(apologies to Clint Eastwood) ...and just about everyone else.Including the late Howard "Pug" Piper, youngest son of Piper founder William T Piper, Sr.
"'W.T.' Piper who happened to produce five sons, one of whom, Howard (Pug), was to be responsible for moving a reluctant company into the modern age." (Well, back when "the modern age" was circa the early 1950's Aztec). Pug was also designer of the PA-24 Comanche, circa mid-1950's.
It's fair to say, Piper Aircraft wants to "move into the modern age" again, with a jet. (And it's got a 3000-pound-thrust-class Williams FJ-44 "Magnum" (-3AP) engine, the most power engine in the VLJ world- it'll knock your socks clean off!- oops, sorry again).
Especially if one considers the relative standings, then (mostly pre-biz jet 1968) to now (2008 anyway):
From 1968:
Cessna, $138M (6578 units)
Beech, $115M (1347 units)
Piper, $85M (4228 units)
Lear, $28M (41 units)
Mooney $24M (579 units)
AeroCommander $22M (435 units)
A History In the Making, by Donald M. Pattillo
General Aviation Manufacturer's Association 2008 delivery/billings:
Bombardier (including Lear) $6,228M (245 units)
Gulfstream (temp. AeroCommander) $5,512M (156 units)
Cessna $4,556M (1,300 units)
Hawker-Beech $2,468M (435 units)
Cirrus $287M (549 units)
Piper $214M (268 units)
Eclipse $207M (161 units)
Mooney $35M (65 units)
There is a temptation to lament the decline in general aviation, as a function of units and pilots produced per year, but from a dollar standpoint, things are going pretty well- using an inflation calculator, and adjusting the 1968 figures to 2008 dollars:
Cessna (1968): $853M (2008 dollars), so $4556M is a 530% increase
Hawker-Beech (1968): $711M (2008 dollars), so $2,468M is a 350% increase
Piper (1968): $525M (2008 dollars), so $214M is, well, a 60% decrease
Throw in Cirrus and Eclipse, and it was a pretty good year for GA, dollar wise. There might be some other items at play, but it seems to "stay in the game", Piper needs a jet. Cessna went into Citations big time, and Beech bought the Hawker and Mitsubishi line, as well as developed their own Premier and Horizon/4000 models.
So, what's the big deal? Seems like they've been shopping around for a place to build it (and maybe to relocate their entire operation). Supposedly, Oklahoma City OK (undisclosed amount), and Albuquerque ($70M "bid") were finalist, with Vero Beach squeezed to contribute $30-50M. Tallahassee offered $90M, and Columbus, S.C. (undisclosed amount) also made offers- but maybe there were some "sticklers" with those deals.
By the way, what did our friend Richard Aboulafia, V.P. of Analysis at the Teal Group have to say, when interviewed by the Albuquerque Tribune (2007):
"'There's a fine line between infrastructure and tax breaks and outright subsidies,' Aboulafia said. 'You have to watch that you're not giving away the store.' He called New Mexico's chances of outbidding its competitors, 'very good'. 'The New Mexican taxpayer is a remarkably generous creature,' he said."
Something to consider, Cirrus has billings (for new aircraft) 40% higher than Piper, and they are struggling financially. Eclipse had billings that were virtually equal to Piper- with only 8 months of production, and, ah, well- you know. So, can Piper pull it off? One thing which should help them is a sustaining revenue stream, from a bazillion (or so) airplanes already in service.
But still, the economy has resulted in challenges for 2009:
PalmBeachPost, February 13, 2009:
"Today, Piper is slashing staff. It laid off 450 workers during the past several months...After Tuesday's round of layoffs, which affected 300 workers, the company reported it had 650 employees...its shares (ACAS) plummet to $2.71, down from a 52-week high of about $37.86 a year ago."
(Ugh- a Friday the 13th. Note: the stock dropped to $0.58 in March)
TCPalm, June 10, 2009:
"Kevin J. Gould, Piper's Vice President of Operations, will become Piper's Chief Executive Officer, and John Becker, Piper's Vice President of Engineering, will become President of the Company."
