High Cost of Sportplanes

Thanks Gordon, it needed to be said. I have had the same feelings for some
time. I too was a little put off by the tone of the editorial in this months
KITplanes. the editor completely ignores some pretty healthy and real costs
when he trashes an older aircraft in favour of the new plastic fantastics.
Depreciation comes screaming to mind. Some of the characteristics of aging
plastic give me pause also.

Since I would not buy a $100,000 depreciating asset even if I could the new
aircraft hold little interest for me.

I think the future for many of us must center on kits and plans, many
magazines have sprung up touting back to grassroots philosophies, only to
change course as they chase advertising revenue.

The makers and marketers should welcome honest discourse on the shortcomings
of their product, far better to have the questions asked in an enthusiast
forum than a courtroom full of liability lawyers.

On Sat, 17 Sep 2005 11:43:30 GMT, "Dan"
wrote:


Thanks Gordon, it needed to be said. I have had the same feelings for some
time. I too was a little put off by the tone of the editorial in this months
KITplanes. the editor completely ignores some pretty healthy and real costs
when he trashes an older aircraft in favour of the new plastic fantastics.
Depreciation comes screaming to mind. Some of the characteristics of aging
plastic give me pause also.

Since I would not buy a $100,000 depreciating asset even if I could the new
aircraft hold little interest for me.



I agree. The thing I am hoping for is economies of scale kick in.
We've increased the number of potential buyers from Europe to USA +
Europe. I don't think relative demand per unit has increased because
of the prices. I am wondering if someone might be able to turn the
corner and start some form of automation or parts sharing. The trick
here would be some form of modularization or partial automation. It
could drop costs dramatically.

I know a lot of people will dismiss this because they think the
numbers are not there, but we aren't talking a Detroit level system
off the bat. The playing field just changed drastically For the
first time, we have a quick method of certification for a standardized
plane. # seats, stall and max speed are all fixed. Powerplant size
can only vary so much otherwise you're shooting youself in the foot.

These can all be achieved with a known airframe. Yes, some people
would want to design their plane to look distinctive or reduce fuel
consumption, but there would be a serious economic incentive to
standardize. Several companies could work with a cookie cutter
airframe, say a Thorp, and focus on ergonimics. Maybe tweak it a bit
for their own purposes.

The 800 lb gorilla in all this might be china. They have the
capability to squash all LSA manuafacturing in one fail swoop with
their cheap labor and manufacturing capabilities. If they could get
the price low enough, they could swallow the trainer market whole.
This market is ripe for the taking. You price a good LSA about
$40-$45K and you'd sell one to nearly every flight school on the
planet.

I am expecting the LSA to depreciate over the next few years, so I
wont touch them. Sportpilot will never materialize until the price
point goes under well under 50K.



Jim

http://www.unconventional-wisdom.org

Jimbob wrote:
On Sat, 17 Sep 2005 11:43:30 GMT, "Dan"
wrote:


[snip]


I agree. The thing I am hoping for is economies of scale kick in.
We've increased the number of potential buyers from Europe to USA +
Europe. I don't think relative demand per unit has increased because
of the prices. I am wondering if someone might be able to turn the
corner and start some form of automation or parts sharing. The trick
here would be some form of modularization or partial automation. It
could drop costs dramatically.

[snip]

Jim,

Interesting economic proposal there. I wonder if its time for the
experimental community to consider something along the lines of a few,
open, i.e. GPLd designs, which manufacturers can build standardized
parts and tooling for.

I can imagine a few such designs, if taken to their extremes, could be
either built out as certified or experimental. In this way, the hurdles
for developing PMAd parts for these few designs could be shared over the
community, and not borne by a single manufacturer.

Evan

On Sat, 17 Sep 2005 17:48:57 GMT, Evan Carew
wrote:

On Sat, 17 Sep 2005 11:43:30 GMT, "Dan"

Interesting economic proposal there. I wonder if its time for the
experimental community to consider something along the lines of a few,
open, i.e. GPLd designs, which manufacturers can build standardized
parts and tooling for.

It could only work with quickbuild kits. I don't think the non-LSA
experimental sector would do it. There is no cap on performance.
Ker-rist, look at the glasair III. Too much leway. If your going to
build, you go for some type of performance or look. Why build cookie
cutter? It might happen, but I doubt it.

