Sikorsky and MD Helicopters??

[PT6ER]

While not wanting to generate pure unfounded speculation (even though it can be fun at times) did anyone else hear that Sikorsky may be buying MD Helicopters??

[tagg]

Someone mentioned here a few weeks ago. It was also on the just helicopters website a couple of days ago.

It would be good news for MD operators if it is true.

[HeliEng]

Yes, this seems to be old news down here.

Don't know that MD have officially announced as such, but seems to be the way that it's going to be.

Hopefully all the poor MD owners out there might start getting the spares backup they deserve, but only time will tell!!!

[handysnaks]

I think the rumours spring from this article
http://www.shephard.co.uk/Rotorhub/default.aspx?Action=745115149&ID=d2175634-6243-41f1-9003-704bcab580f4

Remember, they are rumours!!:hmm:

[HeloEagle]

They are only rumors, but it would certainly benefit the U.S. helicopter industry and anyone that owns and flys an MD. It would also give Sikorsky a full price range of products. With their recent purchase of Schweizer, Sikorsky has the low end of the price spectrum covered with the CB300 series, and the S-70, S-76, and S-92 have the upper end covered, so the MD line would fill in the middle of the market with the MD500, 600, and 900 series line. It would also reunite the 300 series (Schweizer) with the rest of the old Hughes 500 (MD) line-up. Let's hope that the rumors are true, and Sikorsky is able to save the MD line. They are some great products, but are failing fast due to lack of parts and tech support. It was sad that the FTC wouldn't let Bell buy MD helicopters a few years back and instead let a foreign company (RDM Holdings) take it over. They said they stopped Bell because it would have given Bell at monopoly, but curiously the FTC had no problem with Boeing buying the larger chunk of MD and creating the largest defense contractor in the country--much closer to a monopoly than any helicopter company could ever be... Sikorsky may be able to save the MD line, and help slow the takeover of the U.S. helicopter market by Eurocopter. Any comments Nick?

[HeliEng]

Our rumour allegedly came from the horses mouth.

[Shawn Coyle]

We'll have to get Nick to confess it's all his idea - a way to get more types in the logbook.
Nick???

[SASless]

If Nick is going to fly a MD 500/600....he better have a shoe horn of Texas sized proportions.

[NickLappos]

Big men need BIG helicopters, SASless!

[SASless]

Nick,

Does this mean the MD line will become more user friendly than current models....I can't decide if I am having trouble bending over my tummy....or advanced age is making me too stiff to bend like I used to....heavens knows...finding the step on the way out on the high skid gear versions is really getting to be a trick....seems my laundry keeps getting hung up on the sticks and my head keeps bumping the door post. Your engineers do those folding chair lift things for us geriatric pilots?

[HeloEagle]

Come on Nick, please throw us a bone! If nothing else, let the Big Wigs at the Winged "S" know that we think it is a great idea and to buy MD before someone else does...

[NickLappos]

HeloEagle,
If I only had the money!

They say the way to have a small fortune in the aircraft industry is to start with a large fortune and then buy an aircraft company!

[HeliEng]

Have heard that there has been a press release in Flight confirming the MD have been taken over/bought out by Sikorsky.

Can anyone confirm it??

[Ian Corrigible]

Just a report in this week's copy claiming that both Sikorsky and Boeing had submitted offers to buy a share in MD, and a suggestion that both companies (previously teamed on Comanche) might team-up for the US Army's Armed Recon Helicopter program.

I/C

[huntnhound]

I hope someone does buy them out...and soon. We have a list of DDl`s on our 902 that is as long as your arm.
Maybe if Boeing did buy them we, in europe, wouldnt have to wait 6 weeks for a bulb:*

[Flight Safety]

As much as I like Sikorsky, their people, and their products, I do have one concern about them buying out Schweizer and perhaps making an offer for all or part of MD. This concern goes by different names, but it's basically the "morphing of purpose" problem that occurs all too frequently in American business.

Let me illustrate with an example. Here is Texas we have a popular local chain of barbeque restaurants called Spring Creek Barbeque. Their BBQ is excellent, and their bread rolls are to die for.

Let's also say that they make a pretty good steak as well (they don't, but we'll say they do for this example). Then suppose a really large chain of steak houses decides to buy out Spring Creek BBQ, mainly because they like their good steaks.

Now imagine what would happen to Spring Creek BBQ, if the new steak house parent company decided to place most of its interest in the steaks that Spring Creek BBQ makes, and does not show much interest in the excellent BBQ that Spring Creek produces? If the new parent company focuses mainly on steaks (rather than on all of Spring Creek's products), then the process of "morphing" Spring Creek from a BBQ restaurant chain into a steak restaurant chain will have begun, at the expense of Spring Creek and it's BBQ customer base.

One of the most common failings of the "morphing" process, can be illustrated by the fact that Spring Creek BBQ has never demonstrated in the market place that it can be a successful steak house chain, as it has only demonstrated that it can be a successful BBQ chain. Whether the "morphing" process is intentional or unintentional, it can be devastating to the purchased company.

I think you see my point, and this is a VERY common problem in the purchase and aquisition activities of American business. Sikorsky bought Schweizer partly because of it's ability to produce UAVs. As long as Sikorsky does not get Schweizer too focused on UAVs at the expense of its helicopter business, all will be well. The same will go for whoever purchases MD.

Warren Buffett (CEO of Berkshire Hathaway) has always had the right idea about buying other companies. If you decide to buy another company, do NOT take that company's focus away from what it does best. If you buy a company because some part of its operation appeals to you, do not take ANY focus or resourses away from what that company does best. Instead, commit additional resources to growing the specific part of the company that interests you, or you will cripple or destroy that company.

