Robinson Helicopter is pulling out of economic turbulence
The thump-thump-thump of rotor blades above the South Bay is the sound of the world’s largest civilian helicopter maker emerging from the economic downturn.
After two years of layoffs and slumping sales, things are looking up for Robinson Helicopter Co., which for decades has manufactured low-cost helicopters for use by television news operations, banks transporting money between branches and, of course, police departments that depend on them for surveillance and rescue missions.
The Torrance company has a new chief executive, a book full of orders, an expanded factory and a new five-seat chopper that’s generating plenty of buzz in the industry.
“When the economy went in a tailspin, it hit us hard,” said CEO Kurt Robinson, the 53-year-old son of founder Frank Robinson, who retired in August. “We’re ready to bounce back.”
Central to the company’s hopes for recovery is the new chopper, dubbed the R-66. Just arriving in showrooms, it is by far the company’s most technologically advanced rotorcraft, capable of flying faster, higher and with more people and cargo than anything it has ever built.
Robinson may not have the name recognition of firms such as Bell Helicopter Textron Inc. or Sikorsky Aircraft Corp., whose bread and butter is military choppers. Still, analysts said Robinson’s new jet-powered rotorcraft — as opposed to the smaller piston-powered choppers that the firm has been known for — could give Robinson more visibility.
“The R-66 opens up all kinds of opportunities. There’s no doubt that it will enable the company to grow,” said Matt Zuccaro, president of Helicopter Assn. International, an Alexandria, Va., trade group.
After years of growth and record sales, Robinson struggled during the recession as customers cut back orders, cash-poor owners flooded the market with used choppers, and the financing for new helicopters all but dried up.
In 2010, the company churned out just 162 choppers — an 82% plunge from the 893 it sold at its peak just two years earlier.
Robinson’s payroll went from about 1,400 workers in 2008 to about 900 currently. Robinson is privately held, with little public information about its finances. Dun & Bradstreet Inc. estimated its 2010 sales at $75 million. Company officials said sales previously hovered around $100 million.
The R-66 is the company’s first new model since Frank Robinson’s retirement. He built the business from scratch into the nation’s largest civilian helicopter company. But after a grueling recession all but grounded the firm, it’s now up to his son Kurt to make it fly high once again.
The company is a vestige of a once-vibrant era in commercial aircraft that helped to define Southern California in the post-World War II years as an industrial powerhouse. Assembly lines across the Southland hummed with the production of Boeing Co.’s 717, Douglas Aircraft Co.’s DC-8, and McDonnell Douglas Corp.’s MD-80.
Today, at a time when unemployment is hovering around 12.2% in California and new manufacturing jobs are few, Robinson holds the prospect of stability and growth.
Robinson’s expanded factory, where its two-seat R-22 and four-seat R-44 are built, now hugs almost half a mile of runway at the east end of Torrance Municipal Airport.
For now, the new space where the R-66 will be made is empty. The light-gray floor has the radiance of an untouched ice rink. The company has finished about two dozen R-66s. And they have orders for 106 more. Soon, as production of the R-66 ramps up, hundreds of cutting machines, soldering tools and air wrenches will clutter the area — just as they have in the adjacent factory for more than 30 years.
Most major aerospace companies subcontract the fabrication of parts, but not Robinson. It makes nearly all its parts in-house at its plant. Swarms of workers operate high-tech machines that grind, bend and slice metal into helicopter parts.
Helicopter noise in Torrance remains a challenge for the company. But Kurt Robinson said the company always tries to be a good neighbor. “We live and work in the community, so we do our part to minimize” noise, he said.
Robinson is the rare aerospace company that does no work for the military. It produces strictly civilian aircraft.
From the beginning, the company thrived by selling helicopters for a fraction of the prices of its competitors. The R-22 sells for $250,000 and the R-44 goes for about $350,000 to $425,000. In a big leap, the company is pricing the R-66 at $800,000. In contrast, the R-66’s closest rival, the Bell JetRanger, can cost about $1.4 million.
