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Aug
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2015
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Posted 9 years 101 days ago ago by Admin
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Rotorcraft Pro Editor-in-Chief Lyn Burks recently visited Erickson Aviation’s Oregon operations to learn more about how the company’s recent investments are poising it for future growth.
Imagine you’re a helicopter operator and the phone rings. When you pick it up the conversation goes something like this.
Caller: “Hello, I represent the community of Pangnirtung.”
You: “P-a-n-t-y – what? I’m sorry, what was the name again?”
Caller: “Pangnirtung. Do you know where that is?
You: “I’m sorry, I do not. Should I?”
Caller: “It’s a small village located on Baffin Island in the territory of Nunavut in Northern Canada, just outside the Arctic Circle. It’s one of the most remote and sparsely settled regions in the world.”
You: “Oh, OK. Remote, ice, polar bears … got it! So what can I do for you?”
Caller: “Well our entire village relies on diesel generators for power and we recently had a fire destroy four of them, leaving many residents with no electricity at all. As you can imagine, no power in this area with temps hitting -17° is a problem. We have a line on several new generators, but they are 160 miles away in the town of Iqaluit. We believe the only way to get them to our remote community in a timely manner is to have them lifted in by helicopter. Is this something that you can do?”
You: “Sure, that’s what we do. We specialize in moving heaving things, in very hard-to-reach locations, and in extreme conditions.”
Caller: “That’s great. What would be involved in the process?”
You: “Well, first we would do some research on the area and its resources, and then some logistical planning. Then we would mobilize the nearest S-64 Aircrane, tools, and crew.”
Caller: “Where’s the nearest helicopter located?”
You: “British Columbia.”
Caller: “British Columbia? That’s like 2,200 miles away! Did I mention we’re in a crisis situation? How long would it take for your team to get here?”
You: “Well, once we pull the trigger on the project, we will mobilize the aircraft, crew, and gear, load them onto an Antonov Russian cargo plane, and fly over. How does 48 hours sound?”
Question to Rotorcraft Pro readers: How many helicopter operators in the world can have that type of response to such a giant, formidable task?
Answer: Very few. Maybe only one.
Team Commitment
Although I imagined what the above conversation might have sounded like, the details are true; Erickson completed that actual job in May 2015. This real relief event captures the Erickson spirit that first began in 1971 when the company’s founder, Jack Erickson, opened shop with the original goal of using helicopters for timber harvesting. This can-do attitude has guided the company’s growth from one leased Aircrane in 1972, in support of logging and utility operations, to owning the type certificate for the S-64 and manufacturing that model. Oh, and they also operate over 80 helicopters of varying makes and models (as well as fixed-wing fleet) from all corners of the globe.
Pioneering team spirit permeates throughout the company, akin to people wearing the colors of their college alma mater. At Erickson, that color goes by the nickname Big Orange, and the level of loyalty and commitment to the cause has been coined “bleeding Erickson orange.”
Changing Gears
For nearly 40 years, Erickson’s business load was literally picked up and carried almost entirely by the S-64 in the form of heavy-lift helicopter services and firefighting. For all intents and purposes, Erickson was really just a helicopter operator with very unique talents and capabilities. However, in 2007 the sale of Erickson to ZM Equity Fund, along with the appointment of Udo Rieder as CEO, would forever change the company’s direction and trajectory. From that moment on, Erickson would no longer just be a heavy-lift helicopter operator, but also moved toward becoming a global growth company.
Planting Investment Seeds and Diversification
Today, because of its leadership and the hard work of its people, Erickson has successfully diversified its business through both acquisitions and by further developing some internal core skills built up over decades. Traditionally, most of the company’s eggs were in the utility and firefighting basket. In past years approximately half the company’s revenue could come from firefighting, a potentially volatile revenue stream often dependent on Mother Nature.
That diversification effort may be partially insulating the company at this very moment. Although certain U.S. states (Washington, Oregon, and California) are experiencing above-average fire seasons, nationally in 2014, only 3.6 million acres burned. That’s almost half the 10-year U.S. average of nearly 7 million acres. 2015 is predicted to be a similar below-average year.
Although firefighting may represent less of the overall business for the company, its S-64s are in high demand. With 9,600 horsepower, 47,000-pound MGW, and the ability to fill a 2,650-gallon water/foam tank in less than a minute, the newest S-64F has taken firefighting performance to new levels of efficiency and cost effectiveness. Outside the U.S., Erickson has S-64s on firefighting contracts in places like Europe, Greece, Turkey, and Australia.
Two recent moves impacting diversification came through acquisition. First, in a $250 million deal, Erickson stunned the industry by purchasing legacy helicopter operator, Evergreen Helicopters. This position not only quadrupled its fleet and dramatically increased its capability, but also created instant access to new revenue streams derived from other forms of work like medevac, vertical replenishment (VERTREP), HVAC, government, and Department of Defense contracts to name a few.
