Vern's June Commitment
Eclipse Aviation has matured greatly since December 31, 2006 when we delivered our first aircraft. While it has been more challenging than I ever thought it would be, in a peculiar way, it has also been more rewarding because we have overcome so many unexpected hurdles. With the hire of strong executive leaders including Mark Borseth, our EVP/CFO and Todd Fierro, our VP of Manufacturing, we have solidified a leadership team that is well prepared to build the Eclipse 500 at an unprecedented high volume. I communicated to you that we would tell you more about our production ramp in June, after our manufacturing team had conducted a thorough review of our production capacity and more importantly, our capability to produce aircraft in high volume. Well, our team and a group of industrial engineering consultants have completed their analysis and outlined our expected production through the end of 2008.
Due to delays in production, the projected numbers for 2007 are roughly half of what we previously projected in 2007, and 2008 is a bit less than the previous projection of 925. While these are lower than earlier projections, they will nonetheless represent significant production throughput and mark an unprecedented level of accomplishment within our industry.
I want you to know that I have the highest level of confidence in our ability to deliver on these new production projections. Below are some of the key reasons why I am convinced we are well on our way to meeting or exceeding these production numbers:
1. These numbers were derived and agreed upon from the bottom up, not the top down. A large team consisting of plant managers, industrial engineers, and responsible people from quality, human resources, supply chain and engineering built this production plan and the operational leadership team agreed with it.
2. Our plant managers worked closely with external, high volume industrial engineering consultants to determine where each function has improved its efficiency. This assessment was used to logically project how those improvements would continue to increase over the coming months. Below are some specific examples of where production has been improved by up to 300 percent since the beginning of the year, while non-compliance reports are at an all time low:
a. Friction Stir Welding has already demonstrated the ability to weld a complete shipset in one shift per FSW gantry. We now have two gantries online and can expand to two shifts when needed. That alone will get production up to four aircraft per day.
b. Primary assembly has demonstrated an improvement curve of over 200%. Our flexible manufacturing process allows for rapid modifications in the event that any production limiting constraint develops.
c. Final assembly time has been cut in half. Recent aircraft have completed wing attach, engine installation and systems installation in just under one month. Our current production rate is one aircraft every two days.
d. We can now complete a very high quality paint job on an aircraft in 51 hours. Other VLJ manufacturers are proud when they can complete paint in 12 days. That rate is ahead of the required production ramp schedule by 4 months. We have a proven capacity of over two aircraft per day.
e. Our 24/7 production flight test team is now regularly completing interior installation and flight acceptance through certificate of airworthiness in six days.
With our new, data-driven production schedule and this demonstrable learning curve, our entire team is focused with a plan in hand, on delivering the following milestones:
1. one aircraft per day by August 2007
2. two aircraft per day by April 2008
3. three aircraft per day by December 2008
Since earning our Production Certificate in April, we are managing our production teams to a monthly goal before we start managing them to quarterly goals. I am pleased to tell you that we have nailed our April and May production targets, and we are on track to meet our June goal as well. This is what I was referring to in my recent communication when I said I can see the progress we are making.
We certainly realize that you need to know when to prepare to pick up your airplane, finalize your optional equipment selections and send your progress payment six months prior to expected delivery. So we will tell all customers inside of that six-month window what to expect for a delivery date. Outside of that six-month timeframe, we will update all customers on expected deliveries by quarter. In addition, we will continue to report our quarterly deliveries to the General Aviation Manufacturers Association (GAMA - www.gama.aero) so there will be transparency in our production progress. I know that some of you will now be outside of the six month window and yet you have already paid your deposits up to the six month mark based on our incentive offers. We will contact each of you in this situation to offer something that is fair for you and Eclipse.
Your loyalty to Eclipse and your high expectations for us to deliver on our promise are the fuel that keeps Peg and the ops teams completely motivated. Our proudest moment will be when we can deliver to each and every one of you, your airplane.
President and CEO
Thanks to niner zulu for the heads up on this one.