Military work provides stability for Wichita aviation firms

Hundreds of Hawker Beechcraft employees braved the chill last month to watch the company deliver its 600th T-6 trainer.

The aircraft gleamed in the sunshine as U.S. Naval officials accepted the keys.

The ceremony was a reminder of the importance of Hawker Beechcraft's military business, especially during an economic downturn that hit the company's corporate aircraft business hard. All U.S. Air Force and Navy student pilots train in the T-6.

"The T-6 business has been a source of great stability for our company in a traumatic economic period of time," Hawker Beechcraft CEO Bill Boisture said.

"That's our ticket for the future."

Military work made up 25 percent of the company's revenue in 2009. Trainers comprise 31 percent of its total backlog.

Hawker Beechcraft's government business division employs 850 people, including 485 hourly workers.

Like Hawker Beechcraft, military and defense contracts have helped bring some Wichita aviation companies through difficult times.

"The downturn in commercial and civil aviation coincided with a decade-long surge in military spending," said Lexington Institute defense analyst Loren Thompson.

"Many of the skills that are needed to build commercial transports or civil aircraft systems are equally applicable to military systems."

McGinty Machine in Wichita decided after the Sept. 11, 2001, terrorist attacks to concentrate on the military segment of the aviation industry.

Now, about 75 percent of its business is military work, said company president and owner Don McGinty.

While many other Wichita subcontractors laid off workers and adopted shortened work weeks, 2009 was a good year for McGinty.

Business was up 10 percent. It retained its 30 employees and added equipment. This year should be even with last year, McGinty said.

"Anybody that was heavily Cessna and Hawker was in trouble," McGinty said. "Their work just dried up on them. They just had to go into a survival mode for a while."

McGinty and many other local suppliers — such as Kaman Aerostructures, Machining Specialists and TECT Aerospace — could get a significant boost in military business should Boeing win the contract to supply aerial refueling tankers to the U.S. Air Force.

"It's a big deal for Boeing and Spirit (AeroSystems) and for small contractors like us," McGinty said. "It creates new work in the pipeline."

Except for the tanker, there aren't a lot of new military programs coming up for bid, he said.

"If Boeing doesn't get the tanker, we may not see anything for many years," McGinty said.

Thompson said defense spending could be heading into a downturn.

"Military spending is migrating away from high technology and focusing on more manpower and support functions," Thompson said. "In other words, less money for machines, more money for manpower."

Military a bright spot

Military work hasn't solved all of Hawker Beechcraft's economic woes.

With the recession, general aviation aircraft deliveries tumbled, and the company finished last year with a loss.

Still, military business has been a bright spot.

"It's been a very dependable and predictable business at this point," Boisture said.

Last year, the company delivered 109 T-6 A trainers, four King Air C90s and 32 King Air 350s for military use, according to the General Aviation Manufacturers Association.

Now, Hawker Beechcraft is focused on growing its military presence around the world.

Jim Maslowski, president of Hawker Beechcraft's U.S. and international government business, smiles when he talks about future prospects.

He shows a visitor a long list of countries the company views as potential customers.

This year, for example, one of the contracts it will pursue is with India for 75 T-6 trainers, with an option for 37 more.

"We're in pursuit right now in Spain, Qatar, Afghanistan, Taiwan, the U.K., Australia and New Zealand," Maslowski said. "We're in active dialogue with those folks."

Contracts can also include training, software updates and ongoing support, Maslowski said.

"It's an exciting opportunity," he said.

In 1996, the company, then Raytheon Aircraft, won a major contract called the Joint Primary Aircraft Training System, or JPATS, to provide trainers to the U.S.

The company has been delivering T-6 Texan primary trainers since 2000.

The Air Force has taken delivery of 496 trainers; the U.S. Navy will buy about 250.

Hawker Beechcraft has also sold trainers to NATO Flying Training in Canada and to the Hellenic Air Force of Greece.

Last year, it took orders from Iraq, Israel and Morocco.

But time is running out on the JPATS contract.

On Wednesday, Hawker Beechcraft delivered its last trainer to the U.S. Air Force; its contract with the U.S. Navy ends in 2015.

With that work ending, the company is working hard to replace the business and keep production steady.

"In 2015, we're out of Schlitz without the international program," Maslowski said. "That's why we're so aggressively pursuing that."

A new sales weapon

The company hasn't been sitting idly.

It's developed a new weapon to build sales, the AT-6 light attack and armed reconnaissance aircraft.

The AT-6 is a structurally strengthened derivative of the T-6A and T-6B trainer.

Hawker Beechcraft joined with Lockheed Martin to provide the systems avionics.

It's pursuing contracts for the AT-6 with Afghanistan, Indonesia, Iraq and the U.S. air forces.

The company has two prototypes flying.

About 18 months ago, "we got real serious about it and began making the investment to turn that paper airplane into real iron out on the ramp," said Derek Hess, Hawker Beechcraft director of AT-6 development programs.

Last month, the company demonstrated the plane's capabilities to the U.S. Air Force at the Joint Expeditionary Force Experiment at Nellis Air Force Base in Nevada.

It was the only aircraft of its kind there, Hess said.

"We were 100 percent mission capable... and we fulfilled 100 percent of the mission requirements," Hess said.

The AT-6 is expected to be certified next year.

Hawker Beechcraft is adding regional executives to market the AT-6 and the trainer around the world.

The plane can help U.S. partner countries conduct air operations affordably, Hess said.

"There are a lot of nations that can't afford F-16s and F-35s and the high-end aircraft," he said. But they still need planes for light attack and reconnaissance missions.

The AT-6 and King Air turboprops are reasonably priced and have low operating costs, Boisture said. They can cover a lot of area and stay airborne for long periods.

"I see both those products fitting a landscape that is emerging in the world where we have a lot of low-level conflicts going on," he said.

For example, there is more piracy in the open seas, Boisture said.

Hawker Beechcraft's plan is to transition from the JPATS line of business. It will build trainers for the world's trainer market and build the light attack airplane to keep the production line stable in years to come.

"That's our job," Boisture said.