“We can operate them at half the cost of other agencies,” said Bob Muse, a helicopter pilot with the El Monte Police Department, the first police force to purchase an R-44 in 1998. “They’re not as flashy-looking as other helicopters. I know that, everybody does. But it gets the job done.”
Robinson’s prices may be appealing, but critics wonder whether buyers are sacrificing quality. Robinson maintains that it helicopters are safe and reliable.
In the mid-1990s, the Federal Aviation Administration and National Transportation Safety Board put their spotlights on Robinson’s safety record after several high-profile accidents.
Safety board officials investigated Robinson in 1994, citing 21 crashes from 1981 to 1994 in which 32 people died.
The board later concluded that pilot error and inexperience were to blame. “The investigation did not identify any precipitating progressive mechanical failures or material defects.”
The scrutiny nearly brought the company down, Frank Robinson recalled.
Around the same time, an Orange County jury found the company partially liable for the crash in which a prominent surgeon was killed. Robinson was ordered to pay $4.5 million in damages. Frank Robinson said the case was later settled out of court for much less than that. He declined to say how much.
“Those were some very dark years,” he said. “We handled it and moved on.”
Frank Robinson isn’t easily discouraged. It was in 1973, at age 43, that Robinson started the firm with little more than a dream to build a low-cost helicopter that he could mass-market around the world. It was a gamble. Helicopter companies typically concentrate on developing large, turbine-driven choppers for the military.
“Rather than go for these big government contracts, I wanted to build a small, reliable helicopter,” he said. “Larger companies weren’t willing to do that. So I started the company.”
Robinson Helicopter didn’t turn a profit until 1987, but just four years later, the company was the largest-volume helicopter producer in the world. Its growth was largely fueled by foreign sales, Kurt Robinson said.
“We have a broad swath of customers,” he said, rattling off a list that included Australian cattle herders, Panamanian tuna fishermen and Chinese business executives. More than 60% of Robinson’s sales come from outside the U.S.
The company’s robust foreign sales prompted a visit from President Bush in 2008 on a three-day nationwide tour to push his free-trade agenda. “You can’t tell the people at Robinson Helicopter that trade isn’t good,” Bush said.
A smile spreads across Kurt Robinson’s face when he recalls the event. “I don’t care if you’re a Republican or a Democrat, it’s a tremendous honor to shake the president’s hand,” he said. “The fact the president of the United States came to our house is a complete blow-away.”
Today, Kurt Robinson knows he faces a tough market as the world emerges from recession. But he believes he’s got the right product to lift his company.
The R-66 runs on jet fuel, which is more readily available around the world than the low-lead aviation gas that previous models used. It has a separate baggage compartment near the rear that’s big enough for a bag of golf clubs or a few suitcases. The R-44 has a smaller space for baggage under each seat.
But the main deviation from Robinson’s previous choppers is the jet engine.
“As soon I took off, I felt how much more power the helicopter had,” said Steve Roe, a flight instructor with Helistream, a Costa Mesa helicopter dealer and pilot training facility. “It felt like I had two engines under me. It was quite a sensation.”
With that added power, Robinson has loftier expectations: government contracts. That’s right. Robinson Helicopter might go military.
The U.S. Army uses Bell JetRangers to train pilots because it is jet-powered. But it costs nearly twice as much as the R-66.
Peter Arment, an analyst with Gleacher & Co., said that Robinson’s low-cost sales pitch might resonate with the Pentagon at a time when it is reining in spending. It could also benefit Robinson greatly.
“Exposure to the military brings stability to aerospace companies,” he said. “You don’t fall victim to the dramatic swings on the commercial side.”
Even if the company doesn’t get a military contract immediately, Kurt Robinson said he is confident that the company has a bright future.
“It may sound like the company is going in a completely new direction,” he said. “In reality, we’re just building on what’s been there for all these years. We know what we’re good at.”
