Bell Bets Big on R&D Programs
Bell Helicopter has put a price on playing catch-up: $1 billion.
That’s how much the Textron company plans to spend on accelerated research and development, new and renovated facilities, taxable inventory and operations during the next four to five years. It’s all in an effort to recapture some of the market share Bell has lost to Eurocopter and AgustaWestland over the last three decades.
“We have a lot to do to catch up and we are serious about it,” said Robert Hastings, Bell senior vice president of communications.
The spending represents an overall increase of 50 percent in R&D expenditures and will be applied to both the military and civilian sides of the company. Hastings declined to provide an exact spending breakdown with regard to military versus civil programs or initiatives, such as Magellan, which he described as “the work,” as opposed to a new civil helicopter program per se.
In a company memo circulated to its employees in January 2011, Bell officially acknowledged Magellan and said it was a follow-on to “Project X.” Many observers believe the rotorcraft builder is working on a medium-twin helicopter to replace the venerable 412–whose basic airframe dates back to the early 1960s and the single-engine UH-1 Huey–and that this new twin would be aimed primarily at the superheated deepwater offshore oil-and-gas market.
It also is believed that Magellan will have civil and military applications, but Bell continues to decline to comment on the memo, which was sent by Jeff Lowinger, vice president of engineering, and Larry Roberts, senior vice president for commercial programs. While giving few details, the memo said the Magellan is part of a strategy to provide customers with a “comprehensive product line-up that best meets or exceeds their operational requirements.”
Hastings said Bell’s $1 billion initiative does not necessarily mean that the announcement of a new civil helicopter program is imminent. “I would caution against thinking there is a surprise in that figure,” he said. However, he did add that Bell plans a significant announcement at this year’s Heli-Expo convention in Dallas next month.
Dallas/Fort Worth Site Gets an Upgrade
While remaining somewhat tight-lipped about R&D spending, Hastings did offer specific details regarding Bell’s plan to revamp its physical plant. Approximately $240 million will be spent on this between now and 2015 and most of it will be in the Dallas/Fort Worth area.
Bell is currently working with the Fort Worth city council and the Tarrant County commissioners’ court on stitching together a package of tax abatements and other incentives covering the new construction.
Hastings said the primary goals of the new facilities are to rid Bell of leased and widely scattered training, office and warehouse space across the greater Fort Worth area while creating a more centralized, efficient and attractive working environment for Bell employees. As part of the plan, Bell will shutter its leased facilities at Fort Worth Alliance airport and relocate more than 700 workers.
Phase one of the project will begin later this year with construction of a 30,000-sq-ft employee center. Hastings likened the facility to a student center on a college campus and said it would include dining, company store, meeting and collaborative working spaces.
In 2013, Bell plans to consolidate most of its warehousing and move it back to the main company campus. “We have warehousing all over the place,” Hastings said. “We have trucks here that do nothing but move product around all day long.”
Construction of a new, 210,000-sq-ft global headquarters and administration building at Fort Worth is slated for 2014. Hastings said the company’s current offices also are scattered and that Bell currently lacks what could be considered a headquarters building. “Our executives are working in a lot of different places,” he said. Finally, the Bell Training Academy would be relocated from Alliance back to the 133-acre main company campus in 2015 by adding approximately 75,000 sq ft to existing buildings.
Bell currently employs approximately 6,000 in the Dallas-Fort Worth area, and Hastings does not expect that number to change much following the new construction. However, he said the mix of employees likely would, with the company hiring proportionately more engineers.
“We do have plans to bring in more talent from the R&D community, but the overall payroll probably is not going to change,” Hastings said. “As we become more efficient we are going to find opportunities to bring more engineers into the force without increasing the size of the force. We are doing things here that haven’t been done in 30 years. We are becoming a more efficient and effective company and part of that is bringing in more talent in engineering.”
Hastings said revitalizing the physical plant is essential to acquiring new engineering talent. “If we can’t attract world-class talent, we can’t grow,” he said.
Gearing up R&D and physical plant modernization follows Bell’s initial efforts to reconnect with customers and implement product improvement.
“It’s all part of the revitalization of Bell Helicopter,” Hastings said. “Initially we turned our attention the last couple of years to customers and products; reconnecting, getting response times down and putting some innovation into new products like the 407GX, 407AH, and the 412 block upgrade. Now we are turning a little bit more attention to our own backyard.”