Greetings to everyone.
Please allow me to introduce myself. I’m Steve Palm the General Manager of Hiller Aircraft Corporation. I just found out about this board and after spending more than a few hours I’ve read every post and can say it’s pretty gratifying to read the great things many of you have to say about Hiller helicopters.
At the same time, I also read more than a few concerns which just so you know, we probably share with you. Most notable are questions about parts availability and affordability. So I thought instead of ignoring the rumor mill as we usually do, I’d let you know the factory’s perspective on where we’ve been and hopefully where we’re going.
Let me start out by saying the last eleven years for me at Hiller have been quite a challenge. Imagine that, eleven years at Hiller. I can’t tell you how many times I’ve heard “Hiller’s going out of business” over that time but here we are, stronger today then we have ever been. So for those of you who are fond of pronouncing Hiller’s demise, you may want to ask yourself just how long have you been saying that?
Yes, we’re still here. Those of you that know the history of Hiller, and I don’t mean just the last few years but the last 30, know it has been a rough ride. In that context I should probably start by mentioning that long before the current company started the new Hiller in 1994, Hiller Aviation went bankrupt with this same product line in the 1970’s. The reasons for that then, are some of the same reasons that negatively affect our business today. It all begins with a steady stream of cheap surplus parts that have made operating Hiller as a business very difficult for everyone who has tried it.
Many of you operate Hiller’s as a part of your business and we all know, you can’t operate a business for long unless you make a profit. And it’s hard to compete when surplus parts are available for pennies on the dollar and sometimes even below what it would cost us at the factory to make the parts. When that happens, something has to give and its usually the factory because after all, who can blame someone for buying the same part off the surplus market for less than what the factory charges?
Believe it or not, we at the factory understand this. That doesn’t mean we like the situation just that we understand the business decision being made. Although it would be nice if sometimes the people who complain about factory parts availability and costs looked at it from our side once in a while too and realized we are running a business and that there is nothing personal in our pricing or availability. Seriously, we didn’t intend not to have that part you needed or price it beyond what your accountant (or wife, whichever is appropriate) will let you spend.
If you think about it, Hiller Aviation failed, Rogerson-Hiller failed and now the current company, by some accounts, has or is failing too. Even though I would challenge that last bit about the current company. If we are to succeed though, and I mean the collective we of the factory and the owners, we need to think of it in these terms. We need to look at the underlying problem here rather than just think it’s a lack of desire or commitment on the part of Hiller. If you look at it in cause and effect terms, the cheap and readily available surplus as well as other factors has resulted in two major issues for us all. First, it weakened the factory because you can’t run a factory without sales and profits and second, sticker shock on those parts you eventually buy from us.
Sticker shock comes into play when the surplus runs out. That’s happening again now. Think of it from the factory’s perspective. I get calls all the time for parts, parts we have not made in decades. And the customer only needs one. A good example is one customer recently needed the casting that mounts the left side of the canopy to the floor of the cabin. As the factory, we had to have the casting tooling redone for thousands of dollars, a minimum run of casting made and then have the castings machined. And how many of those do you think we can sell in the next 5 years? So as a business, can we make that part without charging what it costs us? Of course not. Is the customer going to be happy paying thousands of dollars for a part like that?. Of course not. Is the customer going to be willing to buy all 50 we have to have made so he can get his unit cost down? No, he only needs one and he knows he won’t be able to sell the other 49 either.
So what is the solution? The business decision is clear for the factory and equally as clear for the customer. The emotional decision and reaction from the guy that needs the part, while understandable, isn’t always keeping all this in mind. All he knows is he needs one small casting and there is no way that part should cost more than $150.00. And you know, as much as I’d love to be able to sell it to him for that $150.00 I can’t. Because I have lights to burn, water to pay for, trash to pick up, salaries to pay and all those other expenses on top of just covering the actual manufacturing cost. And when sales are down overall, it is impossible to make an investment in these types of parts in these situations no matter how much we would like to.
That has been the situation in the past and pretty much is where we stand today. Surplus is cheap and relatively easily available and so people buy surplus and Hiller sales are… well when was the last time you bought something from us?
How are we going to fix it, assuming of course all those good things people have to say about our machine translate into our wanting to do that? Well first, ask yourself, are you a customer of Hiller or are you a Hiller owner or operator? Think about it, there is a big difference. When was the last time you bought something from us or do you even have what I consider the bare minimum contact with us that is reasonable to expect from all owner operators – a subscription to our publications? I know, many of you will say I’m not paying that kind of money for a subscription but is $250 a year really all that much to keep in touch with the factory?
