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Banking on innovation

March 5, 2014  By Matt Nicholls

Resting on your laurels is something that really doesn’t fly at Bell Helicopters. Such a statement, such behaviour, is pretty much taboo – and there’s a rich history to illustrate just how foreign it is.

Resting on your laurels is something that really doesn’t fly at Bell Helicopters. Such a statement, such behaviour, is pretty much taboo – and there’s a rich history to illustrate just how foreign it is.

The Bell 429  
The Bell 429 is just one of four models manufactured at the Mirabel, Que., plant. (Photo courtesy of Bell Helicopter)


As one of Canada’s – and the world’s – most influential aerospace leaders, Bell continues to diversify its product line, innovate and refine its worldwide operations to stay one step ahead of the competition. It’s a philosophy that shapes the very foundation of parent company Textron, and it’s been the driving force of the Bell brand north of the border since it entered the Canadian market in 1947.

With a current fleet size of 2,500 aircraft used by more than 300 operators, Bell currently holds a 40 per cent market share in Canada. Some 4,200 aircraft have been manufactured at its Mirabel, Que., facility since it opened in 1986 and its efficient supply centre in Calgary ensures that the company is staying competitive in a demanding landscape. It’s anything but an easy task. Facing increased competition from Airbus Helicopters, Sikorsky and AgustaWestland, Bell is now very much on the aggressive, working to keep existing customers happy while offering a bevy of technologically-advanced products to replace a rapidly-aging Canadian fleet.


Barry Kohler, president of Bell Helicopter Textron Canada, is tasked with the challenge of keeping the Bell brand flying high north of the border, at both the Calgary and Mirabel sites, and with the Department of National Defence’s fleet of Griffon C-146 helicopters. It’s a challenge the Textron veteran relishes and he’s had plenty of opportunity to use his skills garnered over a successful 25-year aerospace career to help Bell remain a strong player on the Canadian aerospace stage. Kohler sat down with Helicopters to discuss a number of key issues, from Bell’s grip on the Canadian market to his own future plans as the new chairman of the board for the Aerospace Industries Association of Canada (AIAC).

Helicopters: What are the growth opportunities for Bell Helicopter Canada for both the civil and military markets over the next
few years?

BK: Given that we export 95 per cent of our product, we look at things from a global perspective. I think we see it the way the rest of the market does. There’s offshore oil and gas, utility, EMS, and parapublic service – these are the areas that we see continued growth. We have been pleased with our progress in these market segments. When you transfer that over to our current product portfolio, and more importantly, what our product portfolio is going to be in the next three years, we see we have a really strong lineup – products that are well-focused and well-placed within their market segments. The complement to that is we are going to supplement our global manufacturing portfolio by having Mirabel build the four models it is producing. And since I have been at the facility, we have essentially doubled our output.

Helicopters: Which aircraft are being produced at Mirabel and what is the North American demand like for each?

BK: We produce the 206L, which is very popular in Canada, and are enjoying a steady demand in single-engine EMS in the U.S. We also produce the 407, and with the GX, we’ve almost doubled the annual output on the 407 the past few years; it’s taken a nice position in the light-single market segment. The 429 is highly capable and becoming a market leader because it’s the newest and most capable in that segment. We’re now winning business in places we were not winning before. We traditionally haven’t had much success in Europe, but we’re starting to put the aircraft in the hands of new customers. The fourth aircraft is the 412, and we’re increasing production on it to meet demand. The 412 is the basis for the CH-146 Griffon and we’re doing a lot of work with the Royal Canadian Air Force because we have the weapons systems support contract and the Canadian government’s objective is to make it a model contract, because it was a 10-year contract with a four-year option. The Griffon is the aircraft they will be using for that role for the foreseeable future.

Helicopters:Where are the significant international growth opportunities for Bell Helicopter right now?