[NickLappos]

Flight Safety,

That is a big issue when one company buys out another. When Sikorsky bought HSI and AAG, we were very sensitive to not interfering with the senior management and basic operating methods. This helped those companies preserve what made them good. I think we have similar motives with Schweizer. While UAV's are an important new thing, the light helicopter, airplane and glider operatons are also important.

The Schweizer family is part of the current management team, and they are highly respected by the Sikorsky folks. I am sure they would shy away from any deal that made the company bend away from its customer base.

No comments on Buffett, he doesn't make anything, never did and never will. If this were a money thing, I am sure there are lots of companes to buy that do other things and could make even more money. Flying machines are what we do, and what Schweizer does, and that is a core value for both companies.

In a nutshell, your words are wise - don't screw up the golden goose. Message received!

[Flight Safety]

Nick you said:
I think we have similar motives with Schweizer. While UAV's are an important new thing, the light helicopter, airplane and glider operatons are also important.
It amazes me that some highly paid executives often don't realize that the expertise to develop new areas of business (particularly an area of business the purchasing company is interested in) usually comes from the core business activities of the purchased company. That expertise usually cannot be preserved unless the core business activities are also preserved.

You also said:
The Schweizer family is part of the current management team, and they are highly respected by the Sikorsky folks. I am sure they would shy away from any deal that made the company bend away from its customer base.
It's a shame that some founders (and founding families) of companies take no interest in what happens to a company (and its employees and customers) after they sell it, since their primary interest is in "cashing out" of the business. I think we've all seen this. Thank God for the founders and owners who do care.

Thanks for your words Nick, it's nice to know that Sikorsky is the well run company I always thought it was. :D

[diethelm]

Mr. Lappos:

Although well known as a Finance guy, as Chairman and CEO of Berkshire Hathaway, Mr. Buffet does oversee a few companies that manufacture quite a few things to include being the leaders in several manufacturing businesses. A partial list below.

Acme Brick Company
Johns Manville
Ben Bridge Jeweler
Jordan's Furniture
Benjamin Moore & Co.
Justin Brands
Berkshire Hathaway Group
Larson-Juhl
Berkshire Hathaway Homestates Companies
McLane Company
Borsheim's Fine Jewelry
MidAmerican Energy Holdings Company
Buffalo NEWS, Buffalo NY
MiTek Inc.
Central States Indemnity Company
National Indemnity Company
Clayton Homes
Nebraska Furniture Mart
CORT Business Services
NetJets®
CTB Inc.
The Pampered Chef®
Fechheimer Brothers Company
Precision Steel Warehouse, Inc.
FlightSafety
RC Willey Home Furnishings
Fruit of the Loom®
Scott Fetzer Companies
Garan Incorporated
See's Candies
GEICO Direct Auto Insurance
Shaw Industries
General Re
Star Furniture
Helzberg Diamonds
United States Liability Insurance Group
H.H. Brown Shoe Group
Wesco Financial Corporation
International Dairy Queen, Inc.
XTRA Corporation

More importantly, your point is correct. When managment is left to execute their business plan and are simply measured and judged by well defined goals and objectives, mergers can work.

[NickLappos]

diethelm,

I am reminded of a line from "Bonfire of the Vanities" where the wife of a Mergers and Acquisitions broker puts him down when she tells his daughter that, "Daddy's job is to cut other people's cakes, and he gets to keep the crumbs."

When I say build something, diethelm, I am truly trying to differentiate from those who handle money. It is a distinction, I know, but important to all of us. Creating things is what makes life better. Better foods, products, physical things. Shuffling money does not do this. In defference to Buffet's companies that make things, Warren Buffet couldn't make a toaster, let alone a flying machine.

When I think of makers of things, I think of Henry Ford, Tom Edson, Bill Gates, Gottlieb Daimler, Henry Royce, Charles Kettering. Those who handle the crumbs never really make the cake.

[diethelm]

Lappos:

You sound like my father, Guilty as charged. I suspect I would be labled by you as a card carrying crumb handler although my focus in on the whole bakery.

Interesting though, I come from a family of engineers and scientists who make your argument. The question of course is at what level do you stop making things and become a money shuffler. Take for example Mr. Borgman, who sat on ASU's engineering board with my father in the 90's, and as you know was President of a division of MD/Boeing and was President of Sikorsky. Is he a crumb handler/money shuffler as the President of Sikorsky or someone who makes stuff? At what point do you quit making stuff and become a shuffler, can you go back once you go to the dark side? (this reminds me of the joke about the French Bridge Builder)

If an executive engineers a turnaround at MD, is he a maker of things or is he simply an asset shuffler? If he comes from an engineering background he has made something but if he comes from a finance or accounting background he simply "shuffled" things?

I am not convinced that Bill Gates' day and daily contributions are not virtually similar to Warren Buffets'. At that level in a large company, I am not certain how you distinguish between a CEO who is a shuffler versus a CEO who is a maker.

Although certainly not healthy for the long-term of the US economy, I would argue in my lifetime the shufflers have learned to end up with more of the cake than the makers.

I suggest dueling welders at dawn.

[NickLappos]

diethelm,

You do make a valid pont, as well. The difference might be that a fellow who was once a baker has at least the memory of what a cake smelled like! Those bean counters use dry terms to describe what they want in return from the companies, regardless of what they do.

I can say this, Dean Borgman is one hell of an engineer, as is Steve Finger, and as is Richard Case (that Westland guy!)

I once said at a Managenment training course that demanding a percent rate of return, and governing all decisons on that is like training a good football team to win more games by having them stand on the field and stare at the scoreboard. Those crumb counters sometimes forget that it is running, blocking and tackling that wins our games, not scorekeeping.

[diethelm]

Now come on Mr. Lappos, Is Mr. Borgman a shuffler or a Maker...........