Farming Out Maintenance

Apr 7, 2004
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Airlines increasingly seek maintenance from contractors worldwide
BY SARA KEHAULANI GOO
The Washington Post
Northwest Airlines is gutting two hangars at Minneapolis-St. Paul International Airport because the standard work of overhauling the airline's 747 fleet has moved to Asia.

Air China, meanwhile, is sending its planes to San Francisco for high-tech engine work by United Airlines mechanics.

U.S. carriers have outsourced thousands of maintenance jobs. At the same time, however, some have stepped up efforts to bring maintenance work into their shops. The major carriers are "insourcing" work from domestic low-cost carriers that don't have their own maintenance crews and from airlines based in China, South Korea, Canada and elsewhere.

The aircraft maintenance industry is "a classic manifestation of globalization," said Martin Baily, senior fellow at the Institute for International Economics. "Labor-intensive, somewhat less technically sophisticated stuff goes overseas, but more high-tech, leading-edge stuff would remain in the U.S. Maybe the U.S. even has a comparative advantage."

Delta Air Lines' insourcing includes repair work on engines for Atlantic Southeast Airlines and Comair at Delta's hub in Atlanta. Its revenue from such work has increased to $200 million last year from $40 million in 1999.

American Airlines recently signed a contract giving it the option to repair Rolls-Royce aircraft engines for other airlines. United does maintenance work for Air China, Korean Air, Air Canada and the U.S. military.

"We make a high profit margin on engine overhauls and landing gear," said Joseph Prisco, president of Local 9 of the Aircraft Mechanics Fraternal Association, which represents mechanics at United Airlines. "Air China sends a lot of their engine overhaul work to us. The costs are probably more expensive per head, but we do a faster job and better job than they can get done in their own country."

Globally, the business of repairing or overhauling airplanes is expected to grow to more than $50 billion by 2013, from $35 billion today.

The insourcing helps keep some airline employees busy and modestly bolsters the carriers' bottom line. "Through the bankruptcy process, one of the things we are trying to do is become more efficient -- to look at what we can do profitably and what we can't," United Airlines spokesman Jeff Green said.

But the global trends haven't blunted the pain felt by the mechanics on the losing end of outsourcing.

Since the terrorist attacks on Sept. 11, 2001, the U.S. aviation industry has slumped, forcing carriers to reduce costs and lay off thousands of workers. Airlines have shut down huge maintenance facilities in cities such as Oakland and Indianapolis and reconfigured hangars at Minneapolis-St. Paul. Employees who managed to keep their jobs were forced to take pay cuts -- in some cases, several times.

Airlines such as Northwest and Continental and delivery companies FedEx Corp. and United Parcel Service Inc. outsource so-called heavy checks, which are required when planes reach a certain age, to Asia. The heavy checks are more labor-intensive because they require an entire strip-down of the aircraft and repair or replacement of major components, such as the fuselage. Lower pay in Asia makes the work more affordable.

"They have no intentions of bringing that heavy work back in," said Jim Atkinson, president of AMFA Local 33 at Northwest Airlines in Minneapolis. "It's very disturbing for me that hundreds of millions of dollars are supporting China and Singapore's economy."

More than half of all maintenance work for U.S. airlines is now performed by contractors -- foreign and domestic -- and that figure is projected to grow to 60 percent by 2008, according to aviation analysis firm Back Aviation Solutions.

Just how much of that work is contracted to firms overseas is difficult to quantify because the Federal Aviation Administration doesn't track such numbers and the companies that conduct the repairs are reluctant, for competitive reasons, to reveal their customers. Unions also could not provide figures of exactly how many jobs have gone overseas.

American, United, US Airways and Delta said they send no maintenance work overseas except for quick overnight repairs. Those carriers are restricted by new pay-slashing contracts from sending jobs overseas.

"Typically, U.S. carriers will tend to keep their outsourcing in North America for obvious reasons," said Steve Casley, principal of Back Aviation.

"You want to reduce the amount of transportation costs to have the work done."

Union officials claim that the United States has less oversight over foreign workers and that planes could be exposed to sloppy work or sabotage overseas.

For example, airline maintenance workers elsewhere don't have to undergo mandatory drug and alcohol testing or criminal background checks as they do in the United States. "There is a double standard for airline maintenance," said Ed Wytkind, president of transportation trades at the AFL-CIO. "You can't create a fortress-like security in the U.S. but lose those standards overseas."

