Riding Out the Storm
Unstable Conditions Wreak Havoc With the Industry
Call me crazy, but it’s almost comforting that the price of copper is near what it was when I graduated from high school. I say comforting for two reasons. One, it makes me think of when I had hair – sort of. Two, it means it can’t possibly go lower, can it?
An analysis of metal and mineral prices vs. helicopter activity over the past three decades shows the two are almost always in lockstep, and since helicopter activity is generated by clients raising or earning money, metals and other commodities going up is good for our industry. Unfortunately, the commodities bubble (or super-cycle depending on who you talk to) of the 2000s has popped and while what comes down usually goes up, when that will happen is the question of the day.
Most commodities were in a depressed state from the early ’80s to around the turn of the millennium, when the effects of China’s growth, the popping of the Internet bubble and the availability of almost free money created such a steep growth curve in prices that it makes the famous global warming “hockey stick” look like a pool cue. During this period of growth the exploration for, and production of, almost everything increased. Many operators reaped the benefit while the Canadian helicopter fleet added dozens and dozens of aircraft. As soon as growth stopped a lot of those financed helicopters started to look like they weren’t such a good idea, but I think Canada has done well to retire a few of the machines built before I was born!
Now that the suffering has been going on for about four years (with copper and zinc at six-year lows) are there any signs of hope? I think there are, but it won’t be like the recovery from the Great Recession of just a few years ago. Our industry is fortunate in the sense that supplies of extracted commodities are essentially finite, and new discoveries are getting smaller and less frequent.
Since the easy ones have been found, it’s no secret that new ones are almost always going to be on the frontiers of the planet. And contrary to what many people think in this era of Google and Wikipedia, there is plenty left to discover. Helicopters will definitely be required and I suspect the national fleet will resume growth in the future, but there is more pain to come before
This past season was another one in which depression morphed to relief when the fire seasons in B.C. and Alberta enabled many operators to resume making mortgage payments and actually look at the points on a wine label instead of just the price on the tag. That’s not something we can count on for 2016, so prudent operators are cutting costs, reducing expansion plans and trimming debt. With no real end in sight to the malaise, the goal is to survive to catch that wave for the next growth cycle.
There were odd pockets of what I call “geographic blessings” this past season, namely areas where there was substantial activity requiring helicopter support, but these were rare indeed and should be cherished when discovered. One trend I see continuing is the demand for high-performance singles and twins, which seems a bit counterintuitive when faced with the broad downturn. It seems that the clients who do have money to spend are also demanding levels of capability that wasn’t widely available just a few years ago, so more money is being spent on fewer numbers of aircraft. This move to newer and more powerful aircraft might sound like music to the ears of the OEMs, but I think most operators will continue to upgrade legacy aircraft – and when faced with a choice between the newly STC’d 407HP and a factory-new helicopter the choice will be clear. Without clients insisting on certain airframe age limits or refusing aftermarket upgrades, the Canadian industry has always turned to the best bang for the buck model, and I don’t think anyone can say we haven’t made it work all this time.
2016 will probably be the first time many of us confront the use of drones as direct competition, as if we don’t have enough to fret over with the current state of affairs. I have always said: we can’t create work, we can only win it. I am changing my mind on that. I think we need to find new things to do with helicopters. Perhaps things no one ever thought of. That would be something worthy of this industry
Corey Taylor is vice-president of Global Business and Product Development for Great Slave Helicopters.
Fuel shortage may ground helicopters and small planesA Canada-wide aviation fuel shortage may ground some small planes…
Sikorsky CH-53K completes critical flight envelope expansionThe Sikorsky CH-53K King Stallion completed an external lift of…
Sacramento Police Department to operate first law enforcement configured Bell 505 Jet Ranger XBell has announced the signed purchase agreement for the sale…
StandardAero announces plans for expansion at three U.S. facilitiesStandardAero Component Services has announced a significant investment and expansion…
DTI Basic Quality Assurance - Vancouver
March 27, 2018
DTI Basic Auditing Principles - Vancouver
March 28, 2018
MRO Americas 2018
April 10-12, 2018
DTI Basic Quality Assurance - Calgary
April 10, 2018