As Goes Cirrus, Cessna Too?
When I stopped in at Cessna's Wichita HQ on a Midwestern swing last week, the lunch time conversation settled briefly around the AVIC acquisition of Cirrus. I asked Cessna's VP of U.S. sales, Tim White, what he thought of the deal. He laughed and said, "I was going to ask you the same thing." His answer didn't surprise me in the least, for everyone I talk to seems to have the same baffled, uneasy reaction. It's not that we think the Cirrus deal makes no sense, it's just that we can't figure out what it means in the larger context.
The reason is that we are in the midst of major sea change, an economic realignment so large that we're unable to wrap our heads around it. And it's getting faster faster. As the world economy becomes more interconnected, interdependent and hyper-competitive, acquisitions like these are going to continue to come out of left field. Parsing them on the fly is like trying to summarize the arc of western history on the basis of a single day's events. It's impossible. All you can do is strap in and hold on for the ride. Cessna, of course, has a global strategy. It has to, with the likes of Gulfstream, Embraer, Bombardier and others breathing down its neck. The competitive environment today makes the 1970s, when Cessna owned GA, look like a church social.
Every aircraft manufacturer faces the same competitive heat, but each has its own unique baggage to carry. Cessna's is that it's an old line maker of metal airplanes bashed together with rivets and hammers competing with new-age upstarts like Cirrus and Diamond and who knows who else who can conceivably start with clean-sheet, efficient manufacturing methods. The short term verdict on the new age guys is that the re-invented wheel is white, slicker and made of different stuff, but if there have been meaningful efficiency gains in manufacturing, the buyers haven't noticed in lower prices. Or maybe they haven't noticed that the prices of new aircraft haven't increased more than they otherwise might have.
So where does this leave Cessna? Scrambling to find production economies and efficiencies wherever it can in a process that is fundamentally inefficient. When car guys go into aircraft plants—and they do—they're appalled at how much one-off piecework assembly goes on. Sure, there are jigs and fixtures, but there's also a lot of hand drilling, bucking, filing and bending to get things to fit. In a modern car plant, identical parts arrive just in time and fit into the whole in mere seconds as the line moves on. At Cessna, the CJ4 line moves once a week.
Still, there are gains to be made. "Lean" is the buzzword these days, meaning the less inventory and seldom-used tooling hanging around, the better. Manufacturing has become a value-added process and margins and competition have become so tight that companies don't even buy the high-value stuff like built-up assemblies, engines and avionics until 15 minutes before they're needed. (Ten if you can manage it.) Have you seen those relentless UPS commercials about logistics? This is what they're all about. Cub Marion, who oversees the CJ4 line at Wichita, has to dance cheek-to-cheek with his suppliers and good luck to the guy who's a day late on a shipment.
Still there are gains. In this podcast, Marion told me something astonishing. Cessna has done away with green flights for the CJ4. Green flights are an aviation tradition in which the airplane is test flown sans its interior, paint and other "stuffing." That way, the factory doesn't have to rip up floorboards and panels fixing stuff that they didn't get right during assembly. Cessna has stopped doing green flights on the CJ4.
The airplane is completed, with paint and interior, then flown for acceptance. Cessna did this because it had to. It re-jiggered the line and adjusted QC to capitalize on the fact that it had reams of data describing green flight fixes. All it had to do was to get these things right in the first place. Maybe easier said than done, but that's not the same as can't be done.
Down at Cessna's Independence, Kansas plant, they're doing the same, as described by Terry Clark in this video. Since the plant opened in 1997, the line has collapsed on itself to such a degree that there was more than enough room to take on the Mustang production. Mustangs still get green flights, but Marion figures that some day they won't. Even though we tend to think airplanes are made as they always have been, that's not necessarily true in detail. For example, at Independence, Clark told me they figured out that the simple expedient of installing the engine last rather than first kept workers from having to walk around it or bang their heads on it during routine work. Some gains are counter-intuitive: They fuel the wings before installing them to check for leaks and proper function rather than waiting and fixing the leaks later, when the airplane is at a higher-value state and gathering dust, not customer dollars.
Clark can only sigh when he hears pilots and would-be buyers ask for the $100,000 Skyhawk which they insist can be built if Cessna would just invest in automated tooling and robots. But robotics are high-cost assets that make money only if they're running 18 hours a day feeding a torrent of volume. Even Cessna has just a trickle so it does what other manufacturers do: It pays for manual labor to match the real-world volume, thus the $300,000 Skyhawk.
In a certain sense, Cessna is actually training its workers to work as reliably as robots. Robots are the best welders and painters so if you want the best welding and painting, you assign it to a robot. At Cessna, they use an electronic training simulator to hone a human painter's skills: squeeze the trigger here, move the gun this fast, return the stroke here—same way every time, just like a robot. Buyers have, in the past, complained about paint on a $300,000 Skyhawk not matching the quality of a Lexus. "That used to be true," Clark says, "we couldn't match that quality. But now I'm willing to take them on."
Completing the circle, does any of this mean that you won't one day read that AVIC or some other Chinese interest has bought a chunk of Cessna? It does not. Textron is a $10 billion conglomerate and Cessna once accounted for 40 percent of its total revenues. That has declined to about 30 percent, putting Cessna more on par with the Bell Helicopter division, but still a big dog. The piston division is a mere 4 percent of Cessna's total take. The global market forces that ignited that shift are not trivial, nor are they necessarily predictable, thus speculating on where Textron will go—or be forced to go—with its various divisions is thin ice I'm not inclined to dance on. My gut instinct is that Cessna is committed to keeping pistons in its stable, but I could be confusing hope with intuition. In a sense, with the Skycatcher, Cessna has already made a China play and subassemblies for the singles are now made in Mexico and shipped to Independence for completion.
So all Cessna can do is continue what it is doing: Looking for efficiencies at every turn and trying to keep at least an airplane or two ahead of its competition.