Silver clouds are sometimes found among the thunderstorms. As Ron Utecht, CEO, COO and president of Timco Aviation Services, is finding, opportunities for maintenance, repair and overhaul (MRO) companies are expanding and becoming highly competitive even in these tumultuous times.
Although businesses are flocking to low-cost locations in Asia to take advantage of the continent’s burgeoning aviation industry, Timco, based in Greensboro, North Carolina, is picking up work from domestic and international carriers. Many of these have increased routings to North America since Open Skies air transport agreements have vastly expanded international flights to and from the US.
“Carriers are finding that it makes no sense to fly their aircraft across the Pacific to Asia for a three-day check-up,” says Mr Utecht.
“More airlines are outsourcing maintenance and repair activities to outside MRO providers. Japan Airlines and Lan Chile are big customers. We are also drawing a fair amount of work from Europe.”
Another factor influencing MRO growth in the US is the proposed Federal Aviation Administration (FAA) Reauthorization Act, which, when passed by the US Congress, will require FAA-certified foreign and domestic repair stations to adopt a standard Transportation Security Administration programme.
Certified stations will be required to implement strict access controls, provide security awareness training and allow for Department of Homeland Security inspections.
“The Reauthorization Act is making it more difficult for small, independent ‘mom and pop’ shops to do the work,” says Mr Utecht. Consequently, some carriers are already positioning themselves with MRO contracts for when the act takes effect, he adds.
Timco already has the required 145 Certification for aircraft repair stations at five of its US locations: Greensboro, North Carolina; Macon, Georgia; Lake City, Florida; Oscoda, Michigan; and Pacoima, California. Greensboro, Macon and Lake City are its airframe MRO locations.
From its roughly 70,000-square-metre (sq m) facility in Greensboro, 1800 Timco workers service wide-body aircraft for airlines including Continental, Delta, FedEx, United and United Parcel Service, as well as UK travel company Tui. Timco
also works on the US Air Force KC-10 Extender Refueling Tanker aircraft.
“We are transitioning more into the military market,” says Mr Utecht. “We started the KC-10 product in January [and it] is becoming a significant portion of our work.”
The Greensboro operation also manufactures interior parts for aircraft such as galleys, laboratories, closets, ceiling bins and dug-outs.
Timco operates a similar 55,740 sq m facility in Lake City for narrow-body aircraft. Its customers include the US Coast Guard, United, Aligent Air, Air Canada and leasing company ILFC. The Macon operation largely services USAirways and Icelandic Airways. “We also operate a seating manufacturing company in Picoima, California – Brice Manufacturing – where we make coach- and business-class seats for Airbus, Boeing and military aircraft,” he adds.
In addition to heavy airframe and systems repair and modification, Timco is an FAA-approved designated alteration station, providing design engineering, air agency certification approvals and supplemental type certificates, and manufacturing and distributing modification installation kits. “The people we hire come with the appropriate certification and have the proper training,” says Mr Utecht.
The company, which realises about $300m in revenue a year, has 21 locations from which it does line maintenance for a broad group of customers. Through its subsidiaries, Timco is the largest independent aircraft MRO provider in North America and the world’s second largest independent provider of airframe MRO services.
Given the latest aviation trends and the growth of particular regions, Timco is exploring global expansion. Its executives see a lot of the work moving out of the US.
“We have looked at Mexico and South America,” says Mr Utecht. “The trouble with most Latin American countries is their complex labour laws. And in Europe many locations want you to employ people for life.”
Recently, however, the company did enter into a joint-venture agreement with Coopesa, which primarily performs heavy maintenance on narrow-body aircraft in Costa Rica.
“If you look across our business, a high percentage of the wide-body work is going to the Pacific Rim because of low-cost labour,” says Mr Utecht. “Some of it is also moving south to El Salvador and Mexico.”
Consequently, Costa Rica became attractive to Timco because the country is known for its political and economic stability – qualities mirrored at Coopesa. “We found Coopesa to be impressive from a US standards and quality point of view,” says Mr Utecht. “And its workforce is good.”
He admits that Timco’s timing for the joint venture, however, was “horrendous”, at the beginning of the downturn. “Thirty-six percent of the fleet that was eligible for that facility was grounded,” he adds.
Timco, however, held the partnership together. “We are currently looking at a medium-size customer that will be going there for MRO services,” says Mr Utecht. While he describes the operation as by no means vibrant, he emphasises that Coopesa has a highly skilled workforce and can accommodate six narrow-body aircraft.
But Mr Utecht sees a location such as Greensboro as key to Timco’s growth. Greensboro offers good weather, is centrally located in the heavy traffic area between New York and Atlanta, and – given the cluster of aircraft activity in North Carolina – offers access to a skilled workforce at a reasonable cost.
“To be competitive, we have to pay a lower salary than the airlines pay for the same certified technician,” says Mr Utecht. MRO technicians working in major US cities earn upwards of $35 an hour compared to about $20 at Timco. However, “our workers can afford to buy a house and work relatively close to home, whereas in other locations it’s much more difficult”, he adds.
Timco also benefits from excellent community support. In Greensboro, Guilford Technical Community College offers training in aviation systems technology. “We pay for two instructors at the college and they train the workforce,” says Mr Utecht. “Timco has no restrictions on where these students eventually work.”
Other pluses are the right-to-work laws in the US south-east. Though today Timco’s Greensboro facility operates in three shifts, 24 hours a day, 365 days a year, this law was especially helpful during the economic downturn when the company had to implement a flexible working schedule. “Employees had to work different schedules where they worked three weeks, then took a week off,” Mr Utecht explains.
“Our employees adjusted to that and were grateful to keep their jobs.”
Timco Aviation Services
Greensboro, North CarolinaLocations worldwide
21First year of operation
1990Total number of employees
2260CEO, COO and president