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The Skill Quotient

Aviation maintenance, repair and overhaul (MRO) is on a rebound. Helicopter MRO in Canada has traditionally cashed in on several assets, includ


October 14, 2011
By David Carr

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Aviation maintenance, repair and overhaul (MRO) is on a rebound. Helicopter MRO in Canada has traditionally cashed in on several assets, including a skilled and reliable workforce and excellence in niche markets such as gas turbine overhauls and composites. A lower dollar may have tipped some North American and international customers in Canada’s direction, but the overall benefit of a weaker currency is questionable given that parts typically make up 80 per cent of an invoice and are priced in U.S. dollars.

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Canada needs to do a better job of attracting foreign AMEs  and fast-tracking accreditation if it hopes to stay competitive.
(Photo courtesy of Vector Aerospace)


 

So as Canadian MRO climbs out of the doldrums, it will be a shrinking talent pool and not a soaring dollar that will hurt future competitiveness. Operators are feeling the pinch, says Fred Jones, president of the Helicopter Association of Canada (HAC). “We are regularly getting calls from operators looking for flight crews and technicians,” he says. “There is a shortage in Canada of qualified people who are prepared to do what it takes to keep the helicopter industry going.”

The concern now is avoiding a repeat of three years ago, prior to the economic downturn, when machines were parked because there was nobody to fly or maintain them. At a recent industry consultation put on by the Canadian Aviation Council for Aviation and Aerospace (CCAA, formerly the Canadian Aviation Maintenance Council), attracting and retaining people with the right skills was the top issue among MRO operators. “A strong dollar is a concern but we can overcome that,” Robert Donald, executive director of the CCAA, points out. “But it doesn’t matter where the dollar is if you don’t have the right people.”

When it comes to helicopter MRO, at least, too many of the right people are staying away in numbers and that should make the industry nervous. “It is a lifestyle thing, especially among younger people. There is some resistance to going out in the bush and spending 30 or 40 hours away from home,” notes Jones, who cut his teeth flying helicopters in northern Ontario for up to five weeks at a time before returning home. “For me, at least, it was an adventure. They don’t look at it the same way.”

Jones suggests that the industry is going to have to adapt to the changing culture, although he points out it can only bend so far. “An operation that is close to a base lends itself to regular shift changes, more reliable time off and periodic and shorter rotations up north and to isolated areas. But the reality is, if you are working in a camp in the Arctic Circle, distance and accessibility make it impossible to do those things. But we are going to have to adapt or watch the talent pool disappear.”

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StandardAero is working with the Manitoba government and local schools to ensure the pipeline of skilled workers remains steady. (Photo courtesy of Vector Aerospace)


 

By 2017, 40 per cent of the Canadian labour force will be over 55 years of age and considering retirement, including more than 80,000 aviation maintenance engineers (AME). Perhaps Canadian MRO dodged a bullet during the recent downturn as demand weakened and the monetary meltdown caused older AMEs to postpone retirement. The current economic crisis and the elimination of mandatory retirement in provinces such as British Columbia, Ontario and Saskatchewan may prompt a similar rethink.

“That can only take you so far,” says Les Aalders, executive vice-president of the Aerospace Industries Association of Canada. “At some point these people are going to have to retire and it is going to be a wave crashing against the bow.” When they do eventually leave, years of knowledge and experience will be going out the door with them.

Adding to the frustration is the skills imbalance in the Canadian labour force. In 2011, Canada had a shortage of 560,000 skilled workers versus a surplus of 88,000 unskilled workers. By 2016, an already yawning gap is expected to widen to a shortage of 1.4 million skilled workers versus a surplus of over half a million unskilled workers.

As the retirement clock keeps ticking down the number of students enrolling in aviation maintenance programs is not keeping pace with the 5.2 per cent compound annual growth rate in MRO forecast by Oliver Wyman.

Furthermore, there is no guarantee that those who graduate will follow the string onto the floor of an airline, MRO or original equipment manufacturer (OEM). Recently, 100 per cent of British Columbia Institute of Technology aviation graduates bypassed aviation entirely to work on Vancouver’s Skytrain light rail transit system. Graduates from similar programs across the country are finding higher-paying jobs in the oil patch, with bus companies or among the ups and downs of elevator repair.