(Outgoing CEO seemed to get good marks, new guys seem pretty capable too).
TCPalm, July 13, 2009:
"No formal public announcement has been made about Piper’s workforce but according to the company’s Web site, Piper is hiring 17 engineers. As for manufacturing, Piper’s Web site said it 'will not be seeking manufacturing candidates until further notice."
Maybe recent developments may improve the chances (do they feel lucky, well- do they? :) of continued development:
FlightGlobal, July 18, 2009:
"Imprimis, a Singapore investment firm that at the beginning of May (2009) acquired 100% of Piper from American Capital (ACAS). Imprimis has deep pockets funded by the government of Brunei, one of the world's richest countries, and sees its first aviation investment as a way to diversify its portfolio and tap into the industry's budding potential in Asia."
TCPalm, July 20, 2009:
"Piper Aircraft, Inc., will continue shutting down its local manufacturing facility for one week each month until the end of the year, according to a new report from a major aviation trade publication."
As unfortunate developments at Adam and Eclipse demonstrated, it's a tough market to crack, but those were start ups, and Cirrus -and Diamond- are by comparison, relatively new companies as well. Perhaps income from legacy product support, sales of the innovative PA-46; Matrix, Malibu, Meridian (which, ah, sure looks a lot like the PA-47 Piperjet), combined with robust financing from the new ownership will help Piper succeed- let's wish them well. The Piperjet might just "make my day" for a lot of owners!
(I hope we get some good feedback from those attending AirVenture this week).
227 comments:
«Oldest ‹Older 201 – 227 of 227Baron school of disruptive economics, part 3 of 3 !!
"But guess what? Year by year, foreign workers are getting closer and closer to American and German workers in terms of capital support. Every year, there can be less and less of a labor cost differential, because every year foreign workers are working in conditions that are more and more like an American workplace. As of now, an American assembly line worker can be paid about 2x the wages in Brazil, 3x the wages in Mexico and Korea, 4x-6x the wages in China and India and still beat them on output per labor cost, when you factor in transportation, etc."
And my position is- it is in the best interest of the United States to make sure those payroll and property tax revenues are maintained- in fact, improved up, in the United States.
"If it is much more than that, then, sooner or later their companies will fail (like Chrysler and GM) or will move production overseas like Apple, Motorola, etc. Either way, they loose their job. You have to answer the question. Is it better to have 1M jobs in the US making 6x the wages in China, or have 100K jobs making 20x the wages in China and the other 900K jobs moved to China?"
HELLO- is anybody home?
Remember that consequence-free thing again?
"Erin Lett and Judith Banister estimate that average hourly manufacturing compensation for China in 2004 was about 3 percent of the average hourly compensation costs of $22.87 for production workers in the United States for the same year."
Buearu of Labor Statistics, China, 2007
? Would I rather have 1M jobs in the USA, paying 6x wages in China (6 x 0.69= $4.12), or send 900K jobs to China, and have 100K jobs paying 20 x $0.69 = $13.72 ?!?
Both answers are contrived losers: one is a wage cut of 40% AND a job loss of 90%; the other is a wage cut of 82%, to $4.12, HALF of the minimum wage, to keep jobs.
Baron- WHO IS GOING TO PAY THE COUNTRY'S BILLS ???
I'm concerned about maintaining our quality of life- schools, parks, public safety, environmental protection, infrastructure?
Do you think 90% unemployment, and $13.72/hour jobs is the answer? Or full employment, at $4.12 per hour? Do you really think our society can function with either of those outcomes???
"Those are the only two choices."
Anyone who believes that deserves a gold-plated Koolaid pitcher.
Instead, I would suggest a pair of reading glasses:
Take This Job and Ship It
"Moving jobs to China and running profits through the Cayman Islands to avoid taxes undermines American workers and threatens out future" - so begins Senator Dorgan's 'Take This Job and Ship It.' Our trade deficit now increases by $2 billion/day, and our total deficit (federal government and trade) is $1.2 trillion/year."
one reader's review
As a country, we'd better come up with a third- because both choices you mention have the same outcome: SEVERE degradation of U.S. quality of life, rather than improvement.