Now think of it in these terms. If you’re not a customer just what can you, or equally as appropriate, what should you expect from the factory? I can’t tell you how many times I’ve gotten phone calls from owner operators, people who are not customers and who in my ten years as General Manager have not bought a single thing from us. They call from out of the blue expecting us to do things like write them an overhaul extension letter just because they are in the middle of a job and can’t stop. Or another good one is the guys who have never bought a single part from us but call because their overhaul manual is missing page X. An overhaul manual they didn’t buy from us because as you know, some people on the internet violate our copyright and offer free copies just for the asking. But back to the guy looking for page X. They don’t have a subscription, they don’t have the current manual, but they expect us to fax them a copy of the missing page! We all have to remember that this is a two way street. Yes Hiller needs to support our customers but no, we do not have to support non-customers. Which are you?
Hopefully you’re a customer although I have to say from Hiller’s sales history and some of the messages on this board that most of you would not fit into that category. Then lets ask ourselves why is that and how do we fix it because yes, we want you as a customer. First though, sorry to say, that doesn’t apply to everyone because some of you own aircraft that come from Pulse, United Helicopters, Dove Transport and the other names associated with these companies. This is strictly a business and liability issue. These are not our helicopters and we will not accept or create any liability for ourselves by knowingly selling spare parts for use on them. They are “rebuilt” or “refurbished” ships which have been build from spare and surplus parts. The operational history of these ships are, I think ,well known, and if there is anyone out there brave enough to accept liability for these… well enough said on that point.
Liability and limiting it is a huge issue for us. It probably would not surprise you that product liability and legal costs are outrageous but what might surprise you is some of the ways we get hit with these. Do you know Hiller was sued by one pilot who flew into wires during an ag spraying mission? He admitted he did it because he was preoccupied resetting his GPS but his cause of action against Hiller was our flight manual didn’t have a warning in it about wire strike hazards! Another pilot sued us after operating his aircraft past the recommended overhaul period and then when a part failed (one that would have been removed during the overhaul) and caused a crash, he sued us for defective product. We ended up winning these as well as other such ludicrous lawsuits however the cost to defend ourselves was well over $100,000.00. Think about it. Those two lawsuits ate up over $100,000.00 in cash flow that could have been put to better use buying more parts to make them available to you. And those are just two examples of many more I’ve had to deal with over the past eleven years.
For those of you who have taken the time to actually read all of this thanks. I’ll get off the soapbox and get to the part you’re probably really most interested in.
First, our parts policy. It’s pretty simple and has been the same for the past 9 years. We will make any part for any model helicopter (UH-12 series) but we will not do it at an economic loss. If any of you work for a business that doesn’t follow that same basic philosophy let me know how they do it.
Second, Hiller is committed to this long term. We own the 15 acre factory at Firebaugh and have essentially no debt. Hiller is in better financial condition than when I took over as GM. That doesn’t mean we have millions to spend on buying parts but it does mean we’ll be here in the future.
Third, contrary to popular belief, Hiller does have many of the parts you think we don’t. Right now I have 12E main rotor hubs, main rotor forks, control rotor cuffs, control rotor trunnions, control rotor paddles, main and tail rotor TT straps, clutch drums, tail rotor hub and yoke assemblies, inboard and outboard TT pins and over 6 million dollars in other parts off the shelf. We also have about $350,000 in parts being machined at outside vendors. That doesn’t mean I have everything but we do have a lot and we’re willing to work on what we don’t have. For any of you customers out there, I sure could use some sales on these to help pay for the other parts being machined. The more we have in sales the more I can spend on getting other parts into production.
But what about blades – I’m not clairvoyant, I just hear that a lot. Hiller has invested (read that as we wrote a big check) for new technology tooling to be designed for the main rotor blades. The tooling design is complete and we’re looking to have the tooling started sometime around the end of the year. We need to have a new clean room building built. The design of the building is complete we just need to time the construction to our need to build blades. We also have had all the piece parts made so we have inventory to make the blades once the building and tooling is done. All we need is either time so we can fund the project in steps, or a little help from some customers by ordering blades to speed up the project. Without orders it simply doesn’t make business sense to invest over $500,000 into the project without letting some time pass to flush the system of the old surplus blades everyone is using. Hopefully we’ve timed this so we’ll be able to respond to a serious need but without sales there is no business reason to spend that much money especially when we don’t know when we’ll be able to make it back.
Let me close by saying, there isn’t anyone in the world more interested and intent on making Hiller Aircraft a success than I am. But the factory needs your support just like you need ours. We need customers, not owners and operators. Everyone wants a cheap helicopter and that’s why there are other cheaper models in this world. But if you want a well designed, well built, pick-up truck of a helicopter you choose a Hiller. And if you’ve chosen a Hiller or are just thinking about it. then may I suggest you consider that we are in this together. Customers who support the factory through buying parts will help keep these magnificent machines working for us. So are you a customer or are you an operator?
20 years on and I realize how inbred and narrow minded I was writing this. After much deep self reflection, had I not been such a cunty asshole happy playing with myself like a monkey in a cage and collecting my check from Fred, then the Hiller Aircraft could be in the driving seat and mentioned in the same breath as Robinson, Bell, Agusta, Airbus, Hughes etc. Instead, there is now a boat and I am not on it. I am sorry.