Stormclouds & silver linings
Demand for MRO outsourcing is expected to remain strong and continue growing for the foreseeable future as more aircraft continue to enter service. Troy Jonas, vice president – repair and engineering, for AAR, the world’s third-largest MRO, said he sees “a great deal of demand for interior modifications” and “fairly robust growth” in MRO work, particularly for widebodies, over the next several years.
However, some maintenance experts have expressed concern about the industry’s ability to handle what is expected to be a US$90 billion market by 2025. For instance, Templeton, with AMES, said some MROs are worried about attracting the proper talent for this line of work.
“It’s amazing how small this business is,” he said. “Skilled labor such as machinists and welders – people are not standing in line to learn these skills. Everyone is experiencing the challenge of finding the right number of people at the right time.” At AMES, he said, the company started with less than 300 employees and has since ramped up manpower to more than 800 over the last six years or so.
Rather than just wring its hands in worry, AMES is trying to do something about the potential labor shortage. “We’re looking at the local school system for opportunities to develop people here in-house – not everyone’s doing that,” he said. “We’re getting very close to developing a structures program in the vocational school system, which potentially will pay workers to go to school. We’re building a core of folks and providing a lot of reasons to stay.”
But it’s not just machinists and welders that are in short supply. Conversions take a considerable amount of time – around 25,000 hours to complete, McCarthy said, and much of this involves an “epic amount” of technically challenging avionics work. “A lot more is being done on the conversion level, including installing a significant quantity of flight deck modifications. We are on the eve of needing a lot stronger electronic and technical capabilities for new avionics.”
Kamenz, of Commercial Jet, also noted that more MRO work is being concentrated among fewer, richer companies. According to the latest available figures compiled by Aviation Week, half of the 10 largest MROs, in terms of maintenance hours and 2014 third-party revenue, have changed from the previous year. While the top five have remained unchanged – ST Aero, HAECO, AAR, AFI-KLM and Lufthansa Technic – the rest have all moved up, mostly due to consolidation and mergers within the industry. And HAECO’s total airframe man-hours increased by 2 million over the previous year, due to its purchase last year of Timco Aviation Services.
While some may be concerned about manpower, Empire Aerospace is looking forward to this year and will be expanding into its first regional jets – EMB 145s that will be added “sometime this spring,” Komberec said. “Turboprops have been very good for us, but it’s a limited market – no one’s sold a new turboprop in North America of any substance for several years,” he added. His company is also moving into the passenger-to- freighter conversion business for ATR aircraft, and he expects to perform the first contracted conversion in the first half of this year.
“We can make money on [MRO work],” he said. “We’re not going to get rich on it, but it’s an additional product that we can offer. I think 2016 can be quite a good year for us.”