Baron
(part 4 of 4 !- sorry)
"American consumer will NOT EVER AGAIN be bilked by unions."
Baron- we completely agree!!!
THE PUBLIC IS BEING BILKED BY CORPORATIONS THAT OFF-SHORE.
And by the elected officials and policies that allow it.
"They will exact severe punishment on those that try."
Baron- that's a pretty dark comment. But moving on- unions have NOTHING to do with the jobs moving offshore- it's ALL economics- $0.69 per hour labor. Or make it $1.00 per hour labor in Mexico- there's not much difference in the outcome.
NOT PRODUCTIVITY- NOT WORK ETHIC- NOT UNIONS- IT'S CHEAP LABOR RATES.
And the erosion of the tax base is DESTROYING our country!
So-
GET OVER YOUR HATRED OF UNIONS-
THEY HAVE
NOTHING
NOTHING
NOTHING
to do with our country's economic crisis.
Only ONE IN EIGHT manufacturing jobs have union representation (and even lower membership).
Bureau of Labor Statistics, 2008, Table 3
The people who are getting "punished" are the manufacturing workers- how much do you want them to suffer, for working?
"Those are the only two choices."
Baron, the three choices we have to make are:
1) Develop the middle-income working class, and tax them.
2) Lose working class payroll and property tax, but replace it with higher taxes on the high income end.
3) Lose middle income taxes, leave high-end taxes unchanged- see the United States slip to Mexico quality of life standards.
Baron- it's not a consequence free world: which option do you want?
baron95,
Do you think 90% unemployment, and $13.72/hour jobs is the answer? Or full employment, at $4.12 per hour? Do you really think our society can function with either of those outcomes???
how are the US going to pay the F22 next gen,..., or the flight to the moon?
Or the current financial burden!
Julius
Julius asked...How many Mustangs were sold below costs?
=============================
As of now, ALL of them.
Which is typical for any aviation or developmentally intensive, low volume project.
Lets say it took Cessna $250M to develop the Mustang, buy production tooling, train people, etc. And lets say it costs them $2M to produce each Citation, with an average sale Price of $2.8M for a 40% gross margin. That is being very generous, ignoring cost of money, etc.
That means that for the 200 or so Mustangs that have been produced, the total cost is $250M + $2M*200 =$650M or $3.25M per plane that is being sold for $2.8M, at an initial loss of $450K per plane.
It will probably be 4-5 years or so at 100 planes per year, before Cessna breaks even on the "project", being very generous. If they get there, then the program may turn profitable based on follow-on sales, maintenance, etc.
And that is how it is in every car plane. For example, the anticipated break even for the A380 project is 500 frames. With the 200 orders to date, the overall program is a loss, even though each frame is now contributing to operating profits.
How do we know the Mustang is not profitable, beyond the reasons above? Because Cessna is holding production below capacity. That, in manufacturing usually means you are already selling below your desired margins. If Cessna was selling Mustangs above desired margins, they'd simply increase production to make even more money. The fact that they are holding back production means that they need to limit demand in an attempt to hold the line on prices and maintain margins.
Not rocket science.
baron95,
come on!
Not rocket science.
I'am not sure reading your text unless we start a long lasting discussion about the meaning of cost etc...
I got the point!
Julius
Because Cessna is holding production below capacity ...
this is so hilarious ...
so funny that Kondratieff's bones must be shaking in his grave ...!
a perfect application of Shorter-term VS short-term ...
wait a sec...
may be someone in Cessna actually used his brain to find out :
What is wrong in GM = they don't produce enough ; they are holding production ...
OR
MAY be that very person understood that some (YES , whytech : Jet owners ARE rich !) won't see the point of buying TODAY a Mustang at 3M$ while it would be sold tomorrow at 2M$ ...
(this is not peanuts or silly flashy Ipod , unless the size of the problem is even bigger that i thought , EVEN in the Great America , peoples DON'T buy Mustang every week !)
a kind of ratio calculated between "What is price today" / "what could be price tomorrow" / "what is the risk of expanding production VS what it would bring in profits" ...