Additionally, the purchase of Air Amazonia in South America brought access to Latin American oil and gas support business. This new market penetration has successfully opened doors for the company to new projects. For example, a Q2-2015 contract with Group Desarrollo Infaestructura, SA de CV (GDI) involves the building of a new rural infrastructure pipeline to bring clean-burning natural gas to businesses and citizens in Mexico. Erickson assisted in the external load transport of more than 1,000 natural gas pipeline segments for the 329-mile Topolobampo Project.
The contract was a first for Erickson in Mexico’s construction services market. “This was a high priority project for the City of Los Mochis, to help build infrastructure in austere and rugged locations. We provide an ecological solution when roadways aren’t available and the area is difficult to navigate by land. Erickson aircraft and crews are a fast and affordable solution for rural infrastructure projects,” said Erickson President and CEO Jeff Roberts.
Although diversification has expanded and more evenly distributed the types of flying Erickson can perform, the company still believes there is plenty of opportunity in heavy-lift work in the global energy sector. According to Andy Mills, vice president of Commercial Aviation, “Erickson sees market growth potential in infrastructure development in emerging economies. Several countries have experienced rapid growth in both their population and their economy, and they need increased power and line distribution to keep up with the growth. Many of these projects have very rapid timelines, and we are a great timesaver in construction with the efficiency of the Aircrane.”
The Next Frontier – Manufacturing & MRO
The axiom “Necessity is the mother of invention,” could not be truer when it comes to Erickson expanding into manufacturing. Because the company hung its hat on the S-64 four decades ago, it was faced with an interesting challenge. Obviously, there are only so many S-64 airframes on the planet. So, how does a company that has built a big part of its business on one platform continue to do so when production discontinues and OEM support may dwindle as the decades pass? The answer: Take over the type certificate from Sikorsky and become the original equipment manufacturer (OEM).
In 1992, Erickson did just that when it became the S-64 OEM and had to reinvent itself by becoming a manufacturer, complete with engineering, processes, and facilities. Fast forward a couple of decades and Erickson has developed its manufacturing capabilities to such a high level that it has grown its OEM operations into an entire division of the company with its own revenue streams and profit centers.
Today, Erickson not only manufactures its own aircraft, but also supports other S-64s operated by competitors. Its ability to provide operators around the world with maintenance, engineering, and supply chain solutions has become so advanced and robust that Erickson recently captured business from one of the largest rotorcraft manufacturers in the world—Bell Helicopter.
Jeff Roberts, Erickson’s president and CEO since April 2015, remarked, “At Erickson, we are creating new revenue opportunities in our manufacturing and MRO (maintenance, repair, overhaul) business unit by leveraging our knowledge and skills that have been cultivated over decades of maintaining and manufacturing our own aircraft. An example of new work is the recent signing of the Bell 214 Total Program Support agreement, which means Erickson assumes complete responsibility for manufacturing, parts distribution, technical assistance, and training for legacy Bell products. There is no question in my mind that our extensive manufacturing, MRO, and engineering capabilities, combined with the experience, innovative thinking, and passion of our employees, are second to none in the industry. By harnessing our abilities and offering it to other key legacy aircraft customers, I believe that we have a great opportunity to capture an even more significant piece of the aircraft MRO market.”
As far as the life of its cornerstone workhorse goes, Erickson has taken the S-64 production process and the actual aircraft to new performance levels. At their OEM facilities in southern Oregon, they can build an entire new helicopter from scratch. Kerry Jarandson, vice president of manufacturing and MRO, said, “In addition to our industry-leading legacy aircraft support capabilities, we hold the production certificate for both the S-64 E and F model aircraft, including the engines. With our extensive manufacturing capabilities and our recent investment in composite rotor blade technology, we are positioned to manufacture new zero-time aircraft, including the airframe, dynamic components, and composite blades. The development of these vertically integrated capabilities has uniquely positioned Erickson for significant growth in the manufacturing and MRO market.” The newest S-64Fs are being equipped with technology like glass cockpits, third-generation AFCS, TAWS, and NVG capability.
With nearly 90 helicopters performing missions on every continent and a growing manufacturing and MRO business, the company is a long way from where it started when Jack Erickson brought it to life 44 years ago. Heck, it’s even a long way from where it was six years ago when Udo Rieder took the helm. Planting seeds of investment and diversification are often fraught with risk and challenge and take real courage and vision. By all accounts, all of the players in the Erickson story have courage and vision. This applies to everyone: founder, employees (who face massive challenges in the very work they do) and current CEO Jeff Roberts. Big Orange is accustomed to successfully operating in uncharted territory. I believe that success will expand to new frontiers as recently planted investment seeds yield growing cash crops for decades to come.
Fun Fact – Erickson S64 aircraft names
Lucille
Christine
Delilah
Marty
Elsie
Incredible Hulk
Georgia Peach
Jerry
Olga
Mariah
Gypsy Lady
Malcom
Ichabod
Goliath
Camille
Annie
Elvis
Hurricane Bubba
Sunbird
Isabelle