BK:  We’ve always been pretty successful in North America, Latin America and Asia, as well as Africa and the Middle East. But what we’ve always seen though is a disproportionately poor performance in Europe from a market perspective. We’re really focusing on turning that around with the right product and making sure we are getting the right message sent there. There is an affinity for twin-engine machines in Europe, and the 429 is doing exceptionally well. At the same time, they operate single engines over there, too, so the GX with its best in class situational awareness, best in class cockpit – there’s an awfully lot of opportunity there.

Helicopters: In terms of product development, the aging Canadian fleet offers real opportunity for Bell Helicopter. Which aircraft will best suit the needs of Canadian operators now and in the future?

Mirabel facility  
Bell’s busy Mirabel facility has produced some 4,200 aircraft since opening in 1986.
(Photo courtesy of Bell Helicopter)


BK: The big opportunity for change in Canada is we seem to be less enamoured with helicopter EMS than other parts of the globe, particularly Europe and the U.S. And when you look at the fact we are very spread out and have major cities – and less than one per cent of the population density of the U.S. yet our economy is stronger – you ask why don’t we go after more EMS here? That’s an area we are definitely looking at. There is a behaviour process on the government realm and public side; however, that must be worked on. (EMS growth) is something that is going to happen. It’s just a matter of when. If you look at an aircraft like the 429, look at what would be suitable for the rural and semi-rural areas, the 429 is very capable for this situation. If you look at the city of Montreal, the city from an infrastructure standpoint, and you look at the traffic, I can’t think of a place that is more right for a public/private or entirely public EMS role. And I know there are a lot of civic leaders who are trying to do this. I just think there is a little bit of paralysis about how. Bell has to develop a focused effort in Canada on educating people as to the benefits of an aerial EMS strategy.

Helicopters: Following up with operators is a great way to find out their perceptions of product, their needs etc. What feedback have you received from operators about your products? Any areas you’d like
to improve?

BK: The feedback we continue to get is operators are very content with the durability of our machines and the strength of our product support. People are going to continue to operate their Bell’s as long as they can, and we see that in the Canadian market. We let the operators decide what type of equipment they need to have and if they continue to service the tried-and-true Bell product that they own, then that’s great. At the same time, there is finality to this. The average age of the Canadian fleet is, pick a number, in the 20s (years), so 10 years from now it will be in the high 30s. At some point, we are going to have to have the right solutions for operators, at the right price, when they are ready to go.

Helicopters: In what ways are you working to improve service to Canadian operators? What challenges are you having?

BK: If you look at the annual survey done by AIN magazine, we lead in most or all segments when it comes to industry service standards. But that doesn’t mean we can’t be better. We’re best-in-class at parts provisioning, but at the same time, we went through our SAP implementation earlier this year and that resulted in some pain for some of our operators. We’re digging out of that and are committed to being even better than we were before the changes and widening the gap between our competitors and us. There was a period of pain for everyone, no question about it. Everyone goes through it, we were well prepared, but maybe we could have done things a little bit better; we wish we were more transparent to our customers, but we are very focused on getting out of it. We are in a much better position now.

Helicopters: What are some of the differences in market demand in Canada versus those in the U.S. and Europe? What makes the Canadian market unique?

BK: Canada is blessed in natural resources and the management of those natural resources is the predominant opportunity for helicopters in this country. When you combine that with the fact that the operators are really accomplished at taking care of their equipment, you have a smaller percentage of replacement aircraft and new aircraft that you might have in other parts of the world. That makes the utility market very competitive. The opportunity there is to continue to offer better value. If you look at our 407, we have not had the market success in Canada in the utility segment that we would like to have had, but I think part of that is that operators maybe didn’t fully understand the 407s value proposition. But as we do a better job of getting the numbers and attributes of the aircraft in people’s hands, we are seeing there is much stronger interest in the 407 than the competition. In terms of aircraft, there are a lot of L’s our there, there are a lot of B’s out there. We continue to have a lot of aircraft that were made in Canada and they are still operating successfully. For the replacement and the new opportunity aircraft we have to continue to let people objectively evaluate the 407, for example, against the competition, and I think that is going to generate additional interest as people see the 407’s capability.