That person considered surely that one rabbit in the pot is better than 2 still running in the bush !
it seems too me that many peoples got such a hangover in the Internet Madness Time that they are still not back with us on earth ...
VOLUME is rarely more profits alone !!
Billy :
you are 99.99% ! ;-)
today i was invited for lunch by a good friend who happen to be the managing officer of a Sovereign Fund from a Gulf Country ...
the subject of talks was "How to get rid of US denominated assets discreetly" ...
if the fund wouldn't be about 300/400 B$ , it would be almost meaningless !
this is where the 2 dimension and colors only vision is going to provide a difficult wake-up ...
still some like you have enough sens to worry about what already arrived ...!!
soon the money is going to have to be found where it is ...
Big Corp. are mostly out of reach = what or who is left ?
"How do we know the Mustang is not profitable, beyond the reasons above? Because Cessna is holding production below capacity."
This forum is getting more entertaining every day ... we want more such deep insights please!
We have actual news on Eclipse now so lets tone down the worldly economic discussions, shall, we?
======================
B.E.G. said...The people who are getting "punished" are the manufacturing workers
==================
They are NOT. Go interview the non-union automobile workers at BMW in South Carolina or Mercedes in Alabama. (present crisis blip excluded), they have seen their training, income, education level, home ownership, disposable income, and YES, the taxes they pay, got UP. Substantially up. They are, for the most part, very content. They make $28/hr direct, $48/hr with benefits.
They have better labor cost productivity than equivalent plants in Germany, and can be quite competitive with Brazil and China, once you load transportation costs, etc.
That is the model. FREE and COMPETITIVE workers.
The model is right there - in front of your eyes.
Why do you think that non-union WN and B6 are consistently the only profitable airlines in the US, while the union shops, despite being bigger, more established, flying profitable international routes routinely loose money?
Can't you see what is obvious. Whenever there is an old-time/old-tactics union firm competing against a free-worker firm, the free-worker firm wins and their workers get to keep their jobs, while the union workers loose theirs.
How many people have unionized UA, AA, US, CO, NW laid off in the past decade? How many have WN, B6 etc hired.
How many UAW wokers in the midwest have been laid off in the past decade? 400K? How many were hired in the free southern states?
Why "pretend" to "search" for the answer. It is there. Here in the U S of A for all to see.
Ignore it at your peril.
Artificially union-set labor rates are NOT sustainable in a free world.
Either they come down or the jobs come down.
Simple as that.
While we are at it.... remember boys and girls - tell your friends not to buy Government Financed, Union/Fiat owned Chrysler and GM products.
Want to buy American made, buy Ford, BMW, Mercedes, Toyota, Honda, Nissan, Hyundai, etc....lots of models build right here in the U S of A.
Julius asked...how are the US going to pay the F22 next gen
=======================
With the incredible taxes that employees and corporations like Goldman Sachs, Walmart, Pixar, Intel, Microsoft, Google, Stanford University, Hartford Insurance, Mc Donalds, Coca Cola, ADM, Exxon, local school districts, and a few world class manufacturers like Toyota, Honda, BMW, Mercedes, Raytheon, Boeing (maybe), Gulfstream, Ford (maybe) will be paying.
Manufacturing is less than 15% of US economic output. Of that, only 15% of the employers/employees are in unionized plants.
So even if we lose EVERY manufacturing union job in the US, that is 2.25% of economic output. I.e. a rounding error.
Those jobs will steadily disappear, as they have for 3 decades.
And guess what? No one will notice. Their impact to the US economy and tax base is so tiny as to not even be measurable.
Only Fred, and now apparently BEG, seem to give such importance to maintaining artificially inflated union wages.
But who cares. It can't be maintained - they are pricing themselves into extinction. And no one cares. Free worker manufacturers are rushing in to take their place.
I bet that in 5 years there is an Airbus assembly plant in the US using union-free southern workers.
Prob all major world manufacturers will be represented in the union free south soon.
