Chinese Cessna
Looks like another step to find the cheapest labor. WARNING !! Do not chew on any airplane parts due to possible lead ingestion-
Cessna's New Plane to Be Built in China
Lower Costs May Make
Flying More Accessible
As Pilot Ranks Dwindle
By J. LYNN LUNSFORD -- WSJ
November 28, 2007; Page A14
Textron Inc.'s Cessna Aircraft Co. will become the first U.S. manufacturer to turn over complete production of an airplane to a Chinese partner, a move intended to cut production costs and foster a nascent private-aviation market in China.
Cessna officials said China's state-owned Shenyang Aircraft Corp. will build the new Cessna 162 SkyCatcher at its factory in Shenyang, China. The planned single-engine, two-seat airplane will be the smallest in Cessna's product line. It is designed for training and what is known as the light-sport market, for recreational fliers.
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WHY CHINA?
• Starter Plane: Cessna hopes building the SkyCatcher in China will help keep prices low enough to attract buyers.
• Fill Cockpits? Cessna hopes it will appeal to flight schools and new fliers amid a tight global market for pilots.
• Shrinking Base: It also hopes the plane will help counter the dwindling number of U.S. pilots, who face rising costs to own and fly planes.
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Cessna hopes manufacturing in China will help keep the price of the plane low enough to attract new pilots to counter the dwindling ranks of U.S. recreational fliers. It also could lower the cost barrier for training new pilots amid surging demand for airline pilots world-wide.
The deal is scheduled to be announced this morning in China at a news conference in Beijing. Cessna, which said this summer that it would build the plane, estimates it will be available by late 2009.
Lewis Campbell, Textron's chairman and chief executive, said in an interview that lower manufacturing costs in China would allow Cessna to sell the airplane for $71,000 less than it would if it had built the plane at its factories in Wichita, Kan. The move also positions Cessna to play a larger role in the developing private- and corporate-aviation market in China.
"This will give us a foothold into a market that will expand over the next 10 to 20 years," Mr. Campbell said. (Mr. Campbell is also a director of Dow Jones & Co., publisher of The Wall Street Journal.) Some training schools in China already have ordered the airplane, Cessna said.
Boeing Co. and Airbus, a unit of European Aeronautic Defence & Space Co., have used Chinese manufacturers for years to build parts for their planes. Neither of them has been willing to rely on outsiders to produce an entire product line, as Cessna plans.
Cessna says it will design the airplane and build the first prototypes in the U.S., but all of the production airplanes will be fabricated in China. Items such as engines and electronics will be supplied by Teledyne Continental Motors Inc. and Garmin Ltd. in the U.S. and shipped to China for installation and test flights. Airplanes destined for delivery in the U.S. and elsewhere will be partially dismantled for shipping and reassembled at approved Cessna locations, the company said. Cessna will provide on-site personnel to oversee manufacturing and quality assurance.
China has been home for component work for Western aircraft, but that involves less technical know-how than building a plane from scratch. In the 1990s, McDonnell Douglas Corp. attempted to build an assembly line in China for its single-aisle MD-80 jetliner, but the reception for the planes outside China was lukewarm, and the venture was abandoned in 1998 after only a handful were assembled.
Airbus is working with China to build a secondary assembly line for its A320 jet in Tianjin, but that factory will put together large assemblies from existing Airbus plants in Europe.
Mr. Campbell said Textron, of Providence, R.I., chose to partner with Shenyang because of the Chinese manufacturer's history of producing Chinese military and civil airplanes, as well as components for most of the world's big names in aerospace. Shenyang Aircraft Corp. is a unit of China Aviation Industry Corp. I, commonly known as AVIC I.
Luo Yang, chairman and president of Shenyang Aircraft, wrote in a release that the company "sees Cessna as a significant partner." Lin Zouming, president of AVIC I, said the government consortium "has placed strategic importance on general aviation development and will strongly support and promote the business."
Cessna said it will be able to deliver the first 1,000 planes for sale at $109,500 each, with subsequent planes costing $111,500 each. By comparison, the four-seat Cessna 172, Cessna's next-cheapest model, carries a base price of almost $220,000. The company said customers have preordered almost 900 SkyCatchers.
Cessna President Jack Pelton said that without China's participation, Cessna probably wouldn't have started the SkyCatcher program. "If you are going to field a low-end product, this is about the only way you can do it," Mr. Pelton said. He said the move won't result in a loss of jobs at Cessna's main plants, adding that Cessna has unfilled orders valued at $11.9 billion, with plans to expand its profitable business-jet line.
Manufacturers of small, propeller-driven airplanes have faced increasing pressure in recent years to make their products more affordable. The equation has become especially complicated during the past couple of years as oil prices have driven the price of aviation gasoline above $5 a gallon in many metropolitan areas.
Government officials and pilot groups say the rising cost of airplane ownership has contributed to an almost 30% drop in the number of licensed pilots in the U.S. since 1980, to about 579,100. Despite the drop, the light-sport niche has attracted new manufacturers and models in recent years as remaining pilots upgrade to advanced planes.
Growing demand for air travel also has led to a tight market for pilots world-wide, which threatens to stifle the industry's growth.
The problem is particularly acute in China and India, both of which have ordered hundreds of new jetliners to meet an explosion in demand for domestic and international air travel. In recent years, the Chinese government has loosened some of the many restrictions on private aviation and encouraged the development of an indigenous flight-training industry.
Yet, according to industry groups, there are about 70 business jets in all of China, although that number is growing.
"It took us 20 years to put the first 10 jets into China; then, last year alone, we delivered 10," said Roger Whyte, Cessna's senior vice president for sales and marketing.
According to the Civil Aviation Administration of China, the country had 12,840 nonmilitary pilots in January 2006, the last date for which figures were available. About 27,000 students were enrolled among five civilian flight schools, two scientific-research centers and 11 scientific-research bases.
One of the most prominent, the Civil Aviation Flight University of China, has tripled its yearly capacity to 1,200 students and now operates one of the largest fleets of training planes in the world. By the end of the year, the university will have 117 Cessna 172s and six Cessna CJ1 jets in its fleet of 233 airplanes.