The Breakdown

Explaining Southern California's economy

In Torrance, the helicopter business remains strong

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When Frank Robinson was in college, helicopters fascinated him. He loved how they moved like a hummingbird—hovering and quickly moving sideways, backwards and forwards.

He worked for large aerospace companies that built military helicopters, but his desire was to make smaller helicopters sold to civilians. After two of his employers turned down his idea, he quit his job and launched Robinson Helicopter Co. from his Palos Verdes home in 1973.

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He took out loans against his house, received help from an investor and worked ‘round the clock out of his living room.

“It took us 20 years to be an overnight success,” said Frank’s son, Kurt Robinson, who is CEO of the family business.

Today, Torrance-based Robinson Helicopter Co. plans to sell a little over 500 helicopters this year. It’s one of few remaining aircraft assembly plants in Southern California, with more than 80 percent of the parts in the helicopters built in Torrance, from the cabins to the blades.

Targeting the civilian market

Unlike other helicopter companies, Robinson primarily targets civilian customers—whether it’s ranchers who use the choppers to herd their cattle, businessmen transporting goods to their stores or tour operators. The helicopters are sold at a fraction of the price compared to Robinson’s competitors, said Kurt Robinson, the company’s CEO.

Robinson sells piston-engine helicopters, the R-22 and R-44, for about $275,000 and $400,000. These helicopters are smaller; the R-22 seats just two adults. 

The company also sells a turbine-engine model, the R66, which is in the $800,000 range. That’s compared to competitors who sell turbine-engine choppers in the $1.4 million-$1.5 million price range, Robinson said.

Michael Blades, an aerospace and defense senior industry analyst at business consulting firm Frost & Sullivansaid part of Robinson’s appeal is its low prices. 

"The people that want the Robinsons, want a cheap way to get into a helicopter," Blades said.

The bulk of Robinson’s sales come from its piston helicopters, which generally are less expensive to maintain than turbine helicopters, Blades said.

Robinson said most of the manufacturing is done in Torrance, except for the engines and the avionics, which include instruments and radios.

“We try and do as many operations and make as many parts as we can in the factory. By doing that, not only does that help us a bit on the cost, but it also allows us to focus on the quality of the helicopter,” he said.

Recession hurt sales

Robinson Helicopter Co. was not immune to the recession, even though about 70 percent of the company’s sales come from outside of the U.S.

“It was pretty far reaching. That was the first time in the history of our company, where we saw not only sales in the U.S. decline, but also worldwide,” Robinson said.

Robinson said in 2008, the company made just under 900 helicopters, the most in the company's history. Two years later, that dropped to around 160 choppers. This year, the company expects to make a little more than 500 helicopters.

“It’s like the economy has come back two-thirds, but it hasn’t come all the way back, and that’s the way we are, and hopefully the economy will keep going back and will continue to grow,” Robinson said.

Robinson declined to reveal his company’s annual sales, but industry analyst Michael Blades estimates that last year, sales were $196 million, an increase from around $150 million in 2011.

As the economy continues to recover, governments and police departments dealing with smaller budgets may cut back on their helicopter spending, which could impact Robinson, Blades said. However, it’s also possible that penny-pinching governments that need helicopters may downgrade to a Robinson, he said.

Cost was a factor when the City of Fontana decided to buy Robinson Helicopters over competitors like American Eurocopter, said Police Pilot Carl Garlick. The city's police department uses the helicopters to assist patrol operations. The department uses two Robinson helicopters and a third is on the way.

"If they would have picked a platform that was a little bit more expensive, they probably wouldn't have been able to afford the second or third helicopter, the operating costs would be significantly higher and when they looked at it, the Robinson helicopters had the exact same equipment as the other platforms had," Garlick said.

In the future, Blades said he could see unmanned aerial vehicles competing against companies like Robinson. Police departments and news stations use Robinson helicopters for surveillance purposes and it's possible that a drone could perform those functions, Blades said.

"That's where I think their challenges are going to be in the next decade," he said.

To stay or not to say in Southern California?

CEO Kurt Robinson said it was a long process to get the company from his family’s home to its large headquarters in Torrance. Even though the company was founded in 1973, the first helicopter model didn’t get certified until 1979.

The first office was a small hangar in Crenshaw, with a staff of less than 100 people. Compare that to the roughly 1,300 people that work for the company in Torrance today.

His father, the company’s founder Frank Robinson, retired in 2010, and Kurt Robinson took over. It’s unclear who will take over next.

“Once you kind of get involved in a family business, it gets in your blood, I guess,” Kurt Robinson said. Whether his children will go into helicopter business, it’s entirely up to them, Robinson said.

Robinson Helicopter Co. is one of the few aircraft assembly plants left in Southern California. The number of people who work in the aerospace industry in Los Angeles County has plunged over the years, from about 189,000 people in 1990 to just 57,000 people in the first half of last year, according to the Los Angeles County Economic Development Corp.

Part of the decline had to do with defense budget cuts, more automation and electronic components added to the manufacturing process and a move by suppliers to be closer to the Department of Defense on the East Coast, said LAEDC Economist Robert Kleinhenz.

Robinson said every week there are other states and countries trying to court his business to open manufacturing plants elsewhere, but he has no plans to move.

"We grew up in this area and we think we have a great labor force here," Robinson said. "At this time we prefer to stay here."

RELATED LINK: AudioVision--The Making of a Helicopter

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