Latin CEO / May 2001
By Larry Luxner
Politicians may debate the pros and cons of Washington's latest war on drugs, but one thing's for sure: the State Department's $1.3 billion contribution to "Plan Colombia" is a bonanza for Texas-based Bell Helicopter Textron Inc. and its vice-president for Latin America, Frank R. King Jr.
Under the controversial program aimed at eradicating Colombian coca fields, Bell -- makers of the famous UH-1H "Huey" military chopper -- will upgrade 42 Hueys at a cost of around $1.2 million each. The resulting Huey II, says King, adds 20 years of life to the aging choppers while allowing them to carry six additional combat soldiers in hot jungle conditions. Bell claims the upgrades pay for themselves in only five years.
"Congress felt the Huey-II upgrade was a low-cost solution to an immediate problem," King said during an interview at his office in Fort Worth. "The upgrade is essentially putting commercial parts on the Huey airframe, which gives it added performance capability. The Huey II has been sold to the U.S. State Department for use in Colombia by the National Police and the Army. The Colombian Air Force has already converted eight of their Hueys to Huey IIs."
Not that Bell has ever had trouble selling helicopters in Latin America.
According to King, the region last year generated $180 million, or nearly half, of Bell's $400 million in worldwide revenues (excluding U.S. military sales). Likewise, Bell accounts for six out of every 10 choppers sold in Latin America; the remaining piece of the pie is divided among Sikorsky Aircraft Corp., a division of United Technologies Corp. of Stratford, Conn., and Eurocopter, a French-German aerospace conglomerate.
"I think our success in the region is due to the fact that we have such a wide product line," says King, displaying slick brochures advertising everything from the bare-bones Bell 206-B model, which costs $800,000, to the 15-seater Bell 412, which goes for $6 million. "We also have a strong network of 16 dealerships and we offer good aftermarket customer support."
King, a native of Houston, is no stranger to either Latin America or aviation. As a kid growing up in Caracas, he would often accompany pilots on reconnaisance flights over Venezuela, where his father was in charge of logistics support for oil giant Texaco. Later in life, King flew B-52s over Vietnam.
"After Vietnam, I left the service and was on my way to Houston to consider some banking opportunities," he said. "I saw an ad in the paper looking for sales reps at Bell. I was 28 at the time."
King answered the ad, got the job and has remained with Bell ever since. In the ensuing 32 years, Bell's Latin customers -- beginning in the 1960s with the Argentine government buying piston-engine Model 47s to fight locust plagues -- have expanded to include mining firms in Peru, businessmen in Brazil and politicians in Mexico, the company's most important overseas market.
According to King, Bell's factories in Fort Worth and Amarillo, Tex., produce military helicopters, while its six commercial models are assembled in Canada with at least 55% U.S. components. In Fort Worth, Latin American pilots receive specialized training at Bell's flight academy, and from there the pilots fly their new birds to their final destination.
Joel Johnson, spokesman for the Aerospace Industries Association, a Washington-based lobby, says it's no coincidence Bell has found such a ready and willing market south of the Rio Grande.
"Latin America has lots of mountains and jungles, and an underdeveloped road infrastructure, which makes helicopters attractive," he said. "The problem is that helicopters are expensive and difficult to maintain. They essentially shake themselves apart."
Within two years, Bell will introduce the Augusta Bell 139, a medium-size transport chopper. And by 2005, says King, the company should roll out its Bell 609 civilian tilt-rotor model, ideal for corporate, utility, offshore transport and search-and-rescue missions.
"A typical commercial customer would be based in Rio or São Paulo, and because of traffic congestion, he uses a helicopter to travel not only within São Paulo but also between São Paulo and his private home," King explained. "We're also trying to penetrate the Brazilian civil government market, because there's a lot of interest in developing vertical lift or rotary-wing capability for emergency medical use, and for police who might need to be rapidly deployed to a region within a state."
For now, Plan Colombia has been a godsend for Bell, says Richard Aboulafia, a defense-industry analyst with The Teal Group in Fairfax, Va.
Originally, the anti-drug effort was going to utilize only Sikorsky S-70 Black Hawks. But Sikorsky ended up providing 30 Black Hawks to the Colombian government, in two contracts worth a combined $221.5 million. Bell's share of Plan Colombia is worth far less -- only $50 million -- but inclusion of the Hueys amounts to an enthusiastic Pentagon endorsement of the Huey II conversion program, which has had a hard time getting off the ground.
"Bell used a little bit of lobbying to insert a force of rebuilt Huey UH-1Hs," said Aboulafia. "This pitted Texas against Connecticut, but they succeeded."
Besides Colombia, Bell says the market for converted Huey IIs is potentially strong in Bolivia, Brazil, Ecuador, El Salvador, Mexico and Peru.
Bell's biggest long-term hope in Latin America, however, seems to be in purely military aircraft -- especially the MH-1W, a version of the Cobra attack chopper. Colombia would love to buy some of these birds, and Brazil might also be a potential customer, but neither Bell nor Sikorsky have export licenses to sell attack helicopters to Latin America.
If the Bush administration relaxes that policy in the near future, as some speculate will happen, Bell's sales could really take off. Says Aboulafia: "With much of the Latin military market now U.S.-funded, profits are guaranteed."