The King Has Spoken, Two Letters From Vern Plus The One He Should Have Sent
To the postion holders:
It is natural for a new airplane company to experience growing pains as it transitions from development to a predictable production rate. However, our journey has introduced far more challenges than we anticipated. As a result, the 2007 Eclipse 500 production schedule has slipped. This is very disappointing to us, as I know it is to you.
Our sole focus is on delivering a safe, reliable, high-performance aircraft to you in the most expedient manner possible.
While there are challenges, which I have outlined below, we have taken aggressive action to eliminate the problems and are making excellent progress. The purpose of this letter is to fill you in on the specific obstacles we have encountered, and let you know what we are doing to remove them.
At a high level, our production issues relate to the manufacturing process, and are not founded in Eclipse 500 design flaws. At their core, these are issues with internal processes and staffing, although parts shortages and quality problems have absolutely contributed to the delay.
Following is a detailed summary of the issues, and the actions we have taken to resolve them.
Summary of Production Issues & Corrective Action
Resolution Functional Test Procedures
The initial Functional Test Procedures documentation used to verify the accurate function of airplane systems was not sufficient.
These documents have been completely re-written and approved by the FAA. They will be re-written once again to eliminate system testing duplication, which will dramatically reduce manufacturing cycle time.
Aft Wing Attach Fitting
A loose bushing was found inside the rear wing attach point. The design has been corrected to ensure stable bushing placement, and early aircraft have been reworked.
Although we have been hiring many talented people in all areas of the company, we are still short staffed in manufacturing.
We have been aggressively hiring contract workers, most of whom want to become full-time employees. Tomorrow we will make an exciting announcement introducing our new vice president of manufacturing, who brings us extensive high-volume manufacturing expertise.
A number of suppliers experienced parts shortages as we kicked off production in 2006.When original suppliers fell short, we moved quickly to find new component sources.
Although our new suppliers had some start-up delays, these issues are now behind us.
Two suppliers have experienced significant quality issues that have caused production line rework and delays. Both of these suppliers are working through the root cause of these issues and taking corrective action. We have worked extensively with the suppliers and seen improvements.
Friction Stir Weld and thin skin construction of the Eclipse 500 fuselage requires different handling, assembly and repair than conventional structures.
Every situation requires engineering analysis and DER approval.We now have a deeper understanding of these structural requirements, and have developed a standard repair document that is significantly reducing the amountof time it takes to disposition manufacturing errors.
Component Failure Rates
We are seeing a higher failure rate on some components than anticipated. We have been evaluating the root cause of the failures and are making progress to quickly resolve the issues, but in the short term we have an adequate replacement stock for all of these components.
Achieving our target production rates requires innovation within every facet of the traditional aircraft manufacturing process.
We are employing four strategies to achieve high-rate production, which are:
1)bring in experienced automotive production leaders;
2) build-in-position through quality inspection buy-off;
3) leverage robotics in primary assembly to eliminate human error and reduce cycle time; and
4) conduct automated system testing early in the build process.
I would like to offer my overriding view of this situation.
We have had a series of unrelated problems ranging from supplier delays, to design glitches, to leadership oversights that have created something of a perfect storm in terms the start up of the production line. Collectively, these issues have significantly impacted our schedule, and challenged us more than ever before.
Of course, our critics are eager to triumphantly say "I told you so!" And perhaps they are right - for the near term. I have often told you that although Eclipse is not yet as good I believe we will eventually be at avoiding problems, I'll put our ability to solve tough problems up against that of any other individual or company.
Pundits have predicted our demise an almost incalculable number of times. Even in extreme situations such as the Williams International engine failure, we have prevailed. There is zero doubt in my mind that our current challenges will produce a stronger company, and a better product. We've done it before, and we will do it again.
One over arching commitment we have not, and will not, waver from is to provide you with the very best and the very safest aircraft possible.
Although the delay in deliveries is very frustrating to you (and to the entire team at Eclipse), I simply will not allow anything to compromise the quality of this jet or the safety of our customers.
Our focus now is on catching up, and proving to the FAA that we are ready to take the next step. While it is impossible to predict the exact timing for the receipt of our Production Certificate (PC), we will keep you informed of our progress.
It is very important to note that we are working a parallel path with the FAA to produce aircraft under the type certificate while simultaneously working toward PC. Prior to receiving PC, we can and will continue to deliver aircraft by working with theFAA to issue Eclipse 500 Certificate of Airworthiness.
As issues arise, we will continue to move as swiftly as possible to drive to solutions that serve your best interests. In the past, I have been unwilling to discuss problems until I could also provide you with solutions. While we will always strive for this ideal communication, I have come to realize that there simply will not always be an immediate resolution to every issue. Thus, I intend to share updates with you as often as possible, whether they highlight our successes or our challenges.
As always, I thank you for your patience, encouragement and belief in Eclipse.
President & CEO
And some incentives to cough up that last 60% progress payment:
Over the past months, we have worked to overcome numerous challenges that have delayed the Eclipse 500 delivery schedule. Unanticipated obstacles are always frustrating, but these challenges are being resolved. The specific production issues we have encountered and the corrective actions we have taken to resolve them were detailed in our most recent customer communication, which I hope you have had time to review.
