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Mooney parts rate hike

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2 hours ago, 1980Mooney said:

True...the American steel and aluminum suppliers simply increased their prices by the same amount as the market will bear.  Either way the costs are artificially inflated and we ultimately pay for it.  I don't know that everyone agrees that we are better in the long run having to pay $800,000+ for a new Mooney. 

When you say we have been getting screwed by the Chinese are you referring to the Chinese real estate Meijing Group and other Chinese investors that own and control "Soaring America" holding company which owns Mooney International?  Or are you referring to the Chinese Government owned AVIC International which owns and controls "Technify" holding company which owns Continental Motors, sole engine supplier to Mooney?  Cirrus Aircraft is owned by Chinese Government owned China Aviation Industry General Aircraft (CAIGA) and Diamond Aircraft is owned by the Chinese Wanfeng Auto Holding Group Co., Ltd.  If there is unease with the Chinese in GA then the only option is to fly a Cessna until such time that Textron eventually dumps the General Aviation business or build your own.

I guess you see things one way or the other. To each his own.

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Many OEM's in many, many industries contract their parts operations out to third parties who maintain the warehouses and inventory. Think of the operations as "banks" where you stack money. Now if they keep a part (money) on the shelf, they don't just want the price of the part (money), they want an ROI for all the time that "money" sat on the shelf. A lot of these warehouses sit in Memphis or Louisville close to FedEx and UPS. In some cases they are even operated by those companies. When you order a part from the OEM, they simply transmit the order to their warehouser to pulls the part, packs it and ships it out. OEM's often have little control over the pricing of the part by the third party.

 

 

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15 hours ago, N201MKTurbo said:

No taxes on American steel or aluminum. 

It will be much better In the long run. We have been getting screwed by the Chinese for way too long.

I believe that those same taxes were applied to steel and aluminum purchased from Canada.  

Clarence

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2 hours ago, M20Doc said:

I believe that those same taxes were applied to steel and aluminum purchased from Canada.  

Clarence

That's for national security reasons.  ;)

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17 hours ago, N201MKTurbo said:

I guess you see things one way or the other. To each his own.

I think we have to see it as it is.  There is absolutely no appetite within the U.S. to invest in General Aviation.  I forgot to add above that Piper Aircraft is 100% owned and controlled by the Sultan of Brunei, located south of China.

Several here have compared the parts situation to OEM and aftermarket in the auto industry. A couple people here have said that they are amazed and grateful that the factory is actually building parts for legacy aircraft and hopeful that they remain profitable.  One thought Mooney should charge only cost plus a "fair margin". Only one has highlighted that cost is more than materials and labor and that in a low (and declining) volume industry overhead costs are the killer.

This is exactly the situation at Mooney and the dilemma for us.  Many think that Mooney International is actually a viable business as it is run today.  The company acts like it is competing in the leagues of Cirrus, Piper, Cessna and Diamond that sold over 900 pistons combined in 2018.  But it "claimed" to GAMA to have only sold 4 planes in the first 6 months of 2019 and one already destroyed after the pilot reported mechanical problems to ATC before crashing.  LinkedIn lists 75 employees at Mooney.  Since there are probably more that means with benefits Mooney probably has a $5-6 million per year annual cash payroll.  Overhead to pay for the factory, equipment maintenance, keep the lights on, pay for insurance and outside lawyers probably adds another $2 million cash cost. That means Mooney needs about $8 million cash annually just to be able to produce one plane or one part (and that $8 million does not include the cost of materials or any 3rd party costs like the engine, avionics, etc.)   Distributors get a commission and other costs on a sale so I would be surprised if Mooney even nets $700K on an Ultra sale.  Assume that Mooney incurs about $200K in 3rd party costs for engine, prop, avionics, interiors, tires, batteries, tires, etc.  That leaves Mooney with about $500K cash on an Ultra sale.  If they sell 8 Ultras per year that is $4 million cash inflow to cover an annual $8 million cash need.  So how do they cover the $4 million shortfall?....PARTS!  If Mooney is making a 75% profit margin on parts, that means they need to sell $5.3 million in parts every year.  I think there may still be about 8,000 Mooney's in the global fleet so that means everyone needs to buy about $666 of Mooney OEM parts every year on average on every plane in order to keep the lights on in Kerrville.  Unless there are a lot of gear-ups or porpoised landings or corrosion I don't think so!

