Eclipse Jet: The Real Story
Even as Boeing parked its cutting-edge Dreamliner in ConocoPhillips Plaza last week, it is fashionable to decry the lack of innovation in aviation. Same old engines, same old airframes, same old high prices, same tired comparisons to the automotive industry. It's almost as if innovation itself is the product, not airplanes that are actually useful and can justify their stratospheric prices.
But the proof that innovation of itself is not enough lies in the spectacular failure of Eclipse Aviation, a company that burst upon the scene a decade ago, brashly promising to remake transportation and to rewrite the rules of aircraft manufacturing. It did neither, although it did relieve investors of more than a billion dollars in capital. What went wrong? To answer that in detail, you need an insider's view and that's what Dennis Maxwell's new book, The Great Eclipse, manages to do in what is an excellent case study of how not to run a business. Maxwell was involved early on with Eclipse founder Vern Raburn as a marketing consultant even before the company had its name. (It was originally called Pronto.)
Most of us understand the global view of Eclipse's failure. Its business assumptions were fundamentally flawed. As Maxwell explains in his book, the company based its cost structure on an automotive model of high volume and reduced man hours per unit. This, unfortunately, placed Eclipse in a race against time to ramp up production rapidly enough to meet low cost projections while simultaneously delivering finished airplanes to generate revenue. Although Eclipse was, at the end, at a 20-per-month production rate, the curves were never going to merge. The airplanes simply cost too much to build and sold for too little money. (One owner told us Eclipse bankruptcy data showed that his airplane cost more than $2 million to build, but he paid only about $1 million for it.)
Maxwell fills in many of the blanks that we, as journalists, were never able to color in. For example, we assumed that Eclipse was lavishly funded with money from the booming tech sector and it was. But the company constantly struggled to find the next round of financing and was especially hard hit after the 911 attacks. Moreover, it had poor internal cost control and budgeting and burned through money faster than it could be replenished. In an interview at AirVenture Maxwell told me that Eclipse's marketing and promotion tended toward the "high, wide and handsome," as evidenced by the TajMahal years, when Eclipse's vast white tent dominated the grounds at AirVenture.
But behind the scenes, the company was slowly unraveling, falling short on three parallel challenges that the likes of a Cessna or Beech would never take on simultaneously: a new airframe and manufacturing method, a new engine and vastly complex avionics and integration. The book explains that the innovative friction stir welding process, which would save more than 7000 riveting operations, was actually an impressive success. But Eclipse never managed to leverage into the whole to capitalize on the intended efficiencies. The dismal failure of the Williams EJ22 further stunted Eclipse's progress, delaying initial deliveries by at least two years, costing millions in additional work. Design engineer Oliver Masefield said as much as 85 percent of the Eclipse had to be redesigned to accommodate new, more powerful engines from Pratt & Whitney.
Vern Raburn's public dressing down of Williams and later Avidyne and other vnedors for delays in delivering promised components marked a turning point in how the company was perceived from the outside. It began with a forward-looking and friendly public and press relations persona. The company talked the talk of a winner. But by 2006, it practically had a Nixon's enemy list. Raburn forbade the staff from talking to anyone from Flying magazine for some perceived slight in a column then-editor J. Mac McClellan wrote. This reached the utterly absurd at one AirVenture when the company's press staff refused to let AVweb's Mary Grady cover an Eclipse announcement because we weren't on the company's "approved" list. Ms. Grady happened to be also freelancing for Robb Report, so when she flipped her press badge around, she was magically transformed and allowed to cover the event. This passed for logic in the schizophrenic world of Eclipse.
Another interesting nugget Maxwell reveals is the background of Raburn's show-stealing revelation of the single-engine Eclipse 400 at the 2007 AirVenture, at a time when the company was known to be struggling. I remember thinking—and asking—how the hell did the board ever let him do that project? The answer Maxwell reveals is that it didn't. In fact, the board expressly forbade the project, but Raburn did it anyway. A year later, Raburn was publically sacked during AirVenture and new management attempted to salvage the company, without success.
What surprised me most about this book was Maxwell's even-handed treatment of Raburn. On the one hand, he is described as an overbearing micro-manager with a volcanic temper. At one meeting, he flashed a slide of Eclipse managers, describing how each had damaged the company. Two of those managers were in the room at the time. On the other hand, Raburn deserves credit for actually doing what others just talked about. Raburn was a brilliant salesman and promoter of his small jet idea, understood the enormous amount of capital required and raised it. There's no question that what he attempted to do, had it succeeded, would have marked a significant and innovative contribution to aviation.
But transformational? Maxwell's not so sure and neither am I. Eclipse had a part in the glass cockpit revolution for light aircraft, but that would have happened anyway. And Eclipse certainly deserves credit for popularizing the light jet concept, but it's uncertain if even that idea has legs. While it's true that Cessna and Embraer are doing well with their lightest jets, the Mustang and Phenom 100, and Piper and Diamond are in the wings with theirs, those airframes aren't as advanced or integrated as the Eclipse was intended to be. If they get there someday, Eclipse will have pioneered the concept.
Now that new owners have the Eclipse and have renamed both the company and the airplane, they have before them the challenge of proving it's an idea whose time hasn't passed or, perhaps, never was. And thus my only serious critique of the book: The subtitle of the book is: A Dream Design Bankrupted by Marketing and Mismanagement and Saved by a Sensible Business Strategy.
The second part of that title might be true. I certainly agree that the new company appears to have things right. But it's not making new airplanes yet. I've sipped the Kool-Aid, I'm just not ready to chug the entire pitcher.