Continental, which has maintenance performed in Hong Kong and Canada, keeps its own employees on-site overseas, spokeswoman Julie King said. "We have our own airline quality control and quality assurance representatives that oversee the maintenance, and our quality assurance regularly conducts audits of our suppliers," King said. "It's a very comprehensive procedure."

The FAA said it recently tightened rules to keep better track of third-party maintenance contractors in the United States and overseas.

The FAA action came in response to a Department of Transportation inspector general report last year highlighting serious lapses in oversight of independent maintenance facilities in the United States and abroad.
 

mweiss

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Aug 28, 2002
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Honestly, I was going to leave this one alone, but since you asked...

Notice how Air China outsources to...UA at SFO? I already knew about this; there was an article a couple of months ago in the San Francisco Chronicle discussing this, and how it was one of the things that's saving UA right now.

And AA and DL seem to be doing a fine job repairing other companies' aircraft.

It's not a question of what's being done by whom. It's a question of how it's being done.

Assuming all domestic airlines were required to have stricter standards than the other nations, what's to prevent the sabotage from occurring on, say, Air China aircraft destined for the US? Shouldn't we be focusing instead on a global standard for aircraft maintenance?
 

GeezLouis

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Jan 8, 2004
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American Airlines recently signed a contract giving it the option to repair Rolls-Royce aircraft engines for other airlines. United does maintenance work for Air China, Korean Air, Air Canada and the U.S. military.

"We make a high profit margin on engine overhauls and landing gear," said Joseph Prisco, president of Local 9 of the Aircraft Mechanics Fraternal Association, which represents mechanics at United Airlines. "Air China sends a lot of their engine overhaul work to us. The costs are probably more expensive per head, but we do a faster job and better job than they can get done in their own country."
In the two USAirways maintenance facilities that I'm familiar with (Clt and Int), we have a state-of-the-art plating and landing gear shop in Winston-Salem, which could easily be used to perform lucrative third party work on landing gear and plating jobs for other carriers. It is also worth noting that this shop builds an exceptionally good landing gear, unlike many other landing gear overhaul companies that exist today.

We have an avionics shop in Charlotte that has tried for years to contract out it's component repair work, but so far, has been unable to, due to the fact that 3/4's of the components that are farmed out come back because of inadequate repair work. The work that comes out of Charlotte's Avionics's shop is "second to none"!

Both of these are prime examples of facilities we already have, that could be used to create additional revenue to create a superior product for other carriers, and creating jobs for USAir workers at the same time.

USAirways isn't interested in ideas like this because it keeps employees on the payroll. All they are interested in, is layoffs and paycuts. They'd rather spend millions of dollars in legal fees trying to get around their current labor contracts, so they can send their maintenance to a facility that is, for all practical purposes, "a joke"!

This airline remains unwilling to listen to the ideas of their most valuable assets - their employees! It is for this reason, barring a change in corporate culture, USAirways will fail!
 

insp89

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Aug 20, 2002
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Sad to say that Usairways management is attempting to STEAL the Heavy Maintence work [ by litigation ] instead of going thru the collective bargaining process like the rest of the airlines mentioned in the above article. Same sort of sleaziness that management pulled on the pilot's pensions.
 
Jun 17, 2003
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GeezLouis said:
In the two USAirways maintenance facilities that I'm familiar with (Clt and Int), we have a state-of-the-art plating and landing gear shop in Winston-Salem, which could easily be used to perform lucrative third party work on landing gear and plating jobs for other carriers. It is also worth noting that this shop builds an exceptionally good landing gear, unlike many other landing gear overhaul companies that exist today.

We have an avionics shop in Charlotte that has tried for years to contract out it's component repair work, but so far, has been unable to, due to the fact that 3/4's of the components that are farmed out come back because of inadequate repair work. The work that comes out of Charlotte's Avionics's shop is "second to none"!

Both of these are prime examples of facilities we already have, that could be used to create additional revenue to create a superior product for other carriers, and creating jobs for USAir workers at the same time.

USAirways isn't interested in ideas like this because it keeps employees on the payroll. All they are interested in, is layoffs and paycuts. They'd rather spend millions of dollars in legal fees trying to get around their current labor contracts, so they can send their maintenance to a facility that is, for all practical purposes, "a joke"!