HOWEVER, the ELSA area is ripe for this type of standardization.
Capped performance specs. And no 51% rule.

It might be interesting to see if the Experimental Avionics deisgners
might standardize on a commumicaitons bus for flight displays,
transponders, XM and such. With ADS-B relased into the wild, I see
this as a solid possiblity.



Jim

http://www.unconventional-wisdom.org

On 2005-09-17 13:48:57 -0400, Evan Carew said:

Interesting economic proposal there. I wonder if its time for the
experimental community to consider something along the lines of a few,
open, i.e. GPLd designs, which manufacturers can build standardized
parts and tooling for.

Already been done.

The Gyrobee gyroplane, developed as a documentation package by Dr Ralph
McTaggart. Parts available from several vendors, notably StarBee Gyros
of Worcester, Massachusetts.

http://taggart.glg.msu.edu/gyro/gbee.htm

There is another UL gyro project, Tim Blackwell's Jyro Deer, that Tim
has promised to open-source when he has it sorted. I'm not aware of any
f/w but it's a really, really good idea, Evan, isn't it?

Fundamental problems with LSA pricing are perception problems, IMHO:

1. existing kit buyers (& wannabees) are mostly cheap charlies, and or
walter mittys.

2. ergo, they will never buy at any price under which a product can be
made. As Bob Kuykendall pointed out, these things are built by hand
(volumes too small for automation, until you're Cirrus size).

3. Economies from US + Euro standardization won't happen. The US market
is already resisting the european JAR VLA designs available under SLSA
because they are cramped for large, fat Americans. (as one vendor told
me, "these planes are built for bony French asses," eh.) . US allows
600 KG, Euros 450 -- that's a difference which will allow (require)
differentiation. Indeed the first designs to US (not Euro) specs are
happening already.

4. You can build a plane for relatively low money now (Fly Baby, Zenith
from plans) and most choose not to. A lot of people still seem to be
looking for the four-seat 200-knot STOL plane they can build for $30k
in 200 hours and power with an old Corvair engine. It never existed and
it's never going to.

5. If LSA succeeds it will be because people who are not in aviation
now come in. Compare what you can do in a high end SLSA and what you
can do in a sailboat. Compare prices new. These planes are not
competing with a stack of wood and a set of Pietenpol plans, they are
competing with boats, snowmobiles and ATVs, and other outdoor
recreations.

6. Some of the statements by the original poster, about Cirrus
specifically, are not true. The unrecoverability from spin is one of
them (Cirrus SR-20 was spun at least once in testing and recovered with
normal inputs, opposite rudder, neutral ailerons and forward stick).
It's true a full spin series was not done, and it's also true a full
spin series is not required by FAR 23. Most of us fly planes that are
placarded against spins -- I daresay all of us have flown a 172, which
is placarded against spins in some conditions (i.e. flaps down -- the
rudder is masked in that case and recovery is compromised). The P-51
Mustang is placarded against spins with the fuselage tank full (many
privately held Mustangs have this tank removed). Remedial action in the
PIF (1940s version of a dash one) is to bail out!

In re Cirrus, salesmen for a competing product were spreading the
"Cirrus has a chute because it is unsafe" canard in 2001-03 and have
been directed to stop by the manufacturer of their product, cause it
ain't true. The chute was part of the very first designs for what
ultimately became the SR-20. It was from the outset a key component of
the Klapmeiers' safety vision for their aircraft.

The VK-30 kit and VK-50 may have had nonstandard spin characteristics
-- I don't know -- but they were withdrawn from the market, and
represent an earlier, and much less mature, vision than the SR series.

7. The entrepreneurs that build kit aircraft or make plans available
are taking immense risks for measly returns. The average kit impresario
would have done better putting his money in Enron stock. I know one guy
who finished his prototype after years of labor, built his production
tooling, then lost the prototype in a ground fire -- meanwhile, people
who looked at his very capable kit aircraft kept telling him he was
charging too much for kits -- the price they wanted to pay was less
than his cost of materials.

