Archives
Business News : Monday, August 28, 2000
Jet orders not finalized until money is on table
by Kyung M. Song, Seattle Times aerospace reporter
FARNBOROUGH, England - It's not a bad hail for a week's work: Boeing and Airbus Industry said they won as much as $38.7 billion worth of business during this week's Farnborough International air show. That's $300 million more than Boeing's commercial aircraft sales for all of last year.
The blockbuster airplane "commitments" revealed by Boeing and Airbus are just that: commitments. They won't convert to firm orders until the buyers put money down and lock in delivery dates.
Still, Airbus clearly edged out Boeing for both firm and intended orders for 139 airplanes worth $15 billion retail, including 10 orders that were previously counted. Two Boeing jet models, the medium-sized 777 and the small, one-aisle 737, accounted for all the orders.
Of Boeing's total, 114 still need final contract signing before they can be added to the company's true orders count.
Customers took out options and purchase rights for an additional 69 jets valued at $5.7 billion. Typically, less than a third of the options get converted to orders within five years, according to Back AviationSolutions, an aviation data and analysis firm.
Airbus claimed a record 230, jet orders worth $18 billion at list prices. But 196 of those orders are not yet firm, and include intended purchases of planes that Airbus has not officially committed to build, most notably the highly touted A3XX superjumbo jet.
Worldwide hype over the superjumbo, and the sheer size of the orders announced here by the giants of the aerospace business, have grabbed the spotlight at the trade show for four days running.
But toiling away in the shadow of those giants, many smaller companies are pinning their hopes, and big chunk of their budgets, on making connections that could pay off in the future.
Seven small Washington aerospace companies are part of that pack.
Rosemary and Larry Brester came seeking exposure for their seven-person companies, Hobart Machined Products in Hobart, southeast King County.
The trip cost them nearly $12,000, not enough to cover Boeing's catering bill for the week but big bucks for the Bresters.
"We're probably the smallest company here," said Rosemary Barrister, president and owner.
Can the couple really afford to come halfway around the world to attend an aerospace trade show?
"How could you afford not to?" Rosemary Brester asked.
Big guns such as Boeing, Airbus, Bombardier and B.F. Goodrich rent private chalets to entertain customers. The Bresters do their networking on 90-minute train or bus rides to Farnborough from their hotel in London's King's Cross. In fact, that's how the Bresters snagged an invitation to visit and executive yesterday at the United Technologies chalet.
Without that stroke of luck, "I couldn't get past the reception desk without a pass at chalet," Larry Brester said.
The Bresters exhibits at last year's Paris Air Show, which is even bigger than Farnborough But turning contacts into contracts is tenacious work. Rosemary Brester had gone to Spain as part of a Washington trade mission and met executives with an aerospace company there.
She met them again at a trade show in Vancouver, BC, then in Paris. After renewing her acquaintanceship with them in Farnborough, she finally has received some parts specifications from the Spanish executives, who might follow through with an order.
"It's not an overnight thing," Brester concedes.
Bob Moses, a regional sale manager for Pentar Avionics in Bothell, said trade shows almost never yield immediate sales.
"I've never had anyone say, 'We just love your product. May I have a hundred?' " said Moses, whose company is sharing the exhibition hall booth with six other Washington firms.
Joining together allows the firms to divvy up exhibit-booth space into affordable slices. The logistics are handled by Bill King, director of the Washington aerospace program, and J.C. Hall, head of the Washington Aerospace Alliance, a trade group.
Moses said he spends only 10 percent of his time staffing the boot. The rest of the time, he trolls the four cast halls at Farnborough visiting with companies that Pentar could buy from, sell to or partner with.
"If we wait for people to come to this tiny booth," Moses said, "with our 35-member company that 90 percent of the people here have not heard of - we wouldn't get any where."
The rest of the fleet
Boeing isn't the only Washington aerospace company exhibiting at the Farnborough International Air Show. Seven independent businesses from around the state are there as well.
The companies are:
- Pentar Avionics, Bothell - makes equipment to test avionics, such as weather radar or ground warning systems on airplanes. Also makes computer servers that allow passengers to connect to onboard printers or fax machines.
- Hobart Machined Products, Hobart - makes parts such as bolts and welded frames.
- AscendAir, Belligham - sells light, experimental and kit-built airplanes.
- Fatigue Technology, Seattle - makes tools to repair cracks on aircraft.
- Cascade Gasket, Kent - makes custom-molded rubber and silicon parts for aircraft.
- Olympic Tool, Shelton - manufactures and welds parts and assemblies for aerospace and nuclear industries.
- GAC Aviation Services Group, Kirkland - sells airplane parts including electrical cables and harnesses.
--------------------------------------------------------------------------------
Kyung Song's phone-message number is 206-464-2423. Her e-mail address is: ksong@seattletimes.com.