Expect part prices to go higher as the fleet and volume continue to decline.  And since it is likely that Mooney is likely negative cash flowing, it is only a matter of time before it enters bankruptcy (again).  They must have lost $ millions with the aborted Chino, CA expansion and shut down along with the unsuccessful M10 over the last few years.  How long will the Chinese continue to pour cash into Mooney with little prospect of return?  My fear is that the current Chinese owners will liquidate with little concern for legacy of the fleet or history of the brand.  Chinese companies do not have or may be out of touch with the same cultural sensitivities that are important to current owners and therefore operate at a different pace.   

Edited by 1980Mooney
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The vintage owners gotta be grateful to everyone who has an interest in making parts for us  - @GeeBee, LASAR, etc.  I'd rather the profit goes to folks like this than the factory or some warehouse owner. 

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Back in the high volume days of General Aviation there were parts in inventory on the shelves at Mooney and at some high volume Mooney Service Centers, so there was some incentive to move inventory to recover the cost of the part.

Fast Forward to 2020, many times the part has to be manufactured to fill the order. While it's true that it didn't have the costs associated with a part sitting on the shelf, it's pure supply and demand. It costs a lot to make a part in low volume. If the supply is low (none or very few in inventory) and the demand is high (airplane is not airworthy without the part) Mooney's first obligation is to provide a return on investment for the company's owner, not to make parts "affordable" to airplane owners. I don't like it any better than anyone else, but a much worse alternative is no factory, no parts.

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A legal after market is what keeps car parts down in cost. Price compare factory part to after market parts on cars and see the disparity.

"As good as OEM" ? You're to be the judge.

On 11/3/2019 at 6:54 PM, EricJ said:

My understanding is that an owner-produced part doesn't have to be an exact duplicate, it can be an alteration or part of an alteration, it just needs to be airworthy and conform to the type certificate.  The A&P that signs off the installation makes that determination.

In our "CERTIFIED"  airplanes the follow on parts have to be made exactly as the original one was with and by a company "CERTIFIED" as to quality equal to the original maker, to the exact APPROVED DATA used by the original maker or by some other APPROVED DATA path. $$$$$$$$$

EVEN as an OWNER PRODUCED PART-   the part MUST be made in compliance with some kind of  certified and approved DATA. 

An alteration of a certified part must be altered by using "approved data" to alter the part . That is not the same as making a new part in some way different than the original part (think the current thread on "rubber boot" for the intake).  How its altered has to be in conformity to some kind of "APPROVED" data. "Just as good" or "better than new" don't cut it.

An A&P has limited approval on installing repaired or altered parts. They have to conform to approved data to be legal to install. An IA can not just wave a magic wand and declare something as "Airworthy". It HAS to conform to some kind of "APPROVED DATA". 

AN owner can make a part for use on his own airplane ONLY, BUT,  it must meet all 4 required conditions to be legal. The toughest one to meet is making the part to the original approved data or proving that it meets some other approved path to installation. The part doesn't have to be made by the original maker but it does have to meet the same criteria as it met when made by them. 

No one can make "PARTS" for sale for use on certified airplanes unless they hold a PMA for making the part (Parts Manufacturing Approval)

Standard Parts aside (that's a separate discussion)!

You can't go to China and have a a part made and then sell it to certified airplanes unless you or them hold a PMA for the part. If the part differs in its design or manufacture then you'll also need an STC approval to alter the airplanes original Type Certificate. 

Shields up!

 

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I don’t intend to get into a political kerfuffle, but I will stand by my original statement about regulations being a big part of the cost of an aircraft.

At work we have been doing a lot of defense projects lately. Some of our customers require that we have certificates for everything on the project. Just like an aircraft. On a normal project, if we needed some bolt, we would just order a box of bolts from McMaster Carr and have them the next day for $10. The same box of bolts with certs will cost $100 and have a three week lead time. 

These are ridiculous requirements for a piece of production equipment and we are all paying for it.  

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44 minutes ago, N201MKTurbo said:

I don’t intend to get into a political kerfuffle, but I will stand by my original statement about regulations being a big part of the cost of an aircraft.

At work we have been doing a lot of defense projects lately. Some of our customers require that we have certificates for everything on the project. Just like an aircraft. On a normal project, if we needed some bolt, we would just order a box of bolts from McMaster Carr and have them the next day for $10. The same box of bolts with certs will cost $100 and have a three week lead time. 

These are ridiculous requirements for a piece of production equipment and we are all paying for it.  

Agree 100%   Until a way around the "certified" aspect of the Type Certificate can be found we are stuck in an abyss  

As you say, "its all in the regulations"

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Minor repairs and alterations do not require approved data, only acceptable data, which is a much lower hurdle than approved data.

