Editor's note: Our interview with Russell Ford took place well in advance of the current COVID-19 crisis. StandardAero’s current views on that impact to the industry are not reflected in this article, due to the timing of that discussion. Obviously, the world was in a different place a couple of months ago. The current aviation industry growth outlook and economic impacts have changed dramatically.
StandardAero was founded in 1911 as Standard Machine Works, a small automotive parts repair shop located in Winnipeg, Manitoba, Canada. The company's evolution from its automotive beginnings transformed it into one of the world’s largest independent gas turbine engine maintenance, repair and overhaul (MRO) shops in the world. The company employs more than 6,400 people across 41 repair shops located in 11 countries on five continents.
In the past five years, StandardAero has doubled the size of the company while growing their backlog from $6 billion to more than $35 billion over the next 10 years. Chairman and CEO of StandardAero, Russell Ford, anticipates StandardAero’s revenues to annually exceed $4 billion in 2020, with continued, strong growth well into the future. “We’ve also more than doubled the number of our facilities from 14 to 41 and nearly doubled the engine platforms we service from 25 to 41,” said Ford. “Today, we are a much more global company, with a broader footprint and more global customers. In addition, we’ve completed six acquisitions in past five years — Jet Aviation Specialists (JAS), PAS Technologies, Lockheed Martin Kelly Aviation Center Space/Equipment, Vector Aerospace, Safe Aviation Solutions and TRS Ireland to provide new helicopter capabilities (engines and airframe), expand component repairs, expand turboprop services, additional wide body engine and military capabilities for our customers.”
Cultivating a Culture
One of the contributing factors to the success of the company is the culture. StandardAero’s culture, Ford said, starts with their mission to be the best to work for, the most trusted service partner and where customer solutions come standard; their vision is to inspire the best and constantly raise the standards of aviation service.
“Our company is known for providing outstanding customer service and a strong reputation for quality. We build that culture through trusted partnerships with our employees and our customers. Personal influence is integral to our success and our employees are expected not only to ‘own’ their work, but also to continuously improve while working with a strong sense of teamwork. In addition to building a collaborative work environment and camaraderie, we treat each other with dignity, both respecting and appreciating our differences. We also believe in supportive leadership where we set a clear vision and objectives and help others be successful. Employees know what to do and where they stand. As a result, StandardAero has grown to become a successful, winning, growing, recognized market leader with long-tenured employees.”
The success of 2019 is carrying over into 2020, with Ford predicting this year will yield more growth for StandardAero as a result of incremental revenues from several new, long-term, large engine MRO programs they won last year. Revenue will also be bolstered by the completion of new facilities, tooling and training to increase revenues via the increased volume and shop capacity.
“We also have some very exciting potential new programs that we are bidding in our military, business aviation and commercial divisions in 2020,” added Ford.
Model for Growth
The future is knocking for the company too; much of StandardAero’s model for growth is based on where the company is predicting how the MRO market will shift over the next five years. Ford said they anticipate that the new generation MRO requirements will displace the previous generation engine MRO workload at OEM shops.
“Our discussions with OEMs generally indicate that they would prefer not to invest in brick and mortar to support older engine MRO workload, creating the need to outsource engines to make way for the newer variants. As a result, we anticipate the OEMs will come to trusted partners, such as StandardAero, to provide capacity to handle this growing workload,” Ford elaborated.
To prepare for the growth, StandardAero has been investing in capacity over the past two years, recently proven with their acquisition of the high thrust test cell capability at Kelly Aviation Center in San Antonio, Texas and the subsequent RB211-535E4 award from Rolls-Royce earlier this year. The latter of which designated StandardAero as the Rolls-Royce end-of-life engine maintenance service partner for these engines, which are anticipated to remain in commercial airline service until 2040. Ford also said they have capacity available for incremental engine programs to accommodate capacity requirements from GE and operators of CFM56 and CF34 engines, as well as distributing the cycle 2 (repair) work around their increasing, specialized piece part components repair division.
Other growth opportunities StandardAero is exploring include:
- The commercial space using the momentum from their growth in CFM56, recent win and industrialization of the RB211-535 and acquisition of high thrust test cells, StandardAero expects to become more prevalent in the major airline space, both narrow body and wide body class engines.
- Parlaying their increased helicopter MRO presence via the Vector acquisition bringing access to new engine (Arriel, T700/CT7 and PT6T) and airframe platforms and customers into further opportunities in this space.
- In the military space, StandardAero expects to utilize their F100 and F135 depot status and capability in the Netherlands along with afterburning test cell capability to ramp up their presence in fighter engine MRO.
- In the business aviation space, the company expects to utilize their HTF7000 exclusive heavy MRO license and capability to transition into the newer generation super-midsize class engine market, as well as pursue large cabin business jet engine MRO when opportunity arises.
Overcoming Hurdles
While growth is the objective, it is not without hurdles to overcome. Chiefly, Ford said, is the need for skilled technicians. “Finding, hiring and developing skilled technicians is one of the biggest trends we collectively face in the MRO industry. The pipeline for our future technical workforce is a concern and we are going to need additional people.”
To facilitate the acquisition of talented technicians, StandardAero's efforts range from apprenticeship programs with local colleges, to mentoring students at various trade schools, to internships in their repair shops and helping local community colleges develop programs and occupational standards to establish certification programs for A&P mechanics and other technicians. In addition, the company is bringing in people from ancillary industry sectors, like automotive and industrial manufacturing companies, and training people to cross over, learn quickly and get trained as A&Ps.
“We also actively recruit veterans and find them to be well suited for many of our maintenance and technical roles. In fact, almost 20 percent of our U.S. workforce today is either retired or active/reserve military veterans. In addition, we are expanding operations in places like San Antonio, where there is an embedded pool of military and government-trained people who are qualified and available in those locations,” Ford explained.
Another challenge the company faces is the customer demand for recycled and used materials and parts, a demand that is highly dependent on where a particular engine platform is in its product life cycle. “Aircraft retirements will lead to availability of engine assets and used serviceable material, which will help facilitate some of the customer requirements on cost and availability of parts for maintenance,” Ford noted. "Aircraft retirements will also increase the need for creative, customized maintenance solutions for certain customers, such as with airlines meeting lease return conditions and lessors/owners retaining asset value and re-marketability to the next tier of operators or disposition; creating customized maintenance solutions, a strength of StandardAero.”
The challenges, though, are not detrimental to the company’s future growth, with Ford proclaiming StandardAero is “bigger, better and bolder.”
“We will continue to add new capabilities with the goal of doubling the size of the company again, in the next five years,” he said. “In general, we are in expansion mode in all of our business units and we are hiring many new technicians at virtually all of our sites globally. We have grown in North America and Europe purposefully to establish ourselves in these mature, but growing markets. Additionally, we see numerous opportunities to grow in emerging economies like Asia Pacific or Latin America, especially as the majority of future aircraft deliveries and subsequently maintenance requirements will create opportunities for companies like StandardAero.”
