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Very illuminating and quite positive - both for those who agree to the new contracts and even for those who don't.
The most unusual thing I took away is the approval of the loan from Van’ family trust. Most chapter 11 companies don’t have such a benefactor. That is a very positive thing. Cash can be hard to come by in a reorganization.
No ERP. Wow, that explains a lot.
Apparently they ran a lot with Excel. It definitely won't give the integration and control of an ERP. But ERPs are expensive; we had a whole team dedicated to looking after our company SAP system. Hopefully there is a good system that is suitable for a company the size of Van's.
This was well worth the read. I think anyone who has an open order or planning to place an order should definitely read it.
I spent 20 years in large medical device manufacturing. We use to have an ERP joke, "Some companies "run SAP" and many companies are "run by SAP".
ERP systems are great, but it is like owning a dragon, very expensive to buy, very difficult to train and manage, you need to feed them tremendous amounts of data and they can cause nasty bites and burns.... if you are not careful.
I would order an RV-8 finish kit if:
a) I had a any idea as to when it would be delivered
b) I had any certainty over how much it would cost
Really the two are related, if delivery times are 6 months then I’m fairly certain of the cost. If they are 2 years, then I’m not. However, If Vans want new orders then answers to the above would be nice.
Unless you plan to use everything in the finish kit(no more deletions), I cannot think of why you wouldn’t piece meal everything you want. The prices are insane for items you can get elsewhere. Canopy @ $2800, I paid under $1k for low UV from lp aero the end of summer. Plenty of cowls to choose from for half of the new store price. I want to support them but I am not going to be stupid about it.
The engine mount seems to be the big B/O item. I have an order in for awhile and waiting on canopy frame(in stock) & skirts(in stock)to ship when they get to shipping larger items.
I suppose the lcp issue burnt me enough not to put any finish kit deposit down. Burn me once, Shame on them; burn me twice, shame on me.
Unless you plan to use everything in the finish kit(no more deletions), I cannot think of why you wouldn’t piece meal everything you want.
YMMV, but I'd rather spend my time building than sourcing materials. I'm paying Van's (dearly, I agree) to do all the thinking/arguing/negotiating for me.
YMMV, but I'd rather spend my time building than sourcing materials. I'm paying Van's (dearly, I agree) to do all the thinking/arguing/negotiating for me.
Excellent interview in my opinion. Mr. Hamstreet gives me confidence that he understands how to navigate this process and be realistic about what is needed, and how long it will take to implement. I've worked for several aircraft OEMs and major aviation service companies in good times and bad and what he is saying rings true.
Chris
It is not clear if the new proposed price is fixed?
This is on the first page of the new agreements:
The short story is YES, they can raise the price before the crating starts!
This is on the first page of the new agreements:
"PRICE. The estimated price of the Kit(s) as of the Order Date is $##,### (the “Estimated Price”);
however, due to potential increases in key components, the Estimated Price is subject to change
until commencement of Kit crating and packaging for shipment (the “Crating Date”). All deposits
and payments are to be in US dollars and paid in accordance with this Agreement."
The short story is YES, they can raise the price before the crating starts!
What would put the icing on the cake is a go-fund-me for current builders.
I’m impressed by the loan arrangement too. If the numbers that have been posted here are accurate, Van will be pulling in ~1.5 million per year from his secured loans, while regaining 100% of the old company.
It’s a win-win deal. Van gets well compensated for his investment, and flyers get the benefit from the potential of stabilizing and restructuring for long term survival and assurance of parts availability.
What would put the icing on the cake is a go-fund-me for current builders. The cash would flow through them back to Van’s, helping them to bear the brunt of the cost of recovery, while funding Van’s needs as well.
With two QB kits on order the only question I really care about is whether the QBs that will be shipped are free of laser cut parts.
I think someone else mentioned this but I think existing customers with deposits should get equity in the new company equal to the increase in cost they will have to endure. Only seems fair if they have some upside later on. The article mentions those with claims possibly getting equity vice cash compensation in previous workouts. While I'm thankful Van is willing to put money back in the business, it does seem like he's the main benefactor from this deal should the company survive and thrive. Not to mention the attorneys and workout team. I assume employees who had equity in the company have also been wiped out.
An ERP system, or at least the ones I'm familiar with, would be a huge overhead burden for a $50M company to take on.
It may be that Van's hit the awkward phase where running things by spreadsheet is no longer easy to manage, but moving to a big-boy ERP system is a lot to bite off, both from a setup and an overhead cost perspective. There are intermediate steps that can bridge the gap.
I was shocked to hear they were managing their operation via spreadsheets.
There are several levels of integrated inventory control management systems & very affordable for a company that size. I've been involved in many over the years as a software engineer.
Vans does not have any QB kits that are LCP-free in stock. The earliest some will reach Vans is middle of next year.
It's interesting to me some of the expectations people have of Vans right now. Vans is going through bankruptcy. They are working on the very highest priority items in order to successfully emerge from bankruptcy.
Nothing will be "fair" to all parties. Communication will be very infrequent. Emails and phone calls may not be returned timely. Orders will be delayed. Lead times and current inventory levels will not be published frequently. Replacements for LCP's won't be available for weeks or months. Their staff don't have answers to 90% of the questions being asked of them and won't for weeks/months. I think people need to reset their expectations.
And yes, I have skin in the game. I fully paid for my undelivered fuselage kit in August, have deposits on the finishing kit and a Thunderbolt engine. I've also agreed to the new pricing for my two kits and will likely have to cough up thousands more for my engine. I also have laser cut parts. I have a lot of $$$ at risk but I have faith that things will work out just fine - in time.
I'm very impressed with Mr and Mrs VanGrundsven's financial commitment to make sure Vans survives and thrives in the future. I'm impressed with the new portal. I'm impressed with the difficult changes Vans is making to the ordering process and pricing to simplify inventory and make themselves more efficient and profitable. Vans is doing the right things (now) but it won't be business as usual until well into next year at a minimum.
For those who are really, really upset with Vans and keep making posts about wanting to sell and start building another airplane - please sell your kits and move on. You'll be much happier!
Thank you for this. 100% agree. The reason Van's got into this mess was trying to accommodate the complainers who didn't want to wait 18-24 months for their kit deliveries. So they tried a new manufacturing process to appease these people and made mistakes in the process. Now the same people are complaining about having to pay more for their kits and that they aren't getting responses from Van's.
While nobody wants to pay more for parts, nobody has more to lose here than the VanGrundsven family. They have contributed substantially to ensure Van's Aircraft stays solvent and viable. While I'm not happy about potentially losing my engine deposit, I'd be a whole lot less happy if Van's Aircraft disappears.
Thank you for this. 100% agree. The reason Van's got into this mess was trying to accommodate the complainers who didn't want to wait 18-24 months for their kit deliveries. So they tried a new manufacturing process to appease these people and made mistakes in the process. Now the same people are complaining about having to pay more for their kits and that they aren't getting responses from Van's.
While nobody wants to pay more for parts, nobody has more to lose here than the VanGrundsven family. They have contributed substantially to ensure Van's Aircraft stays solvent and viable. While I'm not happy about potentially losing my engine deposit, I'd be a whole lot less happy if Van's Aircraft disappears.
.... The reason Van's got into this mess was trying to accommodate the complainers who didn't want to wait 18-24 months for their kit deliveries....
I would argue that allowing their lead times to get to 18-24 months for kits is part of the reason they got into this mess! It's much harder for a company to plan 18-24 months ahead than it is to plan 6-12 months ahead. These lead times (and Lycoming's too) are getting ridiculous.
Skylor