Wednesday, April 11, 2007
Today is the blog's first anniversary.
Inspiration for this blog came after reading Richard Aboulafia's March 2006 treatise that debunked the major underpinning for the Eclipse business plan, viability of the Eclipse in an air taxi role.
About the same time, I was having a casual conversation with a senior VP from a major general aviation company; Eclipse entered the conversation. This individual expressed genuine cynicism and almost anger at the NAA for awarding the Collier trophy to a start-up company which had yet to succeed at anything. During our conversation, I realized because of his position, this guy could not speak out, his company policy would not allow it. After days of considering the situation, I reached the conclusion, there was nothing stopping me from sharing my views...the blog was born.
The first post covered four topics which encompassed everything I ever intended to say about the program.
The first point was to build a case for my claim the company would not meet their empty weight target of 3,390 lbs and therefore not meet the guaranteed range estimate. I predicted an empty weight of 3,700 lbs that would result in NBAA range closer to 800 nm with four on board. I'd still put money on those numbers for the "A" model. The "B" model might have a bit more range since Eclipse has boosted the maximum takeoff weight but the company will struggle to keep the empty weight below 3,700 lbs.
The second point was to expose the fallacy of friction stir welding. This was a cleverly conceived notion whereby Eclipse would use a new and enabling technology that would allow the company to produce airplanes at a rate unprecedented in the industry. In the course of a year, this topic has been discussed many times and through education, few believe Vern's parlor trick is anything more than a parlor trick.
The third topic covered was Vern's ability to use other peoples money to fund his dream. A year ago the blog categorically stated the investors could not possibly see a return from profits derived by delivering airplanes. They were not the only ones with financial exposure. Vendors were conned into funding development costs and assuming risks as well. This year we add to the list, the initial customers who are unsecured lenders and are at even greater risk of taking a bath in this program.
Lastly, the blog questioned why, if the company was sitting on 2,000 orders was it so actively engaged in so much promotion and self-promotion? While the question remains today, more and more, the answer is becoming clearer and clearer, the 2,000+ orders are probably a myth.
A couple of weeks after the first post, I got to thinking about all the claims Eclipse and the wannbe air taxi companies were making regarding their ability to provide point-to-point air charter at the cost of a full fare coach ticket and a fifty-cents per mile direct operating cost. This was pure BS and needed to be corrected. I resurrected my 40 year old format to determine airplane cost of operation, generated new numbers for the Eclipse and published the second post. And so it went, there was always something more to write about. The year seen a total of 94 posts and several thousand comments.
How do you promote a blog? Thousands of new ones are put up every day, most will never see a hit. I started by sending links to Richard Aboulafia (The Teal Group), Rich Karlgaard (Forbes Magazine), Capt. Zoom and any one else writing on the Eclipse. The responses varied, Aboulafia said I was doing "God's work." Karlgaard said, "always looking for the dark side, eh Stan?" After suggesting to Capt Zoom that he dig deeper into the Eclipse program, he said I was questioning his integrity, threatening him and his family, and he was going to file a police report and a lawsuit and...well, that's just Capt. Zoom.
Eventually, the blog gained traction. One person tells two, those tell two others and growth becomes exponential. There is no counter on the site and I don't care what the numbers might be. If only two or three dozen are reading the blog, that's OK with me.
Having said that, the numbers may be quite high. Last fall, if you were to google 'eclipse aviation' the blog would show up on google's page 34. Today, it has moved up to page 1, item 3, only behind the Eclipse home page and the wikipedia listing.
As the numbers of readers increased, the number of comments increased and this has turned out to be the best part of the blog. The collective insights, knowledge and wisdom of others have all contributed to a better understanding of the Eclipse program. Someone noted that for a blog, this one had a high signal to noise ratio. Couldn't agree more.
The intent of the blog has always been to be informative and entertaining. Today I would add a third point, thought provoking. In the past few months supporters for the Eclipse program have weighed in. Though in the minority, they have their views, make their points and don't back down. The debate is healthy for both sides of the issue, causing everyone to to re-think their positions.
What's in the future for the blog? Who knows. What is store for Eclipse? Who knows.
Several months ago, I declared Eclipse to be a failed program that just hasn't failed yet. Nothing has happened that would change my mind. Nearly every event scheduled and unscheduled is costing the company money. Delays, mod programs, re-engineering, re-testing, re-certification even aircraft deliveries add to the flow of red ink.
The Eclipse goal is to crank up the production line and deliver hundreds of airplanes. Many customers are holding purchase contracts for airplanes near a $1m price when Eclipse itself acknowledges the selling price should be $1.5-1.8m; some believe $2m would be even more realistic. The more they build the more they will lose.
Slow the production line down and fixed costs eat up cash reserves. Tap into investment capital and it will only prolong the inevitable. If you are going to be in the manufacturing business, you must sell your product for more than it costs to build or you can't stay in business. Accounting 101.
My prediction is the airplane will be around for a lot of years but the company will need to be restructured and reorganized under sound management principles. When this happens, the blog will disappear. Meanwhile keep checking in, there will be lots of lively discussions ahead.