Nicholas Watson in Prague -
Instability and economic growth might make for uncomfortable bedfellows, but it’s that mix which has attracted the US’ Bell Helicopter to Central and Eastern Europe.
Even while admitting the helicopter industry is facing “global headwinds” that have dented sales – the geopolitical crisis in Ukraine, the Eurozone crisis and the slump in the oil price hitting the energy sector, a big helicopter customer – Bell CEO John Garrison has spearheaded a big push into a continent where it has not traditionally been strong. “Europe is the second-largest market in the world today, and it will be in 20 years from now. If you want to be a global player, you can’t ignore the second largest market in the world,” he says.
Last year, the Texas-based company opened at Prague’s Vaclav Havel Airport what will be its centre for customising and delivering all Bell helicopters sold in Europe (no two Bell helicopters are the same, it says). And in May it announced plans to set up a production line in Russia's third largest city of Yekaterinburg, in collaboration with the local outfit Ural Works of Civil Aviation (UWCA), a company not covered by US sanctions.
“This is purely a commercial project, we don’t sell to the military there – basically it’s a re-assembly operation for the 407GXP sold solely on the Russian market,” Garrison tells bne IntelliNews during a recent visit to the Czech capital. “In Russia it’s really been the corporate, VIP travel that’s been the main market segment.”
Russian-made military helicopters have dominated in the former Warsaw Pact countries, but it is these countries’ Western shift toward the EU and Nato that has opened up opportunities for Bell as tenders to replace their ageing Soviet fleets are held – a process given some urgency by Russia’s aggression in Ukraine.
The Czech Republic plans later this year to hold a tender to buy an undisclosed number of new helicopters to replace the military's Soviet-designed Mil Mi-17s, Mi-171s and Mi-24s, for delivery in 2018 – only makers of Nato countries need apply, the defence minister, Martin Stropnicky, said pointedly in 2014. And in Poland, the Ministry of Defence is working on acquiring an undisclosed number of new strike helicopters to replace its Mil Mi-24s, for delivery from 2019. Bell Helicopter sees this region as a prime market for its series of H-1 utility and attack helicopters, because they are simple to operate and maintain, and their life-cycle costs are 30% lower than the competition.
“Poland, Slovakia and Czech Republic have tenders forthcoming in the near term, and then there’s requests for information that are not yet tenders – a multitude of those in different segments,” says Garrison. Elsewhere in CEE, Bell has enjoyed recent success in Ukraine, Slovenia and Turkey, where it has sold to the Turkish national police and forestry departments.
Bell sees the military segment making up about 7% of its sales in Europe, while the corporate segment will comprise the single largest customer at 43%, followed by the general utility segment at 39% and the ‘parapublic’ segment (which includes the emergency services) at 7%. The latest success in the latter segment is the sale announced on June 18 of a new Bell 412 EPI helicopter (reputed to cost around $10mn) to the Czech police force, which will be used for search and rescue missions.
Still, competing in a continent where it has a fleet of only 700 or so will not be easy. Two makers dominate the market, Airbus and the Anglo-Italian AgustaWestland, which are long established and enjoy the associated deep ties to the region’s customers. Then there’s Russia, which is making its first forays into the commercial space with new helicopters using foreign engines, which the Kremlin will, like other products such as nuclear reactors, push heavily on price into countries it is trying to ‘peel away’ from Western Europe.
“We believe that one of our competitive advantages is customer support, which for 21 years in a row has been recognised as being the best in the industry,” says Garrison. “Our new products too are very competitive against the competition – it does take new products but it also take great sales and marketing team and we are continuing to build that here.”
“Even though the European market is limited in growth right now, we’ve seen fairly substantial growth simply because we were virtually not in the market,” he says, referring the 60% more helicopters the company delivered in 2013 than the previous year. “We are in the market now and we are competing for tenders around the region – I believe we can compete anywhere.”
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