Sunday, June 17, 2001

Area contingent at Paris Air Show

It's the best venue in world to make connections

By Mike Boyer
The Cincinnati Enquirer

        When the 44th Paris Air Show, the world's largest aerospace and aviation exhibition, officially opens today,a half dozen representatives from Greater Cincinnati will be there.

        The local contingent will be bigger than just officials from GE Aircraft Engines. It will, for example, include the Partnership for Greater Cincinnati, the coalition of local development groups.

[photo] The 1999 Paris Air Show drew exhibitors of military and civilian aircraft from 40 countries. In the foreground is a World War II U.S. Army Air Corps F4U Corsair.
(Associated Press file photos)
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        “This is the first time the chamber has exhibited outside the United States,” said Neil Hensley, director of international marketing at the Greater Cincinnati Chamber of Commerce.

        Mr. Hensley is part of the local chamber delegation that will staff a 10-foot-by-10-foot booth in the U.S. pavilion at the show, which regularly features new aircraft displays and deal-making by the world's biggest aerospace companies.

        This biennial show, sponsored by the French aerospace industry association, comes as the world aviation market is at a crossroads.

        While aviation suppliers such as Evendale's GEAE find their order books are full, their customers in the commercial airline industry are being squeezed by higher costs for fuel and labor contracts and the softening U.S. economy, which is hurting traffic.

        David Calhoun, president of GEAE, said he expects a mixed message from the show.

        “The supply chain of the aviation world is in pretty decent shape because of orders placed over the last couple years,” he said in a recent interview.

[photo] Visitors stopped by the GEAE display of passenger jet engines at the 1997 Paris Air Show at Le Bourget airport in June 1997.
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        “On the flip side, our customers, the airlines, are facing a very tough environment.”

        Eight of the 10 largest U.S. carriers — including Delta Air Lines Inc., which operates its second largest hub at the Cincinnati/Northern Kentucky International Airport — reported first-quarter losses, the industry's first combined quarterly loss since late 1993.

        Last week, Samuel Buttrick, airline analyst with UBS Warburg, predicted the major U.S. carriers will report combined losses of $100 million to $125 million this quarter and $100 million for the full year.

        Total U.S. passenger traffic declined 2.7 percent in May, while international traffic increased 1 percent.

        Mr. Calhoun said it's too early to say the airline industry is in recession, but “they're in a squeeze and they didn't have a lot to get squeezed before.”

GE in "good shape'

        By contrast, GE and CFM International, its partnership with French engine maker Snecma, is “in pretty good shape,” Mr. Calhoun said.

        GE and CFMI combined have an order backlog of more than 5,400 engines and CFMI, which assembles half its engine in Evendale and half in France, expects to build about 1,000 thousand engines both this year and next.

        But Mr. Calhoun points out the outlook beyond that is decidely cloudy.

        “New (engine) orders are not coming in at the same rate (they were in the past),” he said. Although airlines aren't canceling aircraft orders, he said, "clearly, orders are being pushed out” further in the future.

        Still, that doesn't dampen Mr. Hensley's enthusiasm for the show.

        “This is the premier event in the aerospace industry,” he said. “We hope to heighten the profile of Cincinnati in the aerospace industry.”

Aerospace connections

        Not only is Cincinnati home to GE Aircraft Engines, the world's largest jet engine builder, and CFM International, it is also home to more than 300 aerospace-related businesses and has a workforce that includes more than 180,000 engineers and specialists in aircraft engines and other components.

        Meyer Tool Inc., a Camp Washington company that specializes in drilling hair-thin air cooling holes in jet engine parts, will be making its initial foray into international marketings at the show.

        It's one of 17 U.S. companies participating in an exhibit created by the Aerospace Industry Association, and Federal Equipment Co., a small Cincinnati company that builds lightweight helicopter landing structures, or heliports, used by hospital emergency teams and on commercial buildings.

        Jack Davis, president of Federal Equipment, which employs about 50, said he's not going to the show expecting to land orders so much as to make connections with dealers and potential customers.

        “I'm not looking to come back with a lot of contracts,” he said, but the show draws a lot of key people.

        “It gives us a chance to meet people and promote our product internationally,” he said.

