Luis Azúa
General Manager
Bell Helicopter
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View from the Top

Efficiency Helps Ride out Downturn

Fri, 12/01/2017 - 17:56

Q: How has the commercial helicopter market evolved over the past year?
A: We have seen a downturn in the market for commercial helicopters in the past two years, triggered by hits to the oil and gas sector. We continue to feel this impact but challenges create a window of opportunity. This is a time to look to different markets, and explore new ideas, marketing strategies and partnerships.
Q: How is Bell Helicopter’s Chihuahua plant adapting to the market’s downturn?
A: From an operations viewpoint, we are increasing efficiency to reduce costs by investing in our people and improving our inventory management and delivery times. As a manufacturing company, the leaner the better. The downturn in production means there is inventory left over, so we must manage it effectively. More importantly, manufacturing is driven by people. We are investing in our employees so that we will be ready when the market recovers.  
The company is also developing manufacturing lines for electrical harnesses for the new Bell 505 Jet Ranger X, which was certified in December 2016. This is a light, high-volume helicopter for which we counted over 400 letters of intent at the beginning of 2017. Also, we are detailing a business case that aims to establish on-site assembly of the electrical harnesses for the Bell 525 Relentless, the new Bell super-medium fly-by-wire helicopter.
Q: What are your expectations following a potential renegotiation of NAFTA?
A: While the agreement needs to be reviewed as it is over 20 years old, in my opinion it is here to stay. During this long period, the market changed considerably and new technologies have entered the picture. It is time to adapt the treaty to the current state of the industry and world commerce. I expect the renegotiation to lead to a stronger and more beneficial agreement for the three countries and to continue promoting the opportunities the free trade agreement provides. What we can expect is an efficient negotiation between the three countries.
This plant manufactures exclusively for the commercial division and exports only to Canada. As an advanced technology center, our Chihuahua plant is essential to every project that involves the assembly of structural parts and electrical harnesses, placing us at the center of Bell Helicopter’s supply chain. While we do not ship a complete helicopter, we play a significant role in the assembly of cabins, which are then shipped to Mirabel, Canada. When headlines talk about NAFTA, which is seen as a main influence on Mexico-based manufacturing, the third participating country, Canada, is often overlooked.
Mexican industry must also look to other destinations such as Europe, which is already investing heavily in Mexico. We can target the Asian market and generate partnerships with them. There is significant knowledge of processes and technology in Asia that we could learn from.
Q: Which of Mexico’s competitive advantages should be stressed at this point?
A: Our manufacturing practices are continuously improving and generating opportunities to integrate the supply chain. This will provide numerous business and expansion prospects to foreign companies, mainly Tier 2 and 3 suppliers. It is important to communicate the strength of our manufacturing practices, as they grant foreign companies the opportunity to generate partnerships.
The Mexico aerospace sector is growing and gaining relevance as more than a low-cost country, but as a best-cost country, regardless of challenges posed by the global political climate. The country boasts several educational institutions that work closely with the industry to consider its needs when defining their syllabi. Mexico is increasingly becoming a high-technology country.
Q: How would you describe the growth of Bell Helicopter’s plant in Chihuahua during 2016?
A: 2016 was a flat year, due to a lag in commercial helicopter orders, which we are feeling to this day. Our plant has grown in different ways including safety — we have recorded two years without an injury, a significant feat for such a labor-intensive operation. We also reduced our defects-per-assembly rate by 40 percent in 2016 compared to the previous year. Our consolidated manufacturing operating system was recognized with the “2016 State of Chihuahua Award for Competitiveness” as well as the “2016 Commitment to Quality Award.”
Q: How does Bell plan to evolve in line with market trends in 2017 and beyond?
A: We are setting the bar higher and higher. We have to better last year’s results by incorporating more projects, new technologies and processes and responding to new challenges. Our goal is to be flexible enough to support Bell Helicopter’s global operations in any way required. We must continue to improve efficiency to be the strategic choice for structural assembly and electrical harnesses.
This plan will adapt to market demands but as a strategic partner and an integral part of the supply chain, our idea is to stay in Mexico for the long term. We are seeing some signs of recovery already and once the market bounces back we will be ready.