Fast 5: Aircraft Life Extensions Drive Ontic’s Aftermarket Growth

Brian Sartain was appointed Ontic’s chief operating officer nearly a year ago. He spoke with Lindsay Bjerregaard on the sidelines of MRO Americas in Chicago about how aircraft lifespan and supply chain trends are impacting the business, as well as Ontic’s recent workforce and expansion initiatives.

Ontic has long focused on extended life solutions for OEM legacy products. Between reliability issues and new aircraft delivery delays, we are seeing a lot of older aircraft fly longer. How have these trends impacted this business area for Ontic?

It’s actually been a boon for us. As older platforms fly longer, we've got programs that we thought were going to have an end of life that are now flying for 5-10 years longer than expected. When we acquire a product line, and it gets a life extension, that's a good thing for us. We're actually growing even faster than we thought we would because of some of those trends. It's also an interesting challenge for us, because in some cases, we've made last-time buys of scarce material like integrated circuits and chips that aren't produced any longer. Now we have to do engineering projects to replace those, and we have several of those projects underway. This is why we’ve got such an investment in our engineering talent, where we're cloning microchips and doing things like that to extend products 10-15 years longer than the parts that we bought or took over in the transition, and it just creates a challenge.

Due to supply chain shortages and delays, we are seeing a lot of companies looking for alternative parts solutions or adjusting their procurement strategies. What is your perspective with this at Ontic?

If you think about what we do, we buy the intellectual property or we have a license to produce these parts in perpetuity. In effect, we become the OEM, and we're no longer dependent on the original OEM that designed the part. As the OEM, we're seeing the same issues that companies like Boeing, Airbus, Liebherr-Aerospace and Eaton are all starting to see. What's interesting about our position is, when we bring over a product and we do a transition, we have what I would consider to be a best-in-class transition process. We investigate every single part of the bill of material because it’s new to us—even if it’s old to somebody else—and in doing so, we go through and vet the supply chain. We’re finding suppliers that might be on the precipice of going out of business or in a risky situation and identifying those risks. They don't surprise us because we're going out proactively looking at them as part of a transition. So, in some ways, I think for the products that we're producing were faring better than many of the OEMs.

What's also been really an interesting experience for me, somebody who's had plenty of experience with PMA [parts manufacturer approval] houses in my past, is we're going to some of the PMA houses and saying, “How would you like to be an OEM supplier?” If your parts will pass the OEM standards and we can qualification test them and get them onto the platform, we're actually transitioning some of those PMA parts into OEM parts. We're having to take on just as clever strategies as a third-party repair shop that is trying to find parts and not go to the OEMs.

Which types of parts or platforms are you seeing growing demand for when it comes to aftermarket services?

What I don't think a lot of people are thinking about, at least in the U.S., is the unrest in Ukraine and the Middle East and what impact that's having on legacy military programs. We started as a company really focusing on military and we've become increasingly commercial over time based on the licenses that we require. It’s well known that the [Eurofighter] Typhoon has gotten an extended production run, and a lot of the European rotorcraft platforms are having extended runs. That’s years of production that nobody was planning for. One of the things that's really interesting in terms of demand that we didn't expect to see, and it's really driven by geopolitical stuff, is those European legacy military programs becoming more predominant, and people needing aftermarket services for those because the readiness of the European military fleets is not really where it should be. In the U.S., the cancelation of the FARA [Future Attack and Reconnaissance Aircraft] and extension of U.S. military rotorcraft platforms are creating similar demand.

We are also seeing significant demand for our products for the Boeing 737NG, 737 MAX and Airbus A320.

Ontic recently invested in expansions to some of its global facilities, including its Creedmoor, North Carolina and Chatsworth, California sites. What drove these expansions, what did they entail and are there any other upcoming growth plans on the roadmap?

Both of these expansions were driven by our top-line growth and increasing pace of license acquisition. We also acquired a facility in the UK in 2021. In the last five years we’ve doubled our sales and the concept of divesting non-core product lines and utilizing that capacity for new programs is picking up pace at our OEM partners. Both of these projects were multi-million dollar expansions or remodels that have resulted in Ontic having more than 50,000 ft.² of floor space available for new product line transitions.

For now, we have plenty of OEM floor space and we are going to focus on our MRO services offerings. Some of our more recent product acquisitions are very commercial airline-centric and we recognize that airlines need 14-day turnaround times—and our current approach is not consistently meeting that. We are going to make some big investments in the MRO space in the next two years.

Ontic launched an apprentice program last year. What type of workforce demand are you experiencing and what strategies are you using to recruit, train and retain new staff?

We have more demand than we can supply. The good thing is, it’s easier than finding A&Ps [airframe and powerplant technicians] because we’re looking for electrical and mechanical technicians, and not often a full A&P certification. We’re developing pathways and pipelines. In both the U.S. and the UK we are working with local schools, colleges and universities to create a pipeline of talent. We’re going to have to grow our own workers—we can’t rely on the workforce to just supply them. As a board member of CareerSource Florida, I’ve seen how this can work and we are developing our programs from those experiences.