I know another fellow who got more magazine covers than you could shake
a stick at with his beautiful, powerful, roomy kit. You can't eat
magazine covers. Or Gold Lindys for that matter. He sold a number of
kits that you can count on your fingers, and decided to build UAVs for
a customer that appreciated his efforts, was straight with him, and
paid well -- the government, of all things -- rather than customers who
disparaged his efforts, lied, and stiffed him. He would love to offer
kits again some day but he has a family that deserves better of him.

The most successful kit companies like Van's and RANS to name two, are
barely getting by, by the standards of modern industry. Exxon made 9.9
percent last quarter. Bank of America, almost 30%. What did Van's make?
Payroll, I would guess. The only people that ever made 30% in this
industry did it by selling stuff they didn't have to sell (we could all
name the names).

8. For those that offer these products in this fickle market, the only
possible explanation is that they have emotional reasons for doing so.
For that, I am grateful. Think about what Richard van Grunsven has done
for our sport, and think about what he could have done for himself if
he had applied that level of effort to working for Bank of America
stacking up someone's gold teeth in a vault, or for Exxon or somebody.

cheers

-=K=-

Rule #1: Don't hit anything big.

Jimbob wrote:
I agree. The thing I am hoping for is economies of scale kick in.
We've increased the number of potential buyers from Europe to USA +
Europe. I don't think relative demand per unit has increased because

snip

plane. # seats, stall and max speed are all fixed. Powerplant size
can only vary so much otherwise you're shooting youself in the foot.

I think the economy of scale kicked in a few years ago for
powerplants. The Rotax 912 nearly dominates this segment. Here is
an engine whose weight and power are ideal for a 2 seat LSA. It is
also modern, light weight, efficient, and about 3/4 the cost of an
O-200. The next closest competitors seem to be a mix of O-200,
O-235, Continental C-xx, Subaru (if you count non cert).

A lot of people think Rotax 2 strokes "saved" the ultralight
movement, and the 912 series is the next logical step in that line of
engines.

Hopefully something similar could evolve with airframes, but other
than a few parts like wheels, hardware, paint, instruments,
avionics... which are already mass produced, I doubt it. Airframes
and engines are like apples and oranges.

Jim,

I don't think the Rotax is much of a bargain at all. Mattituck will sell you
a brand new uncertified O200 for about $15000, which is about what the Rotax
costs.

There used to be a very good engine bargain in the Polish PZL Franklin, but
they are no longer being made, thanks to the company's acquisition by a
European aerospace concern. Too bad -- these were fully FAA-certified
engines that you could buy brand new for about $8000.

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.

So we couldn't well have a cheap, certified airplane engine spoiling the fun
now could we? So close the plant. 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.

It tells you a lot that these companies were bought simply to extinghuish
their cheap manufacturing capability. So much for supply and demand and all
of the meaningless crap that's always brought up as an excuse for corporate
greed.

However, when it comes to light plane manufacturing, it is really more of a
cottage industry than a corporate thing. The companies building the LSAs are
small concerns with very little connection to the commercial aerospace
industry -- with the possible exception of Tecnam, which builds components
for regional airliners and such.

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. Perhaps other options will emerge -- like a rotary or
auto-based engines. These should be doable under the LSA rules.

As far as the cost of materials goes, sheet aluminum is probably the best.
The total cost of metal in a Van's kit is probably no more than a couple of
thousand bucks. Of course that metal needs to be cut and shaped and bent
into shape, and this is in fact where mass production and technologies like
CNC come into play.

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. 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).

If you add $20,000 for the cost of an engine and firewall-forward
installation, you will have invested about $65,000 -- this is less than the
cost of new LSAs, but you are getting a heck of a lot more airplane by any
measure.

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.

Regards,

Gordon.




"Jim Carriere" wrote in message
.. .
Jimbob wrote:
I agree. The thing I am hoping for is economies of scale kick in.
We've increased the number of potential buyers from Europe to USA +
Europe. I don't think relative demand per unit has increased because

snip

plane. # seats, stall and max speed are all fixed. Powerplant size
can only vary so much otherwise you're shooting youself in the foot.