Remember that even AC43.13 is approved data under the conditions on the first page of that document, which aren't that hard to meet for owner produced parts:

a. the user has determined that it is appropriate to the product being repaired;
b. it is directly applicable to the repair being made; and
c. it is not contrary to manufacturer’s data.

One can make an awful lot of stuff just using AC43.13 as the reference for "acceptable data" for minor repairs or alterations or "approved data" for major repairs or alterations if the Mooney repair and maintenance instructions don't indicate how to make the part or repair.  Perfectly legal by my reading of the documents.

There's an awful lot of guidance from the FAA on owner produced parts, and the scenario of a type or model owner's group (e.g., Mooneyspace) collaborating to have parts made has been cited as an example of what is expected to properly fall under that umbrella.   The case of doing so to circumvent excessive pricing or lead times from existing suppliers has also been cited in FAA presentations as expected motivation for making owner produced parts.

I think the proposals being made here are completely in line with all of that.   There are quite a few ACs and in-house FAA legal opinion letters that address these areas. 

Just my dos centavos.


 

 

 

Edited by EricJ
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I agree but we are splitting hairs here,

My reference point was a Chinese made bellows from an unknown supply of some kind of silicone. by an unknown (to the FAA) company.

It may work just fine and it may be much better than what is available  but it won't qualify as a new part or a repaired part. It won't even qualify as an OPP. As mentioned by someone else the best path might be an STC.

Every year we seem to go round and round with a  thread on why we can't just make parts and have out A&P or IA declare it airworthy and use it. The same caveats apply every year the same way

JMO

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1 hour ago, cliffy said:

I agree but we are splitting hairs here,

My reference point was a Chinese made bellows from an unknown supply of some kind of silicone. by an unknown (to the FAA) company.

It may work just fine and it may be much better than what is available  but it won't qualify as a new part or a repaired part. It won't even qualify as an OPP. As mentioned by someone else the best path might be an STC.

Every year we seem to go round and round with a  thread on why we can't just make parts and have out A&P or IA declare it airworthy and use it. The same caveats apply every year the same way

JMO

Best method and least expensive would be FAA/PMA over an STC. Neither are cheap or quick to get accomplished.

 

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2 hours ago, cliffy said:

I agree but we are splitting hairs here,

My reference point was a Chinese made bellows from an unknown supply of some kind of silicone. by an unknown (to the FAA) company.

It may work just fine and it may be much better than what is available  but it won't qualify as a new part or a repaired part. It won't even qualify as an OPP. As mentioned by someone else the best path might be an STC.

Every year we seem to go round and round with a  thread on why we can't just make parts and have out A&P or IA declare it airworthy and use it. The same caveats apply every year the same way

JMO

there is a letter from the FAA describing an OPP.  I've read the original PDF but at work and not looking it up.

Essentially yes the above is doable with enough Owner involvement.  I'd guess giving an original bellows or even calling up brittain and getting the original specs might work.

Mike Busch speaks to it also.  an OWNER is allowed to maintain his plane.

 

https://aviation.stackexchange.com/questions/8409/how-are-owner-produced-parts-handled-under-faa-regulations

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AC23-27 7.c.3 says you just need to establish that the material is as good as the original.     Even better, Par 7.c.4 says you can use parts or materials that were previously approved on like-type aircraft.   If the stuff you want to use has a previous field approval, STC, PMA, or NAS, etc., you can use those approvals.  So if the material or part was ever approved on any similar (e.g., reciprocating engine GA) aircraft you may be able to use that part or material for a similar purpose.

Par 13 says such substitutions for minor repairs or alterations require only a logbook entry.

I think in many cases it may not be as hard as it is sometimes made out to be.

Edit:   Even taking "like-type" to mean only aircraft certificated under TCDS 2A3 (Mooney M20), a ton of possibilities are opened up.

 

Edited by EricJ
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I read all of these 'arguments' with a bit of amusement.  It seems to me the REALITY is if INSURANCE claims will be DENIED if the cause of an accident is somehow related to an OPP.  Absent that evidence (denied claims) I will continue to take a pragmatic approach to properly maintaining my aircraft.  The FAA and their after-the-fact interpretation take a distant second place to whether my insurance will be in force.

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I visited the Mooney factory in Kerrville back in 1996. I remember being told the person hours required to build a J model was 3200. If it required 3200 hours to build a car, we would all be walking. The real bottleneck in aviation is the number of units that can be sold, and that limits the technology investment in manufacturing. 

Henry Ford went bust twice before he got the assembly line right and could manufacture cars at a low enough price to create a market. And of course, with aircraft there is a qualification limit as well; there are about 600k pilots out of a 330m population. 

