and Boeing.
Although it retains a legacy land systems and military MRO business, working mainly on Romanian projects, sales to foreign customers made up just over three-quarters of its $90.3 million revenues in 2016.
Grigore Filip, the company's veteran president and general director, who has steered the company’s progress since it was divested by the state and floated on the Bucharest stock exchange at the turn of the century, wants to push that export share to 85%. Before privatisation, Aerostar derived almost all its income from its home market.
EQUAL SPLIT
Manufacturing – mostly aerostructures and landing gear components – accounts for just under half of Aerostar’s revenues, with the remainder split roughly equally between civil MRO and defence activities. Filip admits that the company structure may seem unorthodox, but insists that having a foothold in three sectors is a strength. "Certainly, looking from the outside, this mix of business lines may seem difficult to manage," he says. "But we will continue in this way to increase our prospects for growth, rather than focusing in just one area."
Aerostar’s presence in manufacturing is impressive, given that it barely made commercial parts 15 years ago. "We were completely new in civil aviation," recalls Filip. Starting with (now GKN-owned) Fokker, it has won positions in the Airbus, Boeing, Bombardier, and Dassault Aviation supply chains.
Its aerostructures portfolio includes the shroud box for the Airbus A320 and A321 wing – it produces some 60% of Airbus's requirements – around 40 shipsets per month and ramping up fast, says Filip. Additionally, it makes the Gulfstream G450's landing gear doors, as well as spoilers, vanes and airbrakes for the Dassault 7X/8X.
As well as predominantly Airbus suppliers GKN and Premium Aerotec, Aerostar now numbers Boeing commercial aerostructures specialist Avcorp in Canada among its customers.
Meanwhile, in landing gear and hydraulic systems, its other area of manufacturing, Aerostar is the sole supplier of landing gear for the Daher TBM family of single-engine turboprops, and has a strong position on the A320 family and A330, manufacturing components such as steering, retraction and unlocking actuators for Safran Landing Systems (formerly Messier-Bugatti-Dowty).
Without a large local supply chain to rely on, Aerostar is "pretty vertically integrated" on the manufacturing side, notes Filip. While it has not dabbled in areas such as 3D printing or composites, focusing instead on aluminium and other metals, it has invested in a series of special processes such as heat treatment, shot peening, and surface coating. Last year, a new tartaric sulphur anodising line, and an automated paint facility were approved by customers and began production. "In the field of detailed parts, this range of capabilities gives us a strong advantage," says Filip.
SIGNIFICANT OPERATION
Although a smaller contributor to the business, commercial MRO has been another success for Aerostar since it launched this activity in 2003, with Filip claiming “we are now the most important maintenance base in the region”, despite the presence of rivals such as Lufthansa Technik in Sofia, Bulgaria, and Turkish Airlines’ Turkish Technic.
With seven bays at Bacau, the company carries out around 80 heavy checks a year on Airbus and Boeing narrowbodies. Customers include TUI, Royal Air Maroc and Turkish carrier Pegasus. It is one of the first MRO houses approved to retrofit the Split Scimitar winglet on the Boeing 737NG and has carried out several installations. Aerostar will also carry out what it claims will be the first "contracted overhaul" of an A320 Neo in April.
In 2019, the company plans to open a four-bay hangar at Iasi, 130km (80 miles) north of Bacau, and is looking further afield for expansion. "We may go east, to areas where aviation is growing, like India," says Filip. While the company has "no identified solution", he suggests that "in the horizon of 10 years, something will happen".
Over its 15 years in commercial MRO, Aerostar has achieved "100% on-time delivery", he says. "This is our point of difference. While quality of work should be perfect, and cost is also important – and in our case it can be a little bit lower [than competitors] – without on-time delivery, cost has no impact."
On the military side, Aerostar's last flagship programme was the Mikoyan-Gurevich MiG-21 Lancer conversion. Working with Elbit of Israel, Aerostar carried out 110 upgrades of the Russian fighter for the Romanian air force between 1995 and 2003. Although the project itself ended 15 years ago, there are still 25 MiG-21s in active service with Romania and around five of them require a 90-day deep overhaul every year, so supporting that type – and MiG-21s operated by other nations – remains an important part of Aerostar's business mix.
In addition, Aerostar manufactures components for ground defence systems, including vehicle-based rocket launchers, almost entirely for the domestic customer. Under the terms of Aerostar's privatisation in 2000, Bucharest retained a golden share, entitling the government to a veto in matters affecting the defence production capabilities of the company. "The military side is not as significant as in the past," admits Filip. "But it is still one of our commitments to keep our presence in this area to deliver any major contract from the Romanian military."
Filip says the company’s expansion in aerostructures and MRO has allowed it to train around 450 recruits in the past five years, and that it has managed to hold onto most of them once they have gained experience – despite the temptation for European Aviation Safety Agency-accredited technicians to seek higher-paid work in Western Europe.
However, he insists Aerostar – and the rest of Romania's aerospace industry – cannot simply count on a lower-cost workforce over the next decade to remain competitive. "There will probably continue to be some difference in labour costs [compared with other countries], but this cannot be the only differentiator," he says. "We have to focus too on investment and better planning and organisation so we can achieve strong performance indicators."
But the country’s biggest aerospace company, founded 65 years ago, has reinvented itself in the past two decades from a potentially rusting post-communist relic to a stalwart of the second tier of the aerospace supply chain with customers including GKN and Airbus unit Premium Aerotec.
