Cessna is toast, Piper is road kill and Mooney? Fuggedabout it. The way A. Sandy Munro sees it, the established U.S. GA industry has a couple of years-a half decade at best-to reform or face being gutted by the same people who dominate the auto industry, steelmaking and machine tools: the Japanese.
According to Munros blueprint for the 21st century of general aviation, Toyota and Honda-and maybe some Japanese companies youve never even heard of-are poised to come out of the ground any day now with aircraft that, while not necessarily revolutionary, will be so favorably priced and of such irresistible value that the used aircraft market will be reduced to a shambles. The onslaught of inexpensive, high quality aircraft from Japanese companies, says Munro, will drive the U.S. light aircraft industry to ruin in a few short years, paving the way to seizure of the real prize: dominance in business and commercial transport aircraft.
By the end of the decade and perhaps sooner, familiar GA manufacturers in the U.S. might be gone for good, not just flitting in and out of bankruptcy or downsizing the workforce to offset the vagaries of market demand.
Munro says there’s still time for the U.S. industry to respond to and blunt the Japanese challenge, but only if U.S. manufacturers reform quickly, instituting cost controls, manufacturing efficiencies and, above all, improved quality. Thats a change we would all welcome but we arent holding our breath. Weve seen hidebound and its name is general aviation manufacturing.
Who Is This Guy?
You might rightfully ask who Sandy Munro is and what hes been smoking. For more than a decade now, weve been hearing rumors about projects from Toyota and Honda that never seem to materialize into real products. There have been vague sightings of intriguing aircraft and reports about piston and jet engine projects and now along comes Munro stitching it all together with a fantastic theory of how the Japanese view business as war and how theyll use military discipline to take over the world of GA.
Munro is the principal in Munro Associates, a Michigan-based consulting company with expertise in the automotive and manufacturing sector. He came up through the machine tool industry, did a stint as a Ford auto engineer and is a keen student of the way Japanese companies do business. Hes also intimately familiar with the work of famed industrial quality guru W. Edwards Deming who introduced manufacturing reforms to Japan after World War II. Deming is widely credited with making Japan the economic powerhouse that it is today, its current fiscal doldrums notwithstanding.
In a riveting paper presented to an SAE aviation conference in April, 2002, Munro sketched out what he believes will be the Japanese plan of attack in wresting dominance of aircraft manufacturing from the U.S. It would be easy to dismiss Munro as just another futurist crank, save for the fact that Americans who have and are working with the Japanese on aviation projects in the U.S. agree that he may be right. None of them seem to have Munros overarching view of Japans world conquering ambitions, but the bits and pieces of the puzzle fit together in an intriguing way.
Munro believes the Japanese will enter the GA market first with an aggressive presence that will stun the established industry. He says Japanese companies will sell light aircraft at prices substantially below what U.S. manufacturers are currently offering, with comparable performance and with fit, finish, quality and customer support comparable to at least mid-priced or luxury automobiles. He believes Japanese companies-thus far, Toyota, in our estimation-are willing to sell airplanes at a loss for as many years as it takes to rid the market of competition. Given the chronic weakness and hand-to-mouth nature of the U.S. light aircraft industry, we would guess if the Japanese really decide to do this, itll be akin to mugging a drunk in a dark alley. Good business sense has never been in surplus supply in the boardrooms of GA manufacturers. Unless it responds forthrightly, Munro gives the U.S. GA industry two to five years after the Japanese onslaught begins.
This is War
In his paper, Munro says the Japanese laugh at Americans not out of disrespect but because they cant understand why Americans just don’t catch on to the fact that business and war are a single entity. He describes three kinds of companies: those that make things happen, those that watch things happen and those that wonder what happened.
Ford was one of the latter in the 1970s when it ceded the small car market to the Japanese because everyone knew there was no profit in small cars. But a couple of years later, Ford was shocked to see that Japanese companies had bagged a large share of Fords market by underselling cars of better quality.
Munro says theyll do the same in the aviation industry, beginning with light aircraft. Theyll do it by canvassing current and would-be buyers to determine the markets wants and needs, hiring the best engineering talent around, fielding an army of round-eyed lobbyists to pressure Congress for aviation-friendly reforms and exhaustively testing prototypes before rolling out the production models.
These aircraft will be sold automotive style, with showrooms and in-stock delivery options at prices low enough to attract frugal buyers who wouldnt normally look twice at anything new. This, says Munro, will devastate the used aircraft market in the U.S. and spell the end of marginal GA manufacturers in the U.S. (In our view, marginal fairly describes the entire industry, in terms of profitability if not competitiveness.)
And when will this happen? Munro says the Japanese like dramatic introductions at major events where all competitors will be: His guess is Oshkosh at the 100th anniversary of powered flight. In case youre rusty on the history, thats 2003.
Is This Real?