        Meyer Tool, which employs about 500 in four Greater Cincinnati plants, within the last year opened a small operation in Amsterdam, The Netherlands, but won't be specifically promoting the machining capabilities it does for companies such as GEAE, Pratt & Whitney and Rolls Royce Plc.

        Rather, it will be introducing three tools it developed for its own operations to the aerospace market at large.

        One is a suitcase-sized airflow testing system, another is a small batch coating furnace and the third is a statistical process control software.

        “This is the biggest (air) show in the world and it's time for Meyer Tool to be part of the world market,” said Norb Donegan, the privately held company's marketing manager.

        Jerry Flyr, Meyer Tool vice president and general manager, said the decision to exhibit at the Paris show reflects the increasingly global nature of the aerospace business.

        Other area companies expected to be represented at the show include: Structural Dynamics Research Corp., A-Carb LLC, the new Richwood company producing aircraft disc brakes owned by Messier-Bugatti, part of the French-based Snecma Group, and Sermatech-Lehr, a Blue Ash rival of Meyer Tool and part of Telefex Inc.

Level of participation

        Mr. Hensley, who scouted the Paris show at its last iteration in 1999, said what impressed him was the level of participation at the show.

        “You're not just meeting a salesman for a particular company,” he said. “This show attracts company presidents and vice presidents, decision-makers, as well.”

        Mr. Calhoun, the GEAE president, agrees that the contacts developed at the show are more important than the aircraft on display.

        “I don't think people go there thinking they're going to see a lot of new, whiz-bang stuff they don't already know about,” he said.

        “Air shows are enormously important from a networking and meeting standpoint. I'll have an opportunity to meet all of our partners from around the world. I'll have an opportunity to meet the key supply chain folks that support our engine development and I'll have an opportunity to meet most of our customers. I get to do that in the course of a week.”

Maximize the impact

        There will still be lots of news coming out of the show because the aircraft makers and their airline customers typically postpone order announcements until the show to maximize their impact.

        This year, GE's pending $45 billion acquisition of Honeywell International Inc. which is attempting to win European Union antitrust approval is expected to be a major focus of attention.

        European-based Airbus Industrie will display a full-size model of its superjumbo A380 jetliner, capable of carrying up to 600 passengers.

        Seattle's Boeing Co. is expected to counter with more details on its planned Sonic Cruiser, a new long-range jet which will carry fewer passengers than the A380 but travel at speeds just under the speed of sound, reducing the time it takes to travel between distant routes like New York City to Singapore.

        GE and rival Pratt & Whitney — which have teamed to develop a new engine, the GP7200, for the A380 — recently received an initial order valued at $900 million from Air France to power 10 of the A380s, which are expected to enter service in 2006.

        Mr. Calhoun said GE and Pratt & Whitney hope to receive at least one more engine order for the A380 jetliner by the show.

        Airbus has forecast a market for up to 1,500 of the A380s over the next 20 years. The GE-Pratt Engine Alliance is competing with Rolls Royce to supply engines for the A380.

        “If Airbus meets their forecast, this will be a spectacular business for us,” said Mr. Calhoun. “If they get half of that forecast, it will still be a good business for us.”

Upbeat over Boeing

        Mr. Calhoun was equally upbeat about the outlook for Boeing's Sonic Cruiser. GEAE is working with Boeing engineers to define engine requirements for the Sonic Cruiser and expects to develop a new engine using technology from its current GE90 and other programs.

        Mr. Calhoun said GE and Boeing still have about a year of work ahead of them fleshing out plans for the Sonic Cruiser power plant.

        “All I can say is it will be a GE engine and we will deploy every advanced technology that we know,” he said.

        GEAE is also expected to announce orders for its CF34, a family of regional jet engines. The company is spending about $1 billion to certify three new versions of the CF34 which will enter service starting next year.

        “The regional jet market in Europe is not as penetrated yet as it is in the United States but it has exactly the same opportunities,” he said, noting European carriers will be looking at the RJs to feed passengers to their larger airport hubs.

        CFMI, GE's partnership with Snecma of France, also will introduce the successor to Gerard Laviec, CFMI's president who is retiring, at its Wednesday briefing.

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