The company, which employs around 2,200 people, also has a growing civil maintenance, repair and overhaul business specialising in Airbus and Boeing.
Although it retains a legacy land systems and military MRO business, working mainly on Romanian projects, sales to foreign customers made up just over three-quarters of its $90.3 million revenues in 2016.
Grigore Filip, the company's veteran president and general director, who has steered the company’s progress since it was divested by the state and floated on the Bucharest stock exchange at the turn of the century, wants to push that export share to 85%. Before privatisation, Aerostar derived almost all its income from its home market.
EQUAL SPLIT
Manufacturing – mostly aerostructures and landing gear components – accounts for just under half of Aerostar’s revenues, with the remainder split roughly equally between civil MRO and defence activities. Filip admits that the company structure may seem unorthodox, but insists that having a foothold in three sectors is a strength. "Certainly, looking from the outside, this mix of business lines may seem difficult to manage," he says. "But we will continue in this way to increase our prospects for growth, rather than focusing in just one area."
Aerostar’s presence in manufacturing is impressive, given that it barely made commercial parts 15 years ago. "We were completely new in civil aviation," recalls Filip. Starting with (now GKN-owned) Fokker, it has won positions in the Airbus, Boeing, Bombardier, and Dassault Aviation supply chains.
Its aerostructures portfolio includes the shroud box for the Airbus A320 and A321 wing – it produces some 60% of Airbus's requirements – around 40 shipsets per month and ramping up fast, says Filip. Additionally, it makes the Gulfstream G450's landing gear doors, as well as spoilers, vanes and airbrakes for the Dassault 7X/8X.
As well as predominantly Airbus suppliers GKN and Premium Aerotec, Aerostar now numbers Boeing commercial aerostructures specialist Avcorp in Canada among its customers.
Meanwhile, in landing gear and hydraulic systems, its other area of manufacturing, Aerostar is the sole supplier of landing gear for the Daher TBM family of single-engine turboprops, and has a strong position on the A320 family and A330, manufacturing components such as steering, retraction and unlocking actuators for Safran Landing Systems (formerly Messier-Bugatti-Dowty).
Without a large local supply chain to rely on, Aerostar is "pretty vertically integrated" on the manufacturing side, notes Filip. While it has not dabbled in areas such as 3D printing or composites, focusing instead on aluminium and other metals, it has invested in a series of special processes such as heat treatment, shot peening, and surface coating. Last year, a new tartaric sulphur anodising line, and an automated paint facility were approved by customers and began production. "In the field of detailed parts, this range of capabilities gives us a strong advantage," says Filip.
SIGNIFICANT OPERATION
Although a smaller contributor to the business, commercial MRO has been another success for Aerostar since it launched this activity in 2003, with Filip claiming “we are now the most important maintenance base in the region”, despite the presence of rivals such as Lufthansa Technik in Sofia, Bulgaria, and Turkish Airlines’ Turkish Technic.
With seven bays at Bacau, the company carries out around 80 heavy checks a year on Airbus and Boeing narrowbodies. Customers include TUI, Royal Air Maroc and Turkish carrier Pegasus. It is one of the first MRO houses approved to retrofit the Split Scimitar winglet on the Boeing 737NG and has carried out several installations. Aerostar will also carry out what it claims will be the first "contracted overhaul" of an A320 Neo in April.
In 2019, the company plans to open a four-bay hangar at Iasi, 130km (80 miles) north of Bacau, and is looking further afield for expansion. "We may go east, to areas where aviation is growing, like India," says Filip. While the company has "no identified solution", he suggests that "in the horizon of 10 years, something will happen".
Over its 15 years in commercial MRO, Aerostar has achieved "100% on-time delivery", he says. "This is our point of difference. While quality of work should be perfect, and cost is also important – and in our case it can be a little bit lower [than competitors] – without on-time delivery, cost has no impact."
On the military side, Aerostar's last flagship programme was the Mikoyan-Gurevich MiG-21 Lancer conversion. Working with Elbit of Israel, Aerostar carried out 110 upgrades of the Russian fighter for the Romanian air force between 1995 and 2003. Although the project itself ended 15 years ago, there are still 25 MiG-21s in active service with Romania and around five of them require a 90-day deep overhaul every year, so supporting that type – and MiG-21s operated by other nations – remains an important part of Aerostar's business mix.
In addition, Aerostar manufactures components for ground defence systems, including vehicle-based rocket launchers, almost entirely for the domestic customer. Under the terms of Aerostar's privatisation in 2000, Bucharest retained a golden share, entitling the government to a veto in matters affecting the defence production capabilities of the company. "The military side is not as significant as in the past," admits Filip. "But it is still one of our commitments to keep our presence in this area to deliver any major contract from the Romanian military."
Filip says the company’s expansion in aerostructures and MRO has allowed it to train around 450 recruits in the past five years, and that it has managed to hold onto most of them once they have gained experience – despite the temptation for European Aviation Safety Agency-accredited technicians to seek higher-paid work in Western Europe.
However, he insists Aerostar – and the rest of Romania's aerospace industry – cannot simply count on a lower-cost workforce over the next decade to remain competitive. "There will probably continue to be some difference in labour costs [compared with other countries], but this cannot be the only differentiator," he says. "We have to focus too on investment and better planning and organisation so we can achieve strong performance indicators."