A Visit to Rotax

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Late last week, I visited the Rotax factory in Austria, where Iíve been once before and Iíve interviewed the company executives and technical people more times than that. These discussions drift around various themes, but two recur noticeably. First, Rotax and its parent, BRP Powertrain, is, above all else, an engine company. But the conversations project that notion as almost secondary to the fact that the R in BRP stands for recreational. That means, among several, snow machines, ATVs, motorcycles, BRPís unique Can-Am Spyder which they pointedly say is not a motorcycle, and, of course, aircraft.

The second thing these conversations show is that BRP understands its entire business relies on the burning of gasoline for fun but not necessarily profit, in the sense that it's not primarily a commercial aircraft engine manufacturer. Recreation is the core,†whether it be boring holes around the pattern or slashing through the woods on an ATV. In the U.S., we take this sort of thing as a birthright, but itís different in Europe. In Austria, for example, personal watercraft arenít allowed on the lakes during the two warmest months of the year. I suspect itís about noise first, but pollution and safety are also factors.

Few here complain about that; itís just an accepted fact and they run the company accordingly. In the U.S., we would rail about over regulation and government intrusion. Thatís just the way weíre wired.

Without saying as much, Rotax also seems more attuned to an issue aviation is quite vulnerable to: carbon exhalations of piston engines. Regardless of which tribe you belong to with regard to the veracity of anthropomorphic warming, the rest of the world is starting to take notice with regulation and policies and Rotax is trying to stay ahead of this evolution because its entire business depends on it.

The 912 iS is a prime example, which Iíve mentioned before. Ask anyone at Rotax about the business case for this engine and youíll be told it only makes sense as a long-term play. Very long term. This engine is likely to be in the product line for 10 years at least and probably more like 25. So thatís the timeline for the return on investment and Rotax is willing to accept that, something which canít be said of many American companies, never mind American aircraft companies. Continental could be said to going the same way with its diesel investment. Thereís no quick buck there. Of course, Continental isnít an American company, is it?

During a company overview briefing, Rotaxís Christian Mundigler told me Rotax is determined to be seen as an environmentally responsible company acting ahead of any regulations forcing it to do so. Francois Tremblay, head of BRPís propulsion business, said the same thing. I was a little surprised to learn that in some of its test cells, Rotax is using the engines to generate electricity to power the plant and they recover exhaust heat to warm the shops for the same reason. All of this requires investment, of course, and I asked if the energy recovered runs black or red. Tremblay was non-committal on that, but again, in the European context, the payout is in perception and Rotax probably canít afford not to make the investment. I wonder if American companies will ever get to this point or can afford to not bother. Interesting to ponder, no?† To be fair, many already are. We just donít hear enough about it.

Another interesting thing about Rotax is how it lets the passion of its customers infuse the management and promotional teams, which are sort of joined at the hip here. The motor sportsóspecifically motorcyclesóare famous for flying journalists to exotic locations and having them try out the latest new product. In aviation, just getting a look at the latest product can sometimes be like extracting molars with a pair of channel locks. That sort of promotion just isnít done and to be fair, the companies probably donít have much of a budget to do it. We try to help by showing up at the door notebook and camera in hand to review products. Often, we donít even get a call back.

Rotax, on the other hand, takes a page from the motorcycle industry, of which theyíre part. Iím writing this in a giant lux tent erected at the Wels, Austria airport. Rotax sponsored a dinner here last night, a luncheon today and another dinner tonight. Tonightís dinner will combine the aviation side with a couple of hundred European Can-Am riders. I didnít ask about the RIO on it because Iím sure no one looks at it that way. This is nothing but expensively funded promotion and brand building and Iíll tell ya this, it injects a little optimism and enthusiasm into an industryóaviationóthat can use a lot more of both. Continentalís Learn to Fly Day at Fairhope last month had the same effect. No matter how gloomy things might seem, thereís nothing like a good party to spread a little sunshine, even for a grump like me.

Plus the beer is terrific and a got to ride the Can-Am Spyder around. No, not at the same timeÖ.

In a follow-up blog, I'll examine what Rotax may be up to.

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Comments (8)

Note: Second paragraph and I quote;" That BHP understands its entire business relies on the burning of gasoline for FUN (market?) but not necessarily for PROFIT" - its AVIATION again; "want to make a million in GA - start with two" - guess Rotax wishes to stay loyal with the theme of GA!

Added note; I'm OK with the ATV, snow mobile, motorcycles, etc market - much more volume, ease of entry, and higher demand. Can't help wonder how much $profit$ the GA (LSA, etc) segment is doing in contrast?:

Posted by: Rod Beck | June 8, 2014 7:01 PM    Report this comment

Rod,

We all know that most people are in GA for the fun and not the practicality. If I wanted to travel reliably and cheaply, I'd take the airlines. I rent airplanes to go to family events rather than drive or airline because it makes things more entertaining. What on Earth could you possibly have against a company like Rotax developing products that service the market for people like me?

Posted by: Joshua Levinson | June 9, 2014 12:01 AM    Report this comment

A tip of the hat to you, Josh, for understanding the point despite the clutter of that sentence. What I meant to say was was Rotax doesn't view its engines as applying much, if at all, to aviation businesses. That said, the engines are used in flight school aircraft and in UAVs.

I rewrote the sentence.

Posted by: Paul Bertorelli | June 9, 2014 1:31 AM    Report this comment

Paul and Josh: I believe what Paul meant to say was; "the FUN (recreational/want) but not necessarily for PROFIT" (utility/need) motive.. And yes, gents , I got the point AFTER I read what Paul's intent was originally and my reason for this reply.

The Rotax IS the gasoline engine of choice for the LSA/recreational GA market -AGREE, lower fuel bun/SMOH etc, total operating (hourly) cost - makes CENT$ to me!

And for the record Josh; I doubt if the owner of a $200-400K+ Cirrus, for example, purchased his/her bird for pure FUN; (cost/benefit?) perhaps to you and many, it IS (GA/recreational) for fun ONLY. That said, one who invest $100K+ for a GA 150+ knt bird, the UTILITY value trumps the fun aspect in most cases, however, the "fun" ALWAYS is part of the equation but not necessarily the primary or only one.

Posted by: Rod Beck | June 9, 2014 6:20 AM    Report this comment

I've often wondered why US companies are so awkward at marketing (with a few exceptions). Much of it is probably rooted in quarterly financial reporting along with the arcane tax system. You look at companies in places like China or Japan and they are definitely in it for the long haul. Good for Rotax, I hope they continue to succeed. By the way, did you mean ROI (return on investment) or RIO (Richie induced oscillations) :-)

Posted by: A Richie | June 9, 2014 9:01 AM    Report this comment

Mr. A.Richie; I believe the (non-finance definition) of ROI is Runway Obstacle Indicator? NOTE: ONLY available on Ultralights - I think?

Posted by: Rod Beck | June 9, 2014 9:39 AM    Report this comment

Paul, haben noch ein Bier. You could have gone all day without mentioning Fairhope. I like their product and market versatility. I predict blue skies for this company.

Posted by: Rafael Sierra | June 9, 2014 11:16 AM    Report this comment

I give these guys plenty of credit, partly out of guilt for initially writing them off.

Regarding a lack of interest in certified stuff, the head of a training school I know is looking at a P2006T to replace one of the Duchesses. Similar real-world performance, less than half the fuel burn. And then there is the fact they prefer mogas. There are environmental considerations but I now find myself thinking about how much German beer per hour could be bought with the cost savings!

Posted by: john hogan | June 10, 2014 10:19 PM    Report this comment

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