Meanwhile, the union-heavy Midwest will look like Detroit. I.e. a decrepit collection of abandoned, decrepit and torched former union plants and homes.
As it should be. Punished severely by the free market for their stupidity.
Wrong analysis and parallel between GM and Cessna.
GM has been cutting production for years, just never fast enough to match "profitable demand". They had such high union-imposed fixed costs that they "lost less money" selling cars at a loss than they would for lowering volume.
Cessna Mustang is different. They have a single plant with some fixed costs. But they can adjust their labor costs to try to reach profitable demand. They are currently running at about 30% of Mustang production capacity at Independence. It is very rare, if not impossible for any manufacturer to be profitable on a young project (still trying to recover, plant, tooling, development investment) at that low a utilization.
It is a virtual certainty that Cessna is WAY WAY underwater on the Mustang. Their break even point is moving AWAY from them (into the future) instead of moving IN closer.
Lets see how they do in 2011 with the Embraer Phenom completion center in Florida and maybe one more competitor (Maybe Diamond).
Not a pretty picture for the Mustang profit wise.
And if 260 upgraded to late spec Eclipses are on the secondary market for $1.5M, well. You know. Just gets a little bit tougher.
The NTSB preliminary on the PC-12 accident in Raphine, VA, is up. The pilot is quoted as saying he needed a "little DG heading I lost my panel.." which indicates a PFD failure to me. Perhaps the standby was inoperative from the beginning? The report seems to contain two errors. It states that the aircraft began a right descending turn, when the radar data on flight aware plotted over google earth map shows a classic tightening, spiraling left turn to impact. The report indicates that the initial impact was on a heading of 032 degrees and that the wreckage path was on 304 degrees. An aerial photo shows a massive fan of debris heading about 300 degrees. The 032 must be a typo for a 302 degrees impact heading.
'm pleased we have several new "voices" on the blog- and several "returning" participants- welcome and welcome back.
Well, it's blog tidy-up time again; I've deleted a couple of posts- one came across as particularly onerous- a real contender for the most patronizing and offensive- and one that was probably a spirited response- no offense taken, btw.
I'd like to thank Real_Planes_for_Real_Life for stopping in and sharing his ownership experience with us- congratulations on your new Mustang.
And I'd like to thank Ken for keeping us updated on his airplane, and giving us an owner's perspective on developments at Eclipse.
"The NTSB preliminary on the PC-12 accident in Raphine, VA, is up. The pilot is quoted as saying he needed a "little DG heading I lost my panel.." which indicates a PFD failure to me."
This is MSN 570, a late 2004 PC-12/45 Series 10 acft. These acft, as typically equipped, do not have a PFD in the usual sense that this term is used today. Most are set up with dual Honeywell EFS 50/40 EFIS systems comprised of an EADI and a separate EHSI on both sides of the panel. (the 50 series is 5" display, the 40 series is a 4" display.) These are driven by dual redundant Litef AHRS systems. The EFS 50/40 have reversionary capability which combines the functions of two displays in the event that one of the displays fails. The standby instruments are a 2" electromechanical peanut AI, a conventional mechanical altimeter, a mechanical airspeed and a wet compass. The standby AI is typically powered by a separate backup battery independent of the acft electrical system. In the event of a failue of both alternators, the main battery will run the primary instruments for 30-40 minutes, and the standby instruments can run on their separate battery for considerably longer. With this set up, its hard to guess what kind of failure would have taken out all of the primary flight instruments. In the event that this happens, the acft can be flown via the standby instruments, but this is a real challenge, in part due to the small size of the 2" AI, and in part due to the scattered location of the other instruments - not exactly a traditional six pack set up on standby. We trained in the sim constantly flying the acft on the standby instruments, and it was hard - possibly even more difficult than partial panel with needle, ball, and airspeed. Its possible that this particular acft had a different instrument configuration, but unlikely, as a high percentage coming to the US market were equipped this way.
So far, it seems lilely that this accident was a loss of control scenario, but why this happened, given the apparent redundancy, is less clear.