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11 hours ago, MikeOH said:

I read all of these 'arguments' with a bit of amusement.  It seems to me the REALITY is if INSURANCE claims will be DENIED if the cause of an accident is somehow related to an OPP.  Absent that evidence (denied claims) I will continue to take a pragmatic approach to properly maintaining my aircraft.  The FAA and their after-the-fact interpretation take a distant second place to whether my insurance will be in force.

But nobody can produce evidence of a claim denied becuase of an OPP.  All they care about is was it in annual.

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An OPP is a  legal part,  just like any other part you put on your airplane. Nothing there to deny insurance  if done correctly.

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1 hour ago, jetdriven said:

But nobody can produce evidence of a claim denied becuase of an OPP.  All they care about is was it in annual.

Which was my point about being pragmatic:)

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36 minutes ago, cliffy said:

An OPP is a  legal part,  just like any other part you put on your airplane. Nothing there to deny insurance  if done correctly.

Well, now that's the rub, "...if done correctly."  So, if the plane's in annual, in theory, that should mean "it's done correctly."  But, I think we all know that isn't really always true.  So, the question becomes, after the fact, will the FAA and/or the insurance company do a deep-dive on the logs to determine that an OPP was NOT 'done correctly?'  My point is that I'm a lot more worried about the insurance being denied than the FAA.

I seriously doubt claims have been denied over illegal OPPs.  Hence, my amusement with all the hand wringing over how to 'properly' produce an OPP.

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I don’t think there’s really any evidence of insurance companies deep diving in the logbooks. They are not mechanics they pay claims. They try to weasel out of them but how do they know the finer points of whether or not a certain IAD was done properly or in properly or whatever it’s too much bullshit to get involved with. So they mostly just ask for the last page of the logbooks to make sure it’s an annual and that’s about it.  

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5 hours ago, MikeOH said:

Well, now that's the rub, "...if done correctly."  So, if the plane's in annual, in theory, that should mean "it's done correctly."  But, I think we all know that isn't really always true.  So, the question becomes, after the fact, will the FAA and/or the insurance company do a deep-dive on the logs to determine that an OPP was NOT 'done correctly?'  My point is that I'm a lot more worried about the insurance being denied than the FAA.

I seriously doubt claims have been denied over illegal OPPs.  Hence, my amusement with all the hand wringing over how to 'properly' produce an OPP.

Given the general state of maintenance on decades-old GA airplanes, I think there are many opportunities for finding things awry without owner-produced parts ever having to come into the picture.   If that's the sort of thing you worry about, I'd suggest buying a factory-new airplane and only ever have factory-authorized work done on it.

Having spent the last many months poring through maintenance manuals for Mooney, Piper, Cessna, Grumman, Beechcraft, Learjet, DeHavilland and North American products, I can tell you that "done correctly" is very ill-defined or not defined at all in many maintenance manuals.  I think in many cases it'd be tough to specifically define what it means, or there would be multiple definitions, or possibly none at all.  

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56 minutes ago, EricJ said:

Given the general state of maintenance on decades-old GA airplanes, I think there are many opportunities for finding things awry without owner-produced parts ever having to come into the picture.   If that's the sort of thing you worry about, I'd suggest buying a factory-new airplane and only ever have factory-authorized work done on it.

Having spent the last many months poring through maintenance manuals for Mooney, Piper, Cessna, Grumman, Beechcraft, Learjet, DeHavilland and North American products, I can tell you that "done correctly" is very ill-defined or not defined at all in many maintenance manuals.  I think in many cases it'd be tough to specifically define what it means, or there would be multiple definitions, or possibly none at all.  

We are in violent agreement!  I've don a poor job of making that clear, I guess!

Your post is EXACTLY why I find these kind of threads so amusing...all this discussion about regulatory minutiae and documentation.  All this agonizing over where to get 'approved data',...what the FAA will accept,...blah, blah, blah.  Find someone competent, show them the old part, and let them make a new one out of the same material.  The hardest part is finding someone competent... and that is competent enough to know when what you want is beyond his abilities.

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7 hours ago, MikeOH said:

We are in violent agreement!  I've don a poor job of making that clear, I guess!

Your post is EXACTLY why I find these kind of threads so amusing...all this discussion about regulatory minutiae and documentation.  All this agonizing over where to get 'approved data',...what the FAA will accept,...blah, blah, blah.  Find someone competent, show them the old part, and let them make a new one out of the same material.  The hardest part is finding someone competent... and that is competent enough to know when what you want is beyond his abilities.

Hangar elves.

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