As we remove these hurdles and move forward, our team is aggressively working to meet or exceed our delivery schedule for customer aircraft. Below is the updated aircraft delivery schedule for 2007:
It is understandable that some customers have become concerned about our production delays. However, we remain highly confident that the structure is in place (manpower, machinery and methods) to effectively finalize our customer delivery schedule and make the following commitments to you:
Interest on your deposit
If Eclipse is late in delivering your aircraft by thirty (30) days or more, we will pay you 0.5% per month simple interest on your sixty percent (60%) deposit with interest commencing on the 31st day after the end of your scheduled delivery month as defined in your Purchase Agreement (Exhibit 2).
Additionally, we will waive any further CPI-W price adjustment that would have normally accrued from the scheduled delivery date as defined in Exhibit 2 of your Purchase Agreement to the ultimate delivery date.
In addition to the 0.5% monthly simple interest payment, you may also choose one of the following additional compensations to be activated if we are late in delivering your aircraft by the number of days indicated below, after the end of your scheduled delivery month as defined in your Purchase Agreement (Exhibit 2):
1. A discount of fifteen (15) percent against your pre-paid JetComplete subscription if the delivery is late by 45 days or more. This is only available if you pre-pay for JetComplete and is not applicable to Pratt & Whitney Canada supplied services; or
2. Eclipse will pay the cost of the jet fuel consumed by your aircraft during Eclipse provided pilot training if the delivery is late by 45 days or more; or
3. One free additional pilot type rating (involving an Eclipse simulator, not in an aircraft) for a 2nd pilot if the delivery is late by 90 days or more.
To qualify for any of the compensation described above, you simply need to finalize your Purchase Agreement, including options and color selections, and bring your pre-delivery deposit to sixty percent (60%) as described in the Deposit Agreement and Purchase Agreement.
We know you are looking forward to receiving your Eclipse 500, and we are equally eager to deliver your aircraft. We hope these commitments communicate our deep dedication to move beyond our recent challenges, and continue to build a productive, long-term relationship with you. I am confident you will be exceptionally pleased when you take delivery of your Eclipse 500, and especially proud to own and fly it.
And a special thanks to Bambazonke for sharing this information.
ColdWetMackarelofReality drafted the letter Vern should have sent...
To all Eclipse Stakeholders (employees, depositors, vendors, Directors)
Effective today, March 1, 2007 I am resigning my position as President and CEO of Eclipse Aviation. As with my previous endeavors such as Slate and Lotus Development, the near collapse of this venture indicates that it is once again time for me to take my substantial ego and grand vision and to relinquish the daily control to someone who has the ability to execute.
I leave behind a team of mostly fantastic individuals who I have repeatedly blamed for failures that honestly originated from my own corner office overlooking the flight line.
As President and CEO, the responsibility for these problems ultimately resides with me. I would like to take this opportunity to apologize to all of the employees current and former, to whom I was disrespectful. I mistook my bully leadership style as being effective, because after a while I no longer heard all the concerns you were all trying to share.
I would also like to apologize to our many former vendors such as DeVore, BAe, Williams, Avidyne, and more. It was not right of me to condemn you in public for our lack of specification requirements, and our continually changing design requirements.
I personally grossly misunderestimated the difficulty in building a new company, raising capital, designing and certifying an aircraft, and managing this effort in a way that would create a company culture we could all be proud of.
I alone created a culture of blamestorming that led to the loss of some truly talented individuals, and the departure of some dedicated and capable vendors. Hopefully, the new CEO will be someone who can foster a culture of open exchange and respect that can focus on safety first rather than paying lipservice to it.
I have learned that the old axiom is indeed true - to make a small fortune in aviation, start with a big one.
My last act as President and CEO will be to order that we will not request nor will we accept any new order deposit or progress payment.
Knowing we are a minimum of 12 months away from being able to deliver an aircraft that even approaches the capabilities we promised so many years ago, we simply cannot in good conscience accept your money and then use it to pay our bloated executive staff or the currently unnecessary mass of manufacturing personnel we needlessly added for the purpose of keeping the illusion going.
Day to day operation of the company will fall to Peg Bilson, our COO until such time as the Board of Directors can identify and hire as person with the skills and experience to lead the tru, final phase of development of this project.
Along with myself, I have a few other staffing changes to announce: Ken Harness will leave his position as VP Engineering to lead the development and productization of our Phostrex fire extinguishing product. Senior VP and Fellow Don Burtis is announcing he will leave Eclipse to pursue other interests. VP of HR Tina Rulo will also be leaving to manage her own consulting firm.
We will also be replacing our incoming VP of Manufacturing from Ford, because we finally realized we need someone with a verifiable aerospace pedigree to help us to achieve our Production Certificate while building conforming and well finished airplanes.
Don't cry for me Albuquerque.
Guy-who-believed-his-own-rhetoric and refused-to-listen-to-people-who-actually-knew-what-they-were-doing.