WhyTech, I defer to your knowledge of the instrumentation. It does seem a larger, vacuum-powered stand-by attitude indicator maybe would have made a difference. He apparently was talking with the controllers just fine though, and the transponder also was functioning so it was not a complete electrical failure. At least we can dismiss the earlier idea that an exterior panel had come loose. Very curious.
A CitationJet crashed in Maine last winter just after the pilot proclaimed she had lost her attitude indicator. The aircraft departed in freezing rain... very bad conditions. The aircraft may well have been unflyable no matter what the PFD showed.
I wonder if we could have a similar situation in the PC-12 crash. An aircraft climbing 2,000 feet above its certificated ceiling in heavy weather must be a handful. Perhaps the pilot did not believe what the panel was telling him and thought it had failed.
Well ...
i don't give a damn about Union-wages ...
but if you believe that Goldmann&sachs is paying tax to the US Gov. , the size of your glasses has to revised ...
yes off-course they pay some (let's call it "patriotic minimum" )
they mostly use funny entities like Cayman and Bahamas ...
(i know because i have been working in N-Y DOING this at the end of my US period ... the cynicism the guy at top was showing was properly revolting if i would have said only a tenth of what i heard at the time , tomorrow morning their nice little houses in the Hamptons would be set afire by populace !)
i thought you knew !
They have better labor cost productivity than equivalent plants in Germany ...
in your dreams ... may be !
(BTW the "Labor Cost Productivity " ? is that a new standard ? ;-) )
Manufacturing is less than 15% of US economic output. ...
HERE , you are right !
but aren't we touching the core of problem , here ?
70 to 76 % of US GNP is consumers spending ...
the million $ question where do they find this money to spend ?
A: Services jobs and (MOSTLY) credit !
new question : There is no more credit , what will be the GNP ?
leading to an other question :
Can consumers make new credits IF by any chances Banks (Normal ones NOT Bizz-bank ) would lend them again ?
Nope ! they have no wishes to take anymore risks (well played before by US bankers) and prefer to save a bit for "the rain coming" ...
so IF the 15% are declining and the 70 to 76 % are reduced to "strict minimum" (food and essential buy) > WHAT will be left ?
you see , this is where our views differ :
YOU wish the situation to remain as before the crisis ...
UNFORTUNATELY : the Economy booming IS NOT going to be any close of getting free of the scissors-effect we can see here...
UNLESS it reach something like 8 to 10 % per year , the PAST-Debts are not going to be repaid , the present ones not going to be reduced AND at SAME TIME ECO is not going to BOOM ENOUGH to create jobs to ensure a wide consumers spending ...
which is going to be cured by the Temptation of the past decade = Creating a new inflation of monetary mass (here you have to remember : "what is rare is expensive , what is too common is worthless" ) leading to losses of value on $ !
WHICH IS THE ONLY ADVANTAGE USA HAD in the last decade(s)
so Airbus Plants in USA : yes , but not for the good reasons > only because PRODUCTION-COSTS will lower as $ compared to other currencies is(will be) plummeting ...
which means that over time , PRODUCTION-jobs will be a new big + in USA , Services remaining at the mercy of foreigners and production-earners !!
it is not very nice to say but the image coming from this situation :
a boxing guy in a corner , all opponents coming from all the mistakes made the guy in the corner ...
so now , the guy has to choose WHO is going to blow the K.O. ... knowing that if it is not this one , it is only going to be next on his right or left
so DO NOT SPIT on production and union ... they may make your living tomorrow !
Good morning Fred,
I hope all is well there.
Thanks for your contrasting views of unionization, as you note, (and Baron and B.E.G. violently agree with each other on :), the percentages are so low (10-15%), so the impact of strictly union-only jobs is not a predominate concern.
You make interesting, and modestly encouraging, points about currency valuation (encouraging for the US, it seems, rather discouraging for non-US).
What concerns me is that the dollar will be dumped for the Euro or some othe currency.
Time for me to crawl into my union made bed here! (-and set my Chinese-made alarm clock :)
Thanks,
Phil
New headline post up!
(I will be too, in a few hours :)
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