Drones, oil market among Bell Helicopter challenges
It’s not an easy time to be a commercial helicopter manufacturer.
Persistent weakness in the oil and gas market has eroded demand for the rotorcraft, with global shipments down 16.1 per cent in the first half of 2016 and global billings plunging 32.5 per cent, according to the General Aviation Manufacturers Association.
But Bell Helicopter, which currently manufactures all of its commercial aircraft in Mirabel, Que., sees opportunities in the slump.
The company, a division of Textron Inc., announced in May that it would relocate production of its new five-passenger Bell 505 Jet Ranger X to Mirabel from Louisiana, creating 100 jobs.
The 505 is expected to receive certification from Transport Canada later this year and has booked more than 380 tentative orders.
“We really wanted to optimize our manufacturing footprint across the several sites that we have and better position ourselves for the current downturn in the market,” Cynthia Garneau, president of Bell Helicopter Textron Canada Ltd., said in an interview.
“The decision was made to build the aircraft here ... to maximize our engineering, our manufacturing capabilities, and also it was a reassurance and commitment to our Canadian workforce.”
The move was an important one for the Mirabel plant, which has seen its workforce shrink along with global demand for commercial helicopters. Last year, Bell said it would lay off about 300 Mirabel workers despite winning two contracts worth a total of $328 million to build helicopters for the Canadian Coast Guard.
“Because we live in a very cyclical industry, for us it’s something we’ve seen in the past and we just need to continuously adjust our manufacturing rates to adjust to that,” Garneau said.
The main culprit is the energy sector, which uses helicopters to survey its sites and transport workers. Textron CEO Scott Donnelly said recently the market is “very challenging,” but he’s hoping demand will pick up in the back half of the year.
“I certainly hope it’s a bottom. It’s pretty tough out there,” Donnelly said on the company’s secondquarter conference call in July.
The decision was made to build the aircraft here ... to maximize our engineering, our manufacturing capabilities.
“Oil and gas obviously remains very difficult, right? Some of these guys are in bankruptcy. You’ve got a lot of their fleet that’s sitting on the ground. They’re just not being utilized.”
Bell delivered 54 commercial helicopters in the first half of the year, down from 74 in the same period of 2015.
Helicopter manufacturers are also losing market share to drones, which can be cheaper to operate. Garneau said Bell sees this new competition as an opportunity rather than a threat, and is working with Northrop Grumman Corp. to build unmanned aircraft using Bell’s 407 airframe.
“We’re also looking at designing aircraft that are able to support both unmanned and manned missions,” she said, adding that some of the research for that is being done in Canada.