Time will ultimately confirm or deny the recent rumors that the Chinese will become the controlling investor in another venerable American manufacturer of general aviation aircraft. Looking at this possibility from another vantage point … is the US business community trying to tell the general aviation industry something by their lack of interest and financial participation?
Their action, or lack of it, speaks volumes. Given the pragmatic bottom-line focus of business and those who invest in them, clearly American investors see little or no return in GA. Ruminating on why this may be offers several possibilities that pose questions about the industry itself, and about the changing focus of American business.
On the industry side there is supply and demand: Interest in flying and aircraft ownership has been in decline for some time. Part of this is surely the result of social change and the willingness of each succeeding generation of Americans to invest the time and money to participate in what captures their attention and interest. An iPhone is easier to master—and is more useful—than learning to fly. GA is not the only one suffering here: today fewer American teenagers get a driver’s license.
Some may say that the lack of new designs are behind this, but that is surely not a major factor because American investors have sold their interest in manufacturers of new technically-advanced GA aircraft to foreign interests as well. From the perspective of younger generations, flying has been around for more than a century, and like anything old, must-have coolness has lost its addictive properties.
There has been a similar change on the business side of the equation as well. There is no better proof that what matters most is making money, not things, is the American obsession with the various stock exchange numbers. If you doubt this, why are these numbers, and their waxing and waning, a daily report by news organizations in all mediums?
Perhaps the most important question is this: What do the Chinese who are investing in American aviation companies know that US investors don’t? Are we missing—or have we forgotten—something important? Or are the Chinese, whose economy has been playing catch up, at the stage we long ago passed where making things is important? Like the rumors of their investment in another US GA manufacturer, time will provide the answer. — Scott Spangler, Editor
No R & D costs – extract technologies, wise decision, China has a potential market greater than the US, build for less in China, greater profit possibility. China will control worldwide GA. Well, Mooneys were too small for me anyway. Good bye.
Subsidies and cheap money. Cheaper than the USA. Subsidies from the govt pushing all sorts of things. They can handle more business risk than Americans companies can so they are willing to bet.
The us govt hands out subsidies too…but not to GA. X
American investors have always been motivated to make profits. It happens that in past years, making things were very profitable. It is not surprising that if a segment of manufacturing is not profitable, serious investors will look to put their money where it can do the most good (profit). Looking at General Aviation and the declining numbers of pilots being trained, the amount of low cost (relative to new) existing fleet, and the high cost of production of new planes, it is no wonder that investment dollars are not flowing toward this segment of the industry.
Because there has been no general aviation industry in China, there is a large unmet demand. It is much less costly to purchase a company at a low multiple of earnings (if any) than to build a company from scratch.
If there were a good chance of success (profit) in “building things,” the money would flow there
Companies should only be in business to enhance shareholder value.
Here is my take on it: A bunch of old (largely conservative) people are the ones interested in GA, which makes it difficult for them to reach out to young (largely progressive) population. There is a big cost factor, of course, but it’s not insanely high and in the silicon valley you have tons of young people who are oozing money and intelligence.
They get turned off by the sexist hanger talk, the right wing banter, and in general how /old/ everything is. I am currently doing my ground training practicing for my written and the best tools I have are Jeppisen’s online course which is dull as hell… but interactive… or watching the Kings do their videos in 4:3 resolution with archaic graphics.
You don’t have to bring the costs down in GA, just make it more accessible. When you do that, you will bring the costs down.