February 2015 Issue
Lycoming 2.0: Survival in a Harsh Market
After a decade of investment and modernization, Lycoming has pulled itself back from the economic brink. It has enough capital for modest R&D.
To survive in a market thatís a shadow of what it was 40 years ago, Lycoming and Continental have had to reinvent themselves. This is the first of a series explaining changes at the engine companies.
Whenís the last time your late-model car broke? Not a check-engine light, but well and truly quit? It probably hasnít happened and one reason for that is that modern automotive quality is relentlessly driven by quality control systems that favor high volume in factories that build the very same engine, or transmission or ignition module in which the only thing that changes in 50,000 units are the serial numbers.
At the opposite end that continuum is Lycoming, a company that holds more than 700 engine type certificates, each with different designations, different model numbers, unique accessories and sometimes discrete core components for the same families of engines. A Toyota process engineer used to making 300,000 Camry engines a year would need a fistful of Valium to survive the shock of touring the assembly line in Williamsport.
YetÖLycoming has confronted the seemingly insurmountable challenge of so-called high-mix, low-volume manufacturing with a careful, if modest, program of re-investment in a factory whose origins date to the 19th century. Even as the market it depends on flattens or shrinks, the factory has reduced its physical footprint and become measurably more efficient. Twenty years ago, it was outsourcing raw manufacturing at such a rapid clip that it seemed it would evolve into an assembly business with a specialty in drop shipping parts.
Didnít happen. Today, thanks to rapid advances in flexible, computer numerical machine tools and a determination to adapt high-volume quality control methods to trickle volume, Lycoming is bringing vendor work back inhouse.
Now, Lycoming produces many parts that it used to outsource at prices competitive with vendors and at what it says is potentially higher quality. This could be an MBA case study in turnaround management, but itís more accurate to describe it as a survival story in an industry worn down by declining markets and escalating costs. Last fall, I spent nearly three days touring and filming the plant for this report and an accompanying video. Hereís what I learned.
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