If the Japanese are about to burst full-blown into the world GA market, wouldnt there at least be some clues about what theyre up to? There would and there are. Although Japanese companies have been extraordinarily secretive about their plans-this is, after all, war-as Munro contends, a number of U.S. aviation professionals have and are doing developmental work for the Japanese. All of these experts have non-disclosure agreements and none we talked to were willing to go on the record, at least in detail.
Nonetheless, weve learned enough to reveal at least some of what may be in the works. One executive we spoke to told us Japanese involvement in GA began far earlier than most people believe, probably reaching back to the 1970s. This is consistent with Munros observation that companies like Toyota and Honda have strategic business plans extending as far out as 50 years. One American engineer told us he was astonished to learn that Toyota even has a 200-year plan. Hell, he added, in this country, were not looking beyond next month.
Most of what we know about Japanese GA activity has come through brief glimpses, rumor and speculation. We do know that between 1992 and 1995, Toyota funded an engine research project to explore the conversion of its sophisticated Lexus V-8 engine to aircraft use.
This became the FV4000, a 360-HP watercooled powerplant complete with fuel injection and full-authority digital engine controls that pioneered the current round of engine control products just finding their way to market. According to those familiar with the project, the FV4000 was a promising engine and was actually certified by the FAA, including type and production certificates.
It was tested in a Piper Malibu and in a Burt Rutan-designed single and could conceivably, with further development, have replaced the ill-starred TIO-540 Lycoming used in the Mirage or the TSIO-520 found in the original Malibu. But when youre an auto company making 6 million cars a year, re-engining a few hundred aging Malibus is lesser work than sweeping up shop tailings.
In any case, the engine was said to be heavy, had some exhaust problems and would have been expensive to manufacture, on the order of $100,000 per unit. (Admittedly, to a Mirage owner looking at his second engine in under 1000 hours-as many owners have-$100,000 might look like mere pocket change.)
In reality, according to one insider we spoke to, Toyota may have had no intention of producing the engine for aircraft use in the first place. These companies take the long view. Theyre very patient. I think they looked at it as purely a learning experience. They wanted to get some experience in aircraft and certification projects, he said.
Another engineer involved in the project told us the FV4000 was a great engine, quiet, smooth and FADEC-controlled. Further, Toyota left many with the impression that its a reputable company to do business with. It paid its bills and did what it said it would.
Toyota Flies
More recently and, in our view, of greater import is the Toyota Advanced Aircraft project, the proof-of-concept for what Sandy Munro sees as the sharp end of the Japanese wedge into the world GA market.
As the photos here show, the TAA is a four-place aircraft looking very much like a Cirrus or a Lancair. It appears to be an all-composite design but could just as easily be made of metal or a hybrid. This version appears to be fixed gear but there’s room to stow the wheels for a retractable model. Although we believe Toyota is exploring a diesel powerplant, this prototype is reportedly powered by a Lycoming 360-series engine.
It was widely reported that the Toyota aircraft flew on May 31, 2002, from Burt Rutans Scaled Composite facility at Mojave Airport. At Oshkosh, Rutan spoke briefly about the Toyota project and confirmed that Scaled has been hired to wring out what is essentially a Japanese design. Rutan says the airplane has some aggressive composite manufacturing including single-cure technology for the wings and fuselage. It will also have Japanese-designed user-friendly avionics similar to whats found in luxury cars such as the Lexus.
When and how much? Rutan demurred, referring us to Toyotas Torrance, California headquarters, which is overseeing the project with a staff of about 40 people in the U.S. A spokesman for Toyota offered no additional detail, other than to confirm Toyotas interest.
One source told us Toyota has committed some 1000 people worldwide to the GA development project which, if true, is a measure of its seriousness. As for performance of the prototype, little confirmed data exists. AINonline reported that the prototype cruised at 140 knots with a follow-on product to deliver 160 knots. At first blush, this is none-too-impressive but speed may only be part of the Toyota plan, if indeed any plan goes forward at all.
Cheap, Cheap, Cheap
What would it take to ignite volume sales in GA? And by volume, we mean a sustainable world market of, say, 2500 or more light aircraft. Many agree that price continues to be a major barrier to more aircraft sales, if not the only barrier.
Munro contends that when the Japanese enter the market, theyll sell at a loss and shock the competition, just as they did in the automotive industry. When youre willing to bleed a little-or a lot-to seize market share, there’s no downward limit on how cheap prices can be.
If the Toyota airplane sold for $160,000-a figure that has been reported in the general press-and proved to be a 160-knot cruiser, with 900-pounds of useful load and a modern avionics package, it would certainly be a better value than a new Cessna 172 costing about the same. This price point would challenge the domestic U.S. manufacturers but we doubt if it would put them under or lay waste to the used market.
On the other hand, another number weve heard-and one Munro believes may be feasible-is under $100,000, say $95,000 for the same airplane specs described above. This would shift the equation dramatically. We know of no U.S. manufacturer who could compete with a deep-pocket company willing to undersell the market that aggressively to achieve quick dominance. And if you happen to own a 20-year-old Bonanza worth $165,000, how will its value fare in the face of a brand new high-tech cruiser costing a little more than half as much?