Independent MROs Investing In Capabilities, Growing Profits

By Henry Canaday
Source: Aviation Week & Space Technology

Turbine's selling point is that it is an ACE Gold supplier of Pratt & Whitney and brings that quality to all of its customers. The company completes repairs quickly, rather than stocking expensive rotables, to make timely deliveries.

In addition to adding nonengine capabilities, Turbine has hired sales directors for the Pacific and military markets and will add one in Europe next. Walmsley expects to boost sales in all three markets. “There are always opportunities.”

Sometimes MROs are constrained by general business problems. “I hoped we would be growing more, but we are holding our own in our little niche,” says Pat Halpin, co-owner of Turbine Weld, which overhauls PT6, JT15D and PW100 hot-section components.

Halpin is ambivalent about growth. “We do not want to cross that 50-employee barrier in the health law [the Patient Protection and Affordable Care Act that affects businesses with more than 50 full-time employees]. We don't know how much it will cost. Blue Cross and Blue Shield do not know.”

Halpin has 44 employees. He has a good health plan, but does not know what will happen to it or costs in 2014. He wants to ascertain that before making commitments to expand, which could come in the second quarter of 2014.

Component shops must increasingly pay attention to OEM plans. Bernie Rookey is president of Texas Pneumatics and Turbine Fuel Systems, which have a total of 75 employees. His constantly adds specific repair capabilities at a rate of 20-30 per month. “You cannot sit still,” Rookey emphasizes.

Most additions are in product lines his companies already handle, but Rookey sometimes looks at new parts or aircraft types. He is now getting more involved with regional jets and is considering the rotary-wing market, which he believes is underserved.

Investment in new capabilities is funded out of cash flow as Rookey is “bank-averse.” He is not interested in acquisitions, even small ones, because he believes they require too much management effort.

Rookey is still trying to figure out what his companies “want to be when we grow up.” He would like 10-15% annual growth, but has struggled since the 2008 crash. “We are probably close to that [growth rate] this year but not for the last three or four years.”

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