This airline remains unwilling to listen to the ideas of their most valuable assets - their employees! It is for this reason, barring a change in corporate culture, USAirways will fail!
Well said, GL :up: The fact remains if it doesn't benefit someone directly in upper management it is to much of a burden for this company to ever pursue. That is the sad truth. :angry: And I for one see no change in corporate culture in the near or far future. Thats why I say full pay and benefits till the last miserable day. ;)
 

mweiss

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Aug 28, 2002
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GeezLouis said:
Both of these are prime examples of facilities we already have, that could be used to create additional revenue to create a superior product for other carriers, and creating jobs for USAir workers at the same time.
That's a real tragedy. That sort of work should be insourcing from other companies.
 

E-TRONS

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Aug 30, 2003
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MW:

Now you're catching on :up:

Again, UAIR management is NOT interested in that sort of initiative :down:
 

mweiss

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Serious question E,

Is it the equipment or the people?

If it's the people, you should get together and form your own maintenance company. If you're as good as GL says, you shouldn't have much trouble drumming up business from companies that don't have names ending in "ways."
 

cavalier

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Aug 28, 2002
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mweiss said:
Serious question E,

Is it the equipment or the people?

If it's the people, you should get together and form your own maintenance company. If you're as good as GL says, you shouldn't have much trouble drumming up business from companies that don't have names ending in "ways."
We have been tying to get third party work in for years, and like it was mentioned, if someone’s hand isn't greased then it doesn't happen.

They HAD a separate company in “AIRMOTIVEâ€￾ but tore it to pieces and sold it off for pennies on the dollar. I remember them basically giving fixtures away while we tried stopping them for that insanity.

This is why I agree 2000% to the mantra full pay to the last miserable day, let it die once and for all, it's a miracle it is still surviving giving the inept personnel in management to which they gave bonuses to stay!!!
 
Jun 17, 2003
318
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mweiss said:
Serious question E,

Is it the equipment or the people?

If it's the people, you should get together and form your own maintenance company. If you're as good as GL says, you shouldn't have much trouble drumming up business from companies that don't have names ending in "ways."
You are unrealistic. The tooling and equipment cost alone would cost more than any one group of mechanics to raise that kind of capital to ever purchase. Then the red tape for the FAA approvals and certificates. The shame of it all is that Usairways has everything they need to obtain this work except the desire to bring extra cash flow into the company. They will never admit that any groups suggestions concerning cost reductions or cash improvements were right. They want money$$ and benefits. period. I will not reply to any of your unintelligent ramblings as you have proven that you are out of touch with reality concerning any type of aircraft maintenance, and I have better things in life to do than debate issues with people like yourself.
 

cavalier

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Aug 28, 2002
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to much time to quit said:
You are unrealistic. The tooling and equipment cost alone would cost more than any one group of mechanics to raise that kind of capital to ever purchase. Then the red tape for the FAA approvals and certificates. The shame of it all is that Usairways has everything they need to obtain this work except the desire to bring extra cash flow into the company. They will never admit that any groups suggestions concerning cost reductions or cash improvements were right. They want money$$ and benefits. period. I will not reply to any of your unintelligent ramblings as you have proven that you are out of touch with reality concerning any type of aircraft maintenance, and I have better things in life to do than debate issues with people like yourself.
Amen and Amen
 

E-TRONS

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Aug 30, 2003
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mweiss said:
Serious question E,

Is it the equipment or the people?

If it's the people, you should get together and form your own maintenance company. If you're as good as GL says, you shouldn't have much trouble drumming up business from companies that don't have names ending in "ways."
MW:

If it only were that easy to go it alone then we would have given it a shot already.
We're talking FAA certifications, ample facilities, tooling, infastructure and financial backing. Care to sign up for the latter??

We have the talent and the people to make UAIR money from outside work. Delta proves it can be done at the tune of $200 Million per year :shock: .......Again, UAIR execs have absolutely ZERO interest in such an endeavour because they need employees to accomplish such an undertaking. And they want to pare the workforce even more than they already have in a desperate attempt to better the bottom line. Once again they choose to follow the wrong road and probably paid a handsome amount for that advice :angry: !! SUCKERS!!!!

Our once proud companies have been smelted together only to end up in financial ruin......and all of "King" Wharton's MBA's can't put humpty dumpty back togeter again........but yet they are continued to be compensated as if they did <_< .

Aw heck, who am I kidding??? Everyone knows it's the employees fault!!!