£300 million EH101 contract

[Heliport]

Denmark announced today that it has selected the EH101 produced by AgustaWestland - a joint venture between GKN of the UK and Finmeccanica of Italy - to meet its multi-role search and rescue and troop transport requirements.
The order for 14 EH101s is valued at £300 million and is subject to satisfactory contract negotiations.

The EH101 was selected in a straight competition with the Sikorsky S-92 and NH Industries' NH90 to replace Denmark's long-serving fleet of Sikorsky S-61s.

According to a statement, an important element within the contract negotiations with Denmark will be the level of benefits accruing to Danish industry through industrial co-operation.
In October 2000 teaming agreements were signed with TERMA and Danish Aerotech to collaborate and further develop their existing business relationships.

As part of its commitment to Danish industry, AgustaWestland has already placed a number of contracts with Danish industry for the supply of a range of EH101 components including avionic floors and a recently placed contract for composite nose cap manufacture.

These contracts cover the requirements under current contractual obligations with the UK, Italian and Canadian Governments

[bockywocky]

More and more you can see countries selecting new helicopters based on the workshare and not on performances...

I can perfectly understand there are political issues to consider when selecting a new helicopter for your MoD, but in my opinion it should not prevent someone from selecting the best helicopter.

[Mars]

Bockywocky:

Care to elaborate on your email - I for one do not quite understand your point.

[widgeon]

Think he means that the value of offset work is given too high a weighting in the overall rating of the proposal . A helicopter that is technicaly superior may not be selected if not enough work is given to local suppliers. In the Canadian selection process ( now about 15 years old ) I believe to be compliant you have to offer a certain level of regional industrial benefits . So in this case it should not be a factor in the decision as it is a simple question of whether the bid is complaint or not with no extra credit given ( in theory) for any work above the minimum required by the contract.
It remains to be seen if that will be the case.
http://www.dnd.ca/admmat/mhp/docs_e.html

for copies of all Docs for canadian MHP program.

[NickLappos]

Often the amount of offset is a pass fail, but the quality of the offset is usually a graded value. If you offer to place low tech work, it is worth less than high tech growth work. If you have hard contracts, it is worth more than if you promise to find some.

That being said, the Danish competition was held almost 3 years ago (actually, the Danes gave a quick look at the field and selected the EH.) The S-92 was years away from certification, and therefore judged at that time as a risk. Nothing else in the field came close to the EH-101 or S-92 (typographical mistake edited out! thanks heedem!!) in cabin size or range.

[heedm]

New helicopters are so impressive that the minimum qualifying bid is quite likely an awesome machine. If my government is spending millions on a purchase, I think it would be nice if as much of those millions as possible was spent in my neighbourhood. Government spending only stimulates the economy if it's kept in the country (unless there's trade agreements...won't go there).

Nick, what do you mean by comparing EH101 and S76 wrt cabin size? Two nice machines, but completely different on that front.

Matthew.

[RDRickster]

Actually, heedm, your government IS spending millions on the same helicopter. Canada has a EH101 doing SAR. I understand these aircraft can be as much or more than $47 Million each (depending on configuration). I don't see any subcontract work for EH101 production in Canada, but I could be wrong.

[heedm]

RDRickster, I was speaking more generally. The requirement to include local benefits isn't a bad thing when you consider that every complaint bidder offers excellent product.

I'm familiar with the SAR helicopters here. The project does have Canadian content, although I can't say how much nor how important it was in the bid.

Currently, there's a project to replace our Navy's helicopters. It's intimate with the politics which appears to be slowing things down. There's definitely a lot of posturing occuring with manufacturers lining up Canadian content as well as aboriginal Canadian content.

[Lu Zuckerman]

It would seem to me that every time they want to sell an EH-101 or any other aircraft or military systems they offer an offset to sweeten the deal. If this continues the parent company that designed and “built” the system would eventually cease building parts and subsystem elements because they have farmed all of the work out to prospective buyers. They in the process loose a lot of jobs that used to build those offset elements and the builder then becomes an integration contractor.

If they run out of items to offset then they will start to farm out major structural elements which further exacerbates the lost job situation and the company could collapse due to expensive overhead with nothing to support the facilities.

They used to joke at Douglas aircraft that they lost money on every DC-9 they sold. Then some wag suggested that to compensate they could sell them in large numbers. Substitute B-7X7 or any other new design.

:E :E

[widgeon]

On Cormorant , I know Fleet ( RIP) had some parts they were manufacturing . Bristol in Winnipeg got some work as did Acro and Wescam The lions share seems to be with IMP who are actually providing maintenance support for the fleet.