Singapore Technologies Aerospace Looks to Expand Design Engineering Capabilities, Plus New Facilities

Singapore Technologies Aerospace (STAero) president Tay Kok Khiang believes the company can offer the aerospace industry much more than just being one of the world's largest independent airframe and modification companies. He wants it also to be a leader in engineering design development, as it has done on programs like the Eurocopter EC 120 B Colibri light helicopter and the Boeing 757SF (Special Freighter) it is modifying with the American airframer.

The company's quest for expanded engineering design responsibilities is now bearing fruit since STAero and Boeing began delivering 757SFs to DHL Worldwide Express in late 2001. A total of 17 aircraft will be converted by STAero's U.S. subsidiary ST Mobile Aerospace Engineering (MAE) in Alabama, as part of a total contract for 34 757SFs ordered from Boeing by DHL.

The program gives STAero "ownership of design (as a) risk sharing partner," said Tay.

The work at MAE also validates the company's expansion policy in the U.S. and Europe, which Tay says is being driven by the fact that more and more airlines are outsourcing their maintenance.

"Airlines are going to look for sole-source suppliers that can satisfy total service needs," he said. "We're seeing the possibility of the virtual airline in the future, which is only there for the customer and will farm out all maintenance needs to a single provider." That goes even for major air carriers with large maintenance departments, he added.

"You'll find cracks around the seams (of some major airlines). If you ask around a lot of airlines are trying to get out (of maintenance) but may be held back by certain commitments to unions. In the U.S. you'll find a strong trend to outsourcing, and increasingly you read about the United Airlines and Northwest Airlines union agreements and find that cost structures are very high."

Tay believes STAero can help spur on that trend by expanding company operations to other regions of the world. Though STAero already has two sites in the U.S.-MAE and Dalfort Aerospace in Texas-it recently publicized intentions to create a third facility in America, and its first airframe-related operation in Europe.

Late last year, STAero signed a joint venture agreement with FR Aviation to establish a commercial aircraft heavy maintenance facility in Bournemouth, UK. STAero will have a 60% stake of the new company, to be called Bournemouth Aerospace Engineering Company. It is expected that about $13.5 million will be invested in the joint venture over the first three years, of which STAero will provide about $8.1 million. The JV company will be under STAero's management control.

"We are trying to do more work in Europe, (because there's not much work flow from Europe to Singapore to be done," said Tay. "But we can set up a facility in Europe and do it there, making us more competitive."

Bournemouth Aerospace Engineering Company will be located at Bournemouth International Airport. It is expected to begin operations in the first half of 2002, initially leasing an existing

8,500-square-meter hangar from FRA in order to provide maintenance and modification services on commercial narrowbody aircraft including Boeing 727 and 737, MD80 and Airbus A320. It expects to employ a workforce of about 200 in the first year of operation.

Expansion into the world's fastest-growing aviation market-China-is also on Tay's mind.

"If we can do something in China in the near future it would be very attractive," said Tay. "It is a matter of timing. Some got into China 10 years ago and are still waiting for a return.

"Frankly, five years ago we were not ready (to enter the Chinese market); we were much smaller. The U.S. facility was just built. We did not have so much international experience and we were reluctant to take that step. You can always get into a market somehow, but that's not the right way to do business."

By Barry Rosenberg