On 2005-09-17 14:34:17 -0400, "Gordon Arnaut" said:

The fact that the company that bought the PZL plant immediately stopped
production tells you a lot about the business model of the aerospace
industry. It is based on low production volume and high profit margin.
A lot of the business comes from government contracts and that's the
way the industry likes it, as the government is the best customer you
can have -- never any complaints about price.

Interesting point. Vern Raburn wound up working with a lot of
non-aviation-contractors because he finds cost-plus contracting not
only inefficient but, quote unquote, "evil."

We can see this to some extent in the Rolls Royce acquisition of Walter
engines in the Czech Republic. You can be sure we won't be sseing any
of the good Walter turbines or LOM piston engines at cheap prices ever
again. That is history.

Walter was at NBAA, promoting what they call "the other turboprop."
Still significantly less to get into a 601P than a PT-6 or R-R 250. I
got to practice my Czech on them.

Still, the engine is a major cost of the airplane and it's too bad that
the excellent Eastern European manufacturers have been swallowed up and
taken out of comission.

What you had for a brief period was stuff being sold under cost due to
the economic dislocations created by the end of the closed Warsaw Pact
market. Following your logic to its ultimate conclusion, we should hope
that the Chinese start making aero engines and don't ever give up
Communism....

this is in fact where mass production and technologies like CNC come
into play.

If you are smaller than Van's -- and every maker is -- then you can't
exploit such economies of scale. The tooling cost needs to amortized
over a production run of some kind.


And speaking of Van's, they are probably the best value going in the
kit market. You can buy the entire airframe ready to assemble for
$15,000 -- and this leaves the company a good profit margin.

Not sure about the size of Van's profit margin -- enough to survive, I
think. One reason Van's costs are low is that he uses overseas labour
to assemble the QB kits. Again, you need to be of a certain size for it
to be worth your while to do that, and as economic conditions improve
in the nations where Van's assembly work is done, he will face the
choice of raising prices or relocating production again to another
distressed nation.

If you hired someone at $20 an hour to build that airplane, that's only
$30,000 if you figure 1500 hours build time. (This is legal in Canada
and is spawning something of a mini-industry as people look for
alternatives to the high cost of airplane ownership).

It is not legal in the US for amateur-built aircraft (see dictionary,
"amateur.") The US regulations say that you can build for education or
recreation. I dunno about you, but I paid my mechanics significantly
more then $20 when I had a repair station. Also, for a real employee,
wage is only about half the cost.

this is less than the cost of new LSAs, but you are getting a heck of
a lot more airplane by any measure.

Depends on the LSA. Float Planes and Amphibians was selling a Drifter
on amphib floats with radio and mode-C for $45k. Less profit in that
than in an SUV at the same price, for both manufacturer and dealer. The
only way people get a reasonable Van's airplane flying at under about
$60k is by valuing their labour at $0.

The idea that the pricing of LSAs realistically reflects cost
conditions is pure nonsense. But leave it to the magazines to try to
pull the wool over our eyes.

If there was this great delta between costs and prices, some hero would
go sailing in there and build his market share. The fact that no one
has done so, in a fundamentally free market, indicates that prices are
either reasonable, or being set by a cartel. Given the dozens of
producers, a cartel is unlikely to say the least.

cheers

-=K=-

Rule #1: Don't hit anything big.