I think the economy of scale kicked in a few years ago for powerplants.
The Rotax 912 nearly dominates this segment. Here is an engine whose
weight and power are ideal for a 2 seat LSA. It is also modern, light
weight, efficient, and about 3/4 the cost of an O-200. The next closest
competitors seem to be a mix of O-200, O-235, Continental C-xx, Subaru (if
you count non cert).

A lot of people think Rotax 2 strokes "saved" the ultralight movement, and
the 912 series is the next logical step in that line of engines.

Hopefully something similar could evolve with airframes, but other than a
few parts like wheels, hardware, paint, instruments, avionics... which are
already mass produced, I doubt it. Airframes and engines are like apples
and oranges.

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.

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Kevin O'Brien,

Interesting posts. I wonder if you would agree with me that the
kit/small GA builders have wrung most of the fat out of the building
process and that any further gains are in incremental productivity /
materials handling procedures? If so, I wonder what you think could be
realized in savings over the current processes?

Evan
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On 2005-11-14 12:45:14 -0500, Evan Carew said:

Interesting posts. I wonder if you would agree with me that the
kit/small GA builders have wrung most of the fat out of the building
process

I'm not sure that's the case, because we're in the midst of several
real industrial revolutions -- materials, automation, organizational.
These add up to the possibility that we will see, someday soon,
airplanes assembled on a line-production rather than a bespoke basis.

If you've ever tried to fit a factory airframe part (that cost an arm
and a leg) to a Beech, you know what I mean.

and that any further gains are in incremental productivity / materials
handling procedures? If so, I wonder what you think could be realized
in savings over the current processes?

I know that everyone who's seen the Eclipse plant (including Dale
Klapmeier) has been agog.

The problem in the kit field is manifold:

1. Barriers to entry are almost nil. You can rivet up some tubes or cut
some foam, blow a couple grand on a booth at Oshkosh and you are a kit
manufactuer. And God help your customers. In fact, you can skip the
tubes or foam and just show up at OSH with a computer rendering or a
shiny model.

Even if you have a degree from a top AeroE program, certified aircraft
makers are not going to be interested in your design ideas. If you
start off in the kit market, no matter how flaky your idea, somebody
will try to buy it from you, if you can support yourself long enough.

2. For many, the kit airplane dream is built on a myth of vastly
lowered cost. Only if you ignore used aircraft, and value your labour
at a factor of zero.

3. Some companies try to drive the labor cost down towards zero by
doing work offshore. Van's does this, and Bearhawk frames are welded-up
in Mexico (which combines Third World wages with easy transportation to
US and Canadian first-world destinations). Do that, and you wind up
hoping that Mexico stays corrupt so that desperate Mexicans will work
for pennies on the dollar... there is no material reason prosperity
should stop hard at the Rio Grande, but it does; it's Mexican
government and elite policies that cause that. That's an unstable
situation that may last 50 or 100 years but won't last forever.

But the irreducible problem with lowering labor costs on the kit side
is that by law, you only get half of the benefit, because the ultimate
registrant must (under the law, must) do 51% of the work.

4. Many people in the kit field want to build, but my impression is
that more want to fly. Hence the popularity of "builder-assist"
programs, which are now getting a hairy eyeball from the FAA after
about a decade of abuses. One vendor rubbed the FAA's nose in his
disdain for the law, which is never really smart, and now a bunch of
people who were minding their own business and making for safe aircraft
and happy customers are at risk.

5. Many of the designers out there have a design bug or three that they
have to get out of the system, so they don't mind working for nothing
but job satisfaction. You can even build a small team of like-minded
volunteers. But you reach the point where this structure does not
scale... you run out of True Believers sooner rather than later.

To return to your question -- I do not think productivity in this
industry is anywhere near where it could be, but the economics haven't
been compelling enough to make anyone chase higher productivity, with
the couple of exceptions noted.

Sometimes people have mistaken getting wrapped around the axle of CAD,
for increasing productivity. Two projects that were going to
revolutionize the sport via CAD were the Prescott Pusher, and the
DreamWings Valkyrie. Worth a search through the back threads of this
group. I presume the CAD files of those two ghastly projects are still
sitting in somebody's closet... for the sake of pilots yet unborn I
pray that the guy's mother throws them out next time she cleans.

cheers

-=K=-

Rule #1: Don't hit anything big.