HdH Boosting International Manufacturing

In the late 1960s, it was clear to HdH management that the traditional defence aircraft manufacturing workload would decline seriously during the 1970s. As a result, there was a considerable sense of urgency to diversify HdH’s activities.

Some of these efforts involved new types of products, for instance De Havilland Marine which quickly became Australia’s largest aluminium boat builder and the Distributor Products Groups which ultimately became Hawker Pacific.

Other diversification efforts focused on using existing HdH aviation skills in new geographic markets, with South East Asia the primary target for new maintenance contracts and the United States of America the focus for manufacturing diversification.

The decision to tackle the US aerospace market was a brave one for a company which had spent over forty years working in the isolated defence marketplace. It quickly became apparent that while the USA was the world’s largest aerospace market, it was also the most competitive. Some comparatively small machining orders were won by HdH from Bell, Rohr and LTV at a time when the build-up of aircraft and helicopter manufacture for Vietnam was at its peak and any spindle capacity available was quickly snapped up. However by late 1969, several years of effort had yielded less than a million dollars worth of US orders.

It was at this time that the Australian Government’s introduction of a civil and military offsets policy proved an important turning point for HdH. Although the company still had to demonstrate its competitiveness on cost, schedule and quality, it was suddenly- ly in a position where overseas manufacturers had to commit to offer genuine subcontract opportunities to the Australian industry if their aircraft were chosen by the Australian defence forces or airlines.

HdH’s first contracts under the offsets policy came at the end of 1969 from Boeing Vertol as a result of the RAAF’s purchase of Chinook heavy-lift helicopters. HdH won the majority of offsets placed in Australia against that buy, with almost $600,000 in contracts covering a variety of complex machined assemblies, including the aft landing gear for the Chinook helicopter.

In retrospect, HdH had seriously underestimated the technical difficulty and cost of producing these Boeing Vertol components. The result was a financial disaster, but ultimately a considerable technical achievement as HdH’s production and quality people rapidly learnt the US way of doing business. In fact, the lessons were well learnt and on repeat contracts from 1971 through to the late 1970s, HdH became a regular and modestly profitable supplier to Boeing Vertol.

Another major turning point for HdH and the whole Australian aircraft industry came in 1970, when the Boeing Commercial Airplane Company entered the civil offsets field as a result of 747 sales to Qantas and 727 sales to TAA and Ansett.

Boeing quickly set about placing pilot contracts for 747 components with all three major Australian aerospace companies. GAF was awarded windows, CAC got flap angle drive gearboxes and HdH’s share was escape chute packboards. This contract, involving oven curing of fibreglass, was to introduce new technology to HdH which would eventually lead to the advanced composite autoclave facility which today forms a vital part of HdH’s manufacturing capability.

In 1971 came a stroke of luck which was to fundamentally change HdH’s attitude to airframe manufacturing and its reputation as an international subcontractor. With Boeing believing the 727 was in its ‘sunset’ phase, it placed a limited order with HdH for the production of model 727 wing ribs and rudders at a rate of production of 21⁄2 aircraft sets per month, a very modest rate by Boeing standards, but as fast as HdH had produced since World War II.

Neither Boeing nor HdH had foreseen the remarkable resurgence in 727 sales which was about to occur as a result of the Oil Crisis. By the time it made its first delivery of wing ribs and rudders, a rather nervous HdH was committed to producing six chipsets per month. Not only did it achieve this target, but by the end of a hugely successful 727 project in 1982 it had produced almost a thousand aircraft sets of assemblies at rates of up to 23 sets per month without ever missing a delivery.

HdH’s performance on the 727 project gave it an international reputation as a totally reliable, competitive supplier who could hold learning curves over extended production runs and who could be expected to turn out quality products on time. To achieve this, HdH had to transform its production facilities, modelling them on the best available internationally. Even more importantly, it had to transform the attitudes of management and workers alike to believe that nothing was impossible. Its success in doing this is still seen in the pride evident at Bankstown at their ability to take on the world and win.

In the early 1970s, Australia’s levels of productivity were comparatively low by world aerospace standards, but this was offset by low labour rates. As the labour rate advantage was rapidly eroded by very high inflation rates and the appreciating Australian dollar, it became clear to HdH that productivity would have to be raised to international standards to stay in what had become a very attractive market. Adding necessity to determination, domestic Australian defence aircraft workload had virtually disappeared.

HdH began making significant investments in new facilities to raise productivity, increasing its stock of numerically controlled machines, moving into automatic rivetting and improving its production control systems to get men, materials and machines together at precisely the right time.

By 1973, when HdH won contracts from Westland for Lynx helicopter components, it was apparent that HdH productivity levels were competitive with those of European industry.

By 1976, when HdH won a contract to build DC-9 elevators against Douglas in-house estimates, its manhours and learning curves were becoming comparable with major US manufacturers, a considerable achievement for a firm which only a few years before had never ventured outside the comfortable but not very efficient Australian defence environment.