In the future, the 525 Relentless may be an option for a lot of companies in the off shore oil and gas industry. There are a lot of Canadian companies that operate in the offshore oil and gas industry around the globe, so it’s going to be a strong player in that segment. And because of its cost per seat mile and the advancements of aircraft, it will be a top choice when people need something in the super medium category. Like the 429, there will be some market opportunities that will create themselves just because of the aircraft’s capabilities.

Helicopters: Working to create the safest helicopter environment possible is a top priority for operators and OEMs alike. How is Bell Helicopter working to ensure the Canadian operating environment is as safe as possible?

BK: It really starts with the corporate culture; across the board, safety has to be the No. 1 priority, bar none. If you look at our internal safety, both in the U.S. in Fort Worth and Amarillo, Tex., the 2013 performance is one of the best ever in terms of a real aerospace manufacturing company, and we had similar results in Mirabel. Every year, we continue to improve and we are bordering on world-class safety performance for a manufacturing organization. We have more plans this year. The whole purpose is to have a corporate culture where everybody understands how important safety is and it starts with our internal manufacturing and extends to the safety of our flight test operations. It then extends to the safety of our operators around the world and out in the community. Everybody in our plant knows that safety is the No. 1 priority and it starts at our supply base. We encourage our suppliers to have safety programs and we award business ensuring that they have adequate safety programs. We also participate in all of the international safety ventures; IHST is one example, where we took a leadership role with our employees out of Mirabel in helping to start up the organization. At the same time, the rotorcraft industry clearly has some room, collectively, for improvement.

Helicopters: What areas need improvement in the Canadian market when it comes to training and safety?

BK: My safety comments are not specific to Canada; they are more aimed at the global market. Safety comes down to making sure that you have the right mission equipment, that you are giving the pilots the best opportunity possible to operate safely, and that the pilots are always in a position to make good decisions about their missions – and providing them the opportunity to safely operate all aspects of their mission. If you look at the statistics, there is room for improvement in the decision-making process – and that is what we have to do, help operators and pilots make good decisions.

Helicopters: Many corporate leaders I have spoken with speak of finding the right talent to drive their operations in the future. How do you create a corporate environment at Bell Helicopter that establishes trust and promotes growth, development and initiative?

Newfoundland’s Universal Helicopters has had plenty of success with its versatile Bell 407. (Photo courtesy of Universal Helicopters)  

BK: At Textron, at Bell as a whole, and at Mirabel, we are doing a tremendous job at talent development. Our CEO, Scott Donnelly, says it all the time: “Talent is our No. 1 priority.” In terms of internal improvement, it’s safety, no question, but talent development is at the top of his list and he will stress it regularly to us. As senior leaders in the company we should be spending most of our time on talent development. It is incredibly true. John Garrison gives us a lot of opportunity to move talent around the organization, and from my standpoint, I happen to be in one of the three biggest aerospace cities in the world in terms of what can be done – and we happen to live in the best. I respect what they can do in Seattle, but Montreal is a better city. And we have so many people working in aerospace – 50,000 in Quebec, 40,000 in the Montreal area. There’s an incredible amount of talent, there are several high level academic institutions. We have to compete for the talent available with Bombardier, CAE, Pratt & Whitney, and so many smaller players, but we’re doing a nice job of moving that talent in the right spots. A good example, we had someone in supply chain management for a couple of years. I put her in charge of the biggest part of our manufacturing organization at the beginning of last year, and because of her supply chain perspective, she was able to have essentially unprecedented levels of quality improvements.

We also have a very good working relationship with the Quebec government so if we’re able to do some technology and research cooperation that works to improve us all, we can. We have internships for people that are currently in school in Montreal, and once they are out of school, we have the Textron leadership development program where we have people move through various Textron divisions. We’re moving that pipeline around, keeping it fresh. We have a very strong focus on developing our talent internally or indirectly out of college.