CCAA’s Donald argues that the upcoming skills shortage is going to be markedly different from the shortages of the past. Traditionally, there has been a “pipeline effect” where bigger players such as Pratt & Whitney Canada (the world’s largest supplier of engines for helicopters, regional and business aircraft), Bell Helicopter’s production facility in Mirabel, and Vancouver-based Vector Aerospace (now part of the EADS/Eurocopter group of companies) had a steady pipeline to the skills they needed, leaving smaller operations to struggle. This has been especially true of the helicopter industry, which operates in some of Canada’s harshest climates and is more vulnerable to having skilled staff poached with offers of greater compensation. “This shortage is going to flow up the pipeline and it is going to hit everybody,” Donald adds.

The picture is not all gloom. Some MROs such as StandardAero are not waiting for recruits to walk through the hangar door. The Winnipeg-based MRO that has been twisting the spanner on aero engines for almost as long as Canadians have been piloting airplanes (see, “Setting the Standard,” pg 28) is playing a larger role in the education system, working with the Manitoba government and local schools to identify the skills.

Apprenticeship programs give the next generation of technicians a taste of the industry, but Jones maintains if operators want to hold onto personnel, they have to do a better job of educating young people about the nature of the beast before they sign on. “I don’t think it is in anybody’s interest for new personnel to arrive at a camp with false expectations,” he says. “There is a percentage of the new generation who will see this (as an adventure). But we haven’t been particularly good at preparing them for the time away from home or irregular shifts.”

Still, apprenticeship does not come cheap and can be a drag on already thin operating margins, which may explain why so many MROs remain hesitant about launching in-house training programs. Moving forward they may have little option, discovering as StandardAero has that a good apprenticeship program does deliver the skills. Canada also needs to do a better job of attracting foreign AMEs and fast-tracking accreditation. The number of foreign trained AMEs contributing to the unskilled shortage by driving cabs and sweeping floors is not as severe as with other professions, but they do exist and in increasing numbers. There is also a concern that federal budget cuts might compromise Human Resources and Skills Development Canada’s ability to help the MRO industry solve the skills puzzle.

A simple straight-line analysis points to at least 32,000 Canadian AMEs (40 per cent of supply) set to retire over the next 10 years. For the most part, the Canadian MRO industry has been lucky. Despite an enormous talent bank, offshore operators have been slow to poach Canadian AMEs the same way they do pilots, and foreign students who have trained here are just as likely to stay. But Canada is not the only country confronting a tightening MRO labour market, a situation that makes foreign AMEs more difficult to attract and Canadian AMEs more vulnerable to lure.

It is entirely possible that a sharp increase in jet fuel prices and a depressed market could knock the fragile recovery off course and push the bottom of the skills shortage into the future. But that is a dangerous assumption that few MROs should base their calculations on.

Setting the Standard

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Celebrating 100 years, StandardAero is still going strong. The Winnipeg location recently cut the ribbon on a $50-million engine testing plant.
(Photo courtesy of StandardAero)


 

Dubai’s $15-billion road map into aerospace manufacturing and aviation services runs through Canada. Launched in 2006 by the emirate government, Dubai Aerospace Enterprise’s (DAE) early focus was to be on new airport development and management, especially in China and India. One year later, DAE made a $1.9-billion acquisition into North American MRO buying Winnipeg-based StandardAero and Arizona-based Landmark Aviation from the Carlyle Group, a global asset management company.

Celebrating 100 years, StandardAero was an early pioneer in third-party aero engine maintenance and repair. In 1911, two years after John McCurdy first flew the Silver Dart over Baddeck Bay, N.S., Charles Pearce and William Bickell founded Standard Machine Works, specializing in car, truck and tractor engine repair. In 1936, the company expanded into aircraft engines, beginning with the rebuilding of a British Armstrong Siddeley Cheetah piston engine that would power training aircraft in the Second World War.

StandardAero has changed hands several times over the decades and head office has strayed a bit from its Winnipeg roots. DAE consolidated its North American operations under the StandardAero banner. Headquartered in Temple, Ariz., the entity is one of the world’s largest independent providers of MRO services, which include engine and airframe repair and overhaul, engine component repair, engineering services, interior completions and paint for the business, airline and military sectors.

In 2010, the Reuters news agency reported that DAE had retained the services of Deutsche Bank to advise on the sale of StandardAero after the company had received interest from several potential buyers. StandardAero quickly denied the story, although Dubai’s state-owned enterprises continue to cope with a $100-billion debt pile and merger and acquisition within global MRO is expected to ramp up after three years of little activity.

Whatever the outcome, StandardAero’s Winnipeg operation continues to jump from strength to strength. Later this year, the company will cut the ribbon on a $50-million engine testing plant in partnership with GE Canada.


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