In the second half of the 1970s, HdH had achieved its objective of penetrating the US aerospace subcontract market and had well established contracts with Boeing, Lockheed, McDonnell Douglas, Pratt & Whitney and Westland, with repeat contracts becoming the order of the day.

However, nothing ever remains static in the state-of-the-art world of aerospace and by the late 1970s it was apparent to HdH management that significant investment in newly emerging technologies would be necessary for HdH to remain competitive.

The two manufacturing technologies targeted by HdH were large scale multi-spindle, multi-axis numerically controlled milling and advanced composites. Both involved multi-million dollar investments.

A major problem faced by HdH was that the lead time to acquire and install these new technologies was greater than the lead time normal on contracts to utilise them. This meant that HdH was going to have to make these major investments in advance of winning any contracts for their use, running the risk that it might turn out to be uncompetitive or bidding into a market which already had surplus capacity available.

In both cases, it was HdH’s good reputation and its relationship with Boeing, helped by the Australian Government’s Offset Policy, which provided the solution.

When Boeing was in the process of launching the new 757 project in 1979, it offered HdH the opportunity to become sole source manufacturer of the wing spar ribs. Boeing was well aware that HdH had no experience in the 3 axis and 5 axis machining required, but HdH’s performance on earlier 727 wing ribs gave it confidence that the Australian firm could perform. And it did; HdH with GAF as its major subcontractor installed the new facilities and got them operational in near record time and joined the 757 programme with a contract worth over thirty million dollars, at that time the largest single aircraft offset placed in Australia.

The story was similar on composites, but even more challenging. HdH committed to the establishment of a composites bonding facility and was then able to negotiate a contract for the manufacture of ailerons for the Boeing 737 at a time when the ailerons were being changed from metal to carbon fibre.

What created the greater challenge was the unexpected sales success of the 737. Suddenly, HdH was faced with the need to install and commission a completely new technology and immediately accelerate to a production rate of eleven aircraft sets of ailerons per month. Close cooperation between HdH and Boeing made this one of the smoothest such exercises ever undertaken.

When, in 1979, Airbus was successful in selling the A300 to TAA, HdH quickly built on its international experience to become a contractor to British Aerospace, who have responsibility for Airbus offsets in Australia.

Building on its established areas of expertise, it was logical for HdH to consider building wing ribs for Airbus, and HdH now produces ribs for all Airbus models, the A300, A31O and A320.

With its new composite facilities, HdH was also successful in winning contracts from BAe to build components for the A310 and A320 in carbon fibre. In the latter case, HdH also became involved in the design of composite components for the first time.

Most of HdH’s international manufacturing is long-term, sole source repetitive production, but an interesting variation occurred in 1984 when Sikorsky offered HdH the chance to build, on a one-off basis, the wing and horizontal tail surfaces for the experimental X-wing prototype aircraft.

This required a totally different approach in terms of the low cost tooling, minimum planning and emphasis on the individual skills of the people involved. By establishing a separate, dedicated team, HdH successfully completed this demanding project and opened up the possibility of further development work.

At the other end of the scale, 1985 saw HdH presented with its largest ever international manufacturing opportunity when Boeing offered HdH the complete leading edge flap system for the 747 airliner. Boeing was withdrawing this major package from a troubled US supplier, and offered it to HdH on the basis that Boeing would nominate an internationally competitive price and HdH would have to accept it. Boeing also stipulated that HdH’s ability to meet this pricing basis would be a test case for its ability to be competitive on new generation programmes such as 7J7.

In the event, Boeing and HdH were quickly able to reach an agreement and in March 1987 HdH delivered its first chipset of 747 leading-edge devices,to Boeing against a schedule which had accelerated considerably from that in the original contract.

Worth over $A140 million and involving participation by more than a dozen Australian firms, the 747 contract confirmed HdH’s maturity as a significant international supplier.

The future holds new international challenges for Hawker de Havilland. While the Australian Government’s offset policy will remain an important element in creating opportunities, the increasing international sharing of new aircraft projects from the outset will make traditional post-purchase offset contracts more difficult.

Accordingly, HdH is bidding to join new projects as a preselected participant from the beginning. This approach guarantees a place for the life of the project, but in return HdH will be required to find increased funding for initiating activities and will be asked to accept a higher level of risk sharing than previously.

Already HdH has signed a Memorandum of Agreement with Boeing on possible 7J7 participation and is part of an Australian team which has signed a Memorandum of Understanding with Airbus on possible A330/340 participation. HdH is also talking to Douglas and manufacturers of smaller aircraft and helicopters.

HdH’s involvement in these new projects will involve design and development as well as manufacturing. It will see major new developments in such areas as electronic information transfer and integrated CAD-CAM operations. It is already clear that HdH and other new project collaborative partners will have to achieve significant further cost reductions if they are to persuade airlines to give up existing depreciated equipment and invest in new aircraft types.

The challenges of the future in international manufacturing are very considerable, but HdH has the track record to meet them successfully.