Rotax: Go Big? Or Not?
As a journalist, Iíve come to recognize a certain look when I ask a victimÖerr, I mean, a source, a question I know is going to be sensitive. If the question is getting close to pay dirt, the person suffering the interview adopts a certain Cheshire cat look that implies to me: if only I could tell you.
I saw the look several times last week at the Rotax factory when I asked about higher-horsepower engine development plans. I donít expect companies to answer these questions honestly, but itís fun to ask them anyway. Based on the answers I didnít get and the looks I did, Iím more convinced than ever than Rotax has a mid-horsepower engine in the skunk works, at least at the whiteboard stage. The director of the powertrain division, Francois Tremblay, hinted that Rotax is looking in this direction, but he offered no details. He did say that the trend toward light, four-place aircraft certified under CS23 revisions, as exemplified by Flight Design's C4, has caught the company's attention.
Consider the trajectory. Two years ago, Rotax introduced the 912 iS, a pretty techy little package with electronic fuel injection and FADEC control. In April, they followed with the iS Sport, really just an improved variant but one with better torque, which should appeal to the U.S. market where constant-speed props arenít allowed on LSAs. Clearly, the aviation division has some juice in a company thatís dominated more than 10 to one by terrestrial recreational engines. Those projects represent no small investment.
During a plant tour, you can see the sense of Rotax capabilities. I had a couple of molar chilling moments when we were ushered by yards and yards of state-of-the-art machining cells capable producing any engine part imaginable and in volume general aviation hasn't seen in multiple decades, if it ever saw it. Itís exaggerating to say they could dump iron ore and bauxite in one end of the plant and crate up finished engines at the other end, but not much. The amount of modern manufacturing technology and expertise that Rotax has developed through its other markets just begs to be leveraged into aviation.
But begging doesnít change reality. In that manufacturing base driven by high-volume recreational markets, Rotax has some definite advantages over Lycoming and Continental, mostly in terms of rapid prototyping, manufacturing capability and sheer economics. Having built more than 120,000 aircraft engines, including certified versions of the 912 series, itís hardly an unschooled upstart. But like Lycoming and Continental, Rotax would face the same soft market with OEMs sales just trickling along and the two other engine companies have the advantage of long-sunk costs on engines that have generally been considered proven. Thatís a sobering consideration if youíre about to throw $20 million or more to develop a new engine that might sell but a few hundred a year, if that. I'm skeptical that the CS23 revision is going to substanially ramp up global margin, although it may help.
The wide spots in the market seem to be at the 160- to 180-hp power point and around 300-hp, which is where Continental and Lycoming are with the 550 and 540 series, respectively. Starting modestly, how about a four-cylinder engine with fuel consumption about 20 percent less than the competition and a weight that's 10 to 25 percent less? Thatís essentially what Rotax did with the 912 iS, against both its own engines and Continentalís O-200 and Lycomingís O-230. Besides the better fuel specifics, the Rotax is lighter and by anyoneís count, itís a more modern engine. Itís designed to run on mogas, too, even E-10 mogas. In fact, Rotax encourages it.
But is that enough to push the button on a big project like a clean sheet engine? Are buyers really sensitive enough to fuel costs to demand a more economical engine in this power range? My guess is, frankly, they are not, even if they complain about the price of fuel and the lack of innovation in the engine market. But that might change if the replacement for leaded avgas costs $7 of $8. I know this at least one consideration in Rotaxís deliberations.†
Despite being part of a company that thrives on volumes in the thousands, Rotax understands how to make money in the low-volume world of general aviation. Since the 912 iS was introduced, the company has put about 500 into the field, they say. There may be a little market expansion there, but most of those sales go to customers who would have bought some version of the 912 anyway and many have just chosen to go with the more expensive, improved product. In the end, selling engines isnít a lot different than selling soap.
Around Rotax, youíll occasionally hear a famous quote from CEO Jose Boisjoli, who said he didnít know anything about aviation, but he sure understood and appreciated the passion of the people who practice it. Thatís an interesting attitude and I suspect one that makes it possible for aviation engineering groups inside Rotax to develop business cases with good margins, but low overall profits that accrue over many years. And if you think much about it, thatís what itís going to take to develop new products in GA because for the foreseeable future, there arenít going to be any high-volume grand slams, rather singles and doubles that play out over decades. Continental seems to be following the same strategy with its diesel investments. (I visited the plant this week to see improvements they've made in production and qaulity control.)
From what I saw last week at Rotax, I think the decision to go forward with thisóor notómust be very difficult. All that manufacturing capability and expertise makes such a product eminently doable, but sometimes the larger challenge is resisting doing a thing just because you can.