The new leadership group at MD Helicopters is focusing on improved inventory levels, stronger relationships with suppliers, and a strengthened network of service centers and distributors as they seek to turn around the OEM’s aftermarket performance.
In an exclusive interview with Vertical, Ryan Weeks, MD’s newly-appointed VP of aftermarket, said the scale of the task ahead of the company was highlighted during his interview process, when he was told that MD ranked seventh (and last) in Vertical’s 2022 Helicopter & Engine Manufacturers Survey.
Weeks joined MD from Honeywell, where he was working as senior director of marketing and product management. But he previously spent almost eight years at Bell, rising to the position of director of customer and product support at the OEM.
“Moving to MD, it was kind of refreshing, because not only am I moving back into the helicopter industry, but I’m stepping into a situation in the aftermarket that really resembles where Bell was at in the aftermarket roughly seven/eight years ago,” he said.
Weeks said his perception of MD prior to joining was that “it really wasn’t growing,” but that it had “a very interesting set of products and a great brand reputation.”
He said the company’s shortcomings were quickly identified by the new leadership team and would be “pretty straightforward” to address.
“A lot of what we have to do in the near future is blocking and tackling — it’s getting the basics sorted out,” said Weeks. And this has led to the focus on inventory, suppliers and its network of service centers and distributors over the next 12 months.
Firstly, the company is identifying a group of roughly 500 of the highest demand parts and assemblies. Its goal will be to improve inventory levels on those key parts to the point that MD can ship them within 24 hours of an order, 95 percent of the time.
“It involves a little bit of forecasting, a little bit of math, and then some investment to get the inventory level where it needs to be,” said Weeks. The total investment could climb into the tens of millions of dollars, he said.
Current inventory levels are healthy for about 30 percent of parts at MD, Weeks added, but the remainder is going to need some work.
“For some of those parts, it may be a matter of two months before we’re healthy in terms of inventory, but for other parts, realistically, it may take nine to 12 months before we get some of those on the shelf,” he said.
MD will be looking not only at the parts that are in highest demand, but also those that can cause aircraft on ground (AOG) situations most frequently. Main rotor gearboxes and main rotor hubs would be two of the major items in the latter category, said Weeks.
To help with the availability of those assemblies, MD is creating an exchange pool.
“We are actively working on putting another six main rotor gearboxes on the shelf, whether they be new in the beginning or eventually reconditioned,” said Weeks.
The second improvement priority is strengthening contractual relationships with suppliers through long-term agreements.
“We can’t get the inventory on the shelves unless we have good relationships with our suppliers, and those have been stressed, in particular, over the last couple of years,” said Weeks. “Now we’re rebuilding those and providing those suppliers with five-year demand forecasts.”
He said this will allow suppliers to better plan their business and acquire the raw materials they need for parts.
He also said MD is actively looking to add new suppliers who can help with parts availability.
“In some cases, like with the 902, the 520, and the 600 series, there are not a lot of those aircraft out there in the world,” he said. “As you can imagine, over the years, some suppliers may decide that it’s not really worth their time and effort to continue to support those aircraft as we need to support them. So, we’re open to working with new suppliers that can help us support those aircraft.”
Finally, the company is working to strengthen its network of Authorized Service Centers and distributors.
“We need to make sure that our service centers are geographically aligned with our fleet around the world,” said Weeks. “We need to make sure that they are properly staffed, trained, equipped and carrying the inventory needed to provide timely service to the helicopters in their area.”
Weeks said he will be spending time with most of (if not all) the company’s service centers over next few months to get a better understanding of their business to “turn this thing around considerably over the next 12 months.”
The right inventory in the right place
Gauging the true size of the MD fleet was one of Weeks’ initial tasks.
“When I arrived at MD, that was one of my first questions: ‘How big is our fleet? Where’s our fleet? How many hours they flying?’ And the team said, ‘Well, we’re not exactly sure — but we think it’s somewhere around 1,200 aircraft.’ ”
Weeks called Cirium, a data analytics firm specializing in aviation. He discovered that, across its history, MD has manufactured 4,831 aircraft — military and civil — and of those, 1,727 are still flying (and a further 163 are reported to be in storage). Ninety percent of that active fleet is composed of MD 500-series aircraft.
Thirty-eight percent of the fleet is in North America, and another 37 percent in Asia-Pacific. Europe is a distant third with 11 percent.
These data didn’t mesh with the geographical spread of service centers.
“We’re developing heat maps for where all of these aircrafts are and then we’re going to start working on how we how we set up a network that can best support them,” said Weeks.
The data also highlighted the sectors in which the fleet is working, with utility operations taking up the largest proportion with 34 percent (followed by light armed scouts/military trainers at 29 percent, and private/business use at 22 percent). Weeks said future product developments would be tailored accordingly.
“As we work towards our aftermarket kits, as well as what commercial aircraft we’re going to sell in the future, we plan to create a handful of different products that are tailored for the various missions,” he said.
MD customers have been promised new dawns before, but Weeks said the new leadership group will work hard to prove that they mean business.
“We are immediately spending more time with our operators and partners to gain their perspectives on what we need to do to change things,” he said. “We’re fixing our biggest known issues . . . or establishing improvement priorities across the business for everything from product upgrades, to manufacturing efficiency, to what do we need to do in the aftermarket to make this thing a well-rounded company.”