Helicopters: So, you’re not a pilot Barry, but what got you into this business and what excites you most about the business in general? What’s the best part about being on the leadership team of a major helicopter manufacturer?

BK: I am a propulsion guy. I started my career technically working on what is now the Rolls-Royce 250 engine. I have turned fuel into propulsion my whole career . . . it’s all I know how to do and all I ever will do. I’ve run the gamut from gas turbine engine design to under sea propulsion systems, such as torpedoes and missile control systems. And then the opportunity to get back into the helicopter business presented itself and it was ideal for me because I love the business, I love the product, I love what we can do with our product . . . it’s unlike any other business. The versatility of helicopters is just incredible and frankly, it’s just really fun.

When I look at the Canadian aerospace industry, which I am very passionate about by virtue of my position with AIAC, the other thing that I like seeing is Canada’s aerospace role. Canada has a strong economy. We survived the economic crisis as well as or better than any other nation. But that means we do not have developing nation labour rates. So, watching our ability to be globally cost competitive at Mirabel by using our talent and technical capability to meet the demand is a real challenge. We have to find a way to compete with customers in countries who have much lower labour rates. How do we do that? If you look at the progress we have made in terms of our cost structure and taking the direct cost out of developing our aircraft, you do that with finding the right talent. . . and this is the kind of thing that excites me.

Another thing that excites me the most is our helicopter facility in Mirabel. We do it all here: composites, research and development, flight-testing. Anyone that walks into our facility no matter what industry they come from, they are struck at how world-class our assembly facility is, looks and is organized. Groundbreaking was in 1984, production in 1986, we’ve been a force there for more than 20 years.

Helicopters: Congratulations on your recent appointment as chairman of board for AIAC. What is your reaction to the appointment and what will be your first order of business upon taking over the role? What are your goals for the organization?

The technologically advanced Bell V-280 Valor is an improved version of the tilt-rotor V-22 Osprey.
(Photo courtesy of Bell Helicopter)


BK: There’s really three things. The first one and the over arching priority is to create and support the environment for the Canadian aerospace industry to succeed on a global basis. We are a small country, which means we don’t buy a lot of aerospace products but we have a lot of aerospace manufacturing, we’re selling a lot of product. By definition we are an export business and so we need to be competitive at that export business. The immediacy of that for my tenure is to continue to work with the Canadian government to implement the policies and recommendations from the Emerson and Jenkins reports and to help guide the government to implement those recommendations. Step two is we have to recognize that the vast majority of companies are small and medium enterprises (SMEs). If you look at the economics of it, we have to put them in a position so that they are growing as an entity, growing at least at a global GDP. This means that for them to succeed they need to be globally cost competitive. This is critically important. The OEMs are successful by globalizing the supply chains and staying globally cost competitive. The SMEs by nature have to be somewhat less reliant on the domestic OEMs and look more toward global cost competitiveness to win business in an export market. We have to develop a strategy that allows them to do that. The third priority is we executed a superb strategy with getting the government and pubic award of the aerospace sector, and although we haven’t finished it, it is largely done. My predecessors did a great job. We need to develop our next multi-year strategy.

Helicopters:: You have had tremendous success in your career at Bell Helicopter. Are there any experiences that stand out that have helped you in the process of growing the organization? What has been the most satisfying experience at Bell Helicopter for Barry Kohler?

BK: I break it into three things. First, seeing successful product in production, be it the market penetration of the 429, watching the 525 roll out, seeing the 407 GX go into production . . . we can’t make them fast enough. I am thrilled with the development and execution of product development; it’s always special to see. But at the same time, it’s all about the people and I am passionate about people and developing talent. When I see the people in the organization have an opportunity to succeed and thrive, especially hidden gems of talent step into new roles and grow . . . that’s exciting for me. The third thing is to set a strategy for our organization and convince them that, even though we are in a strong economy, we can be globally cost competitive. And we can substantially improve our position with respect to our supply chain stability and our year-over-year approach. Watching all of the elements together and having Bell achieve its goals . . . it’s just very exciting.


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