Flying High With Modest Venture

Hovering 1,000 feet above Long Beach, Frank Robinson banks his R-44 helicopter and brings into sight an eerie reminder of California’s once-dominant aerospace industry, a sprawling McDonnell Douglas factory that now sits idle and empty.

But a short time later, as the 70-year-old Robinson begins his approach to Torrance Municipal Airport, the view changes dramatically. Near the runway, two helicopters resembling large dragonflies are preparing to take off. Four others awaiting delivery to customers sit on the tarmac.

Inside the adjacent factory, dozens of helicopter skeletons surrounded by swarms of workers make their way down a production line to a hangar where 20 finished helicopters wait to be moved out onto the tarmac for delivery.

Albeit in a small way, Robinson has revived the aerospace industry in Southern California, turning an idea crafted in his Palos Verdes living room into the world’s largest helicopter maker by inventing a market for small, inexpensive choppers.

The little-known Robinson Helicopter Co. produces 80% of all civilian helicopters sold in the U.S., more than helicopter behemoths Bell, Sikorsky and Boeing combined, according to the Aerospace Industries Assn. In the first half of this year, 183 of the 229 civilian helicopters sold in this country were made by Robinson.

Defying industry convention by building almost all of the parts in-house, Robinson has sold more than 4,000 helicopters since the first R-22 two-seater rolled out of a small tin hangar at the Torrance airfield in 1979. The helicopters are now built in a state-of-the-art, 260,000-square-foot facility where lighting is provided by dozens of skylights.

“I have to hand it to him. I don’t think anybody thought he could do it,” said Matt Spitzer, owner of a large helicopter leasing company in Hayward, Calif. “Now he’s produced more helicopters than anyone else in the world right there in Torrance.”

Robinson specializes in helicopters that sell for half to a third of the prices of the competitions’, and the company has been unable to keep up with the demand. With a three-month backlog of orders, Robinson is talking to Torrance city officials about leasing adjacent property to build a second factory.

Robinson says he expects the company to post $100 million in sales this year, up 18% from a year ago, continuing a growth rate of about 10% to 20% for the last five years.

Despite the growth--it has 800 employees, up 160 from a year ago--the company is still a family affair and runs like a mom-and-pop shop. The company’s comptroller delivers the day’s financial report on a small Post-it Note with just three figures scribbled on it: book balance, bank balance and payroll.

“We don’t fool around with financial reports and cost studies,” Robinson said, sitting in a spartan office that looks as though it is barely used. After reading the figures, he crumples the paper and throws it away before heading back out to the factory floor.

The company has been dubbed the Swift Family Robinson, in reference to the fictional Swiss family that was stranded on an island. Robinson’s wife, Barbara, is the marketing director and three of their six children work for the company, including their eldest son, Kurt, vice president for customer service.

Jon B. Kutler, president of Quarterdeck Investment Partners Inc., an investment bank specializing in aerospace companies, said the company is a “throwback to the gutsy entrepreneurial days.”

“All these companies we consider monoliths now were started by entrepreneurs like Robinson,” said Kutler. “But that was a long time ago.”

Today, he says, there is little room for entrepreneurs in an industry dominated by a handful of players.

Indeed, Robinson spent 16 years trying to convince his employers, several of whom were helicopter makers, that a market existed for an inexpensive, personal chopper. Rebuked and frustrated, Robinson, at 43 and then the father of four, quit a comfortable job as an engineer and mortgaged “everything I had” to build his dream.

He founded the company in 1973 and developed his first prototype in his garage two years later. But it would take four more years before the Federal Aviation Administration would certify the two-seater.

“That whole period was very difficult for me,” Robinson said. “I had no money. I had to beg and borrow.”

Unable to build a second helicopter, Robinson refurbished the prototype and sold it to a flight school. Eventually, the R-22 would become the world’s most popular trainer.

“I misjudged the market,” Robinson said. “I didn’t even think about flight schools when I developed it.”

Eventually, Robinson developed the R-44, a four-seater that is expected to eclipse the R-22 in sales. Although the initial market for the R-22 was for flight schools, cattle herders, doctors and rich businessmen, the R-44 is expected to have a broader appeal. The R-22 sells for about $150,000; the R-44 lists for $294,000. Other helicopters, such as the Bell JetRanger that is commonly used by police and corporations, are priced in the $800,000 range.

Hoping to attract more television stations and police departments, Robinson equips aircraft with on-board cameras and infrared sensors.

So far the company has been relatively successful expanding its reach in the industry. Robinson’s market share has steadily increased since 1995 from about 60% of all U.S. sales to 77% in 1999, and is expected to reach 80% this year.

“I call it the Honda of helicopters,” said Bob Muse, a helicopter pilot with the El Monte Police Department, the first police force to purchase an R-44. “Other agencies are flying Porsches and Ferraris, and a small department like ours would not be able to justify them.”

These are heady days for the company, but it was on the verge of collapse in the mid-1990s when it was rocked by a recession and high-profile accidents that brought the scrutiny of the Federal Aviation Administration and the National Transportation Safety Board.

In 1994, completion of the new manufacturing plant in the midst of lagging sales led the company to lay off 60 temporary and full-time employees.

Adding to Robinson’s financial woes, an Orange County jury found the company partially liable for the crash of an R-44 in which a prominent surgeon was killed. The judge ordered Robinson to pay $4.5 million in damages. It was eventually settled for “considerably less,” Barbara Robinson said.

Then in 1995, the NTSB launched a special investigation of the R-22 after a rash of accidents. The agency eventually blamed pilot error or inexperience for the crashes.

“The investigation did not identify any precipitating progressive mechanical failures or material defects,” the agency concluded in 1996, recommending that pilots of the R-22 and its flight instructors be better trained and restrict flights of the R-22 in certain adverse weather conditions.

With the hard times behind it, Robinson is trying to keep the company’s focus as the leading maker of low-cost, reliable helicopters even as the industry moves toward upscale, higher-margin products.

With the exception of the engine, avionics and radios, Robinson builds most of its components in-house to ensure quality and to have better control of production time.

Robinson himself remains an industry maverick. He has little respect for the aerospace industry, which he says is still too fat and too complacent despite years of cutbacks: “We don’t have anyone from the aerospace industry because they’re overpaid and under-worked.”

Indeed, most of the employees who assemble Robinson helicopter’s are trained in-house because they lack factory experience, let alone in aircraft manufacturing.

“We have people off the sidewalks, literally,” Robinson said.

With success has come some annoyances for Robinson, who says a day doesn’t go by without some investment bank or a large company calling on him to give up the company and retire rich.

There’s not a chance, he said. “I can’t think of any better hobby than what I’m doing right now.”