RAM Dings Continental On Parts Prices
In one of the more unusual press releases we’ve seen, RAM Aircraft LP, a Waco, Texas, engine and mod shop, says Continental Motors’ recent acquisition of ECi “will cost everyone in general aviation.” RAM implies that the loss of competition will drive prices higher on certain engine components that both Continental and ECi, as an independent company, manufactured. “Doesn’t general aviation expect that Continental’s higher prices will continue to grow?” RAM said in its press release.
In one of the more unusual press releases we've seen, RAM Aircraft LP, a Waco, Texas, engine and mod shop, says Continental Motors' recent acquisition of ECi "will cost everyone in general aviation." RAM implies that the loss of competition will drive prices higher on certain engine components that both Continental and ECi, as an independent company, manufactured. "Doesn't general aviation expect that Continental's higher prices will continue to grow?" RAM said in its press release.
Continental announced the acquisition of Engine Components International for an undisclosed sum in May of 2015. The San Antonio-based ECi competed with both Lycoming and Continental on PMA parts such as cylinder units, camshafts and other major components. ECi is part of a larger group called Danbury Aerospace while Continental is owned by the Chinese-based AVIC International.RAM says it's a major purchaser of ECi components.
For its part, Continental is blunt about the economics. Continental CEO Rhett Ross told AVweb on Wednesday that ECI's prices, while competitive, were simply too low for a sustainable business plan. Since the acquisition, Continental has eliminated duplicate production of Continental parts and will service that demand from the Continental's in-house manufacturing.
"We've been very above board in saying there's no sense in producing two sets of products that are identical and pricing them differently. So we've standardized on the Continental Motors parts," Ross said. "But I would also say you're not getting the whole story," Ross said, adding that there's a reason why businesses go through bankruptcies and/or require outside capital injection. Without going into specific detail, Ross said ECi's prices to the industry, including RAM, were not sustainable and ECi wouldn't have survived without being sold or being recapitalized. Ross said RAM was "playing games" in that their relationship with ECi wasn't based on equity. Ross also said developing PMA parts and new, innovative products requires capital investment and that parts prices that may be competitive don't support such investment.
RAM also produces a line of PMA parts and says it's gearing up to expand that line.
