“Two planes leave the factory each week”

Pilatus employs over 1,400 people, most of them in Stans Keystone

The aircraft built by Pilatus in its factory in Stans, canton Nidwalden, can be found all over the world, a commercial success despite strong competition from heavyweights such as Cessna and Embraer.

The smell is strong, almost sickening. The fuselage of PC-21, a military trainer, has just received its last coat of paint, bright red, like a Ferrari.

“We changed the colour to make the plane more visible,” explains Markus Kälin, a 25-year employee of Pilatus and our guide for the day on the site a few kilometres from Lucerne.

“It takes us 14 to 16 months to build an aircraft,” he adds. “On average, two planes leave the factory each week.”

Most of the parts are produced in Stans although assembly is partially carried out abroad, according to Kälin. “We send kits to the Czech Republic, Portugal and Poland,” he adds. “That’s where the wings and fuselage are put together.”

Outsourcing

This outsourcing was necessary because the assembly work is labour intensive and Switzerland is not sufficiently competitive, points out Kälin, who is also the assistant to Pilatus’ chairman. “Swiss quality is respected though, even abroad,” he says.

Although outsourcing helps cut costs, it can cause occasional delays. Shipping fuselages and wings across Europe is far from simple.

“Rail transport is not appropriate because wagons shake too much,” points out Kälin. “You would need rubber shock absorbers. We prefer to load everything on a truck, which is safer and faster.”

In the hangar next to a building dating back to 1939, the year the company was founded, a few employees in white coveralls are wiring electrical systems on five PC-12 NG, the company’s flagship aircraft. Afterwards they will install the engine, the propeller and the landing gear.

Further along, the quiet of the assembly area is replaced by the din of the machines producing the aircraft parts. Alongside the latest in computer-controlled machines, older equipment dating back to the 1990s keeps on working reliably.

Each part that is produced receives a quality-control certificate. “We keep these documents for at least 20 years,” says Kälin. “You can imagine how much paperwork we have stored away.”

Multiple uses

Pilatus customers aren’t just the Swiss and foreign air forces. Among its customers are also humanitarian organisations (for example rescue teams), transport firms, skydiving centres, businesses and individuals.

“Some of aircraft are used by park rangers in South Africa. They use them to keep an eye on animal reserves and catch poachers,” adds our guide.

The global economic crisis has been having an effect on business though, especially in the United States, which is one of the company’s main markets. Without an influx of orders from the Middle East, Pilatus would have had to consider job cuts or reducing employees’ work time.

Pilatus recently signed contracts with the United Arab Emirates, Saudi Arabia and Qatar. In May, a deal was also reached with the Indian government for 75 aircraft worth around SFr500 million ($533 million).

“We are thinking about how to deliver the planes,” admits Kälin. “The limited autonomy (around 1,500 kilometres) of the PC-7 Mk II means it can’t been done in a single flight.”

“We have to come up with an itinerary that takes into account the situation in Syria and the rest of the Middle East. So it will take seven to eight days to deliver each aircraft to India.”

During his time at Pilatus, Kälin has seen the company grow. The staff has increased from 800 to 1,400 employees while its reputation has improved too.

In the early 1990s, when the PC-12 came on the market, Pilatus will still flying under the radar abroad, and few believed the company was in for the long haul.

“The founder of Crossair, Moritz Suter, thought we would sell 30 PC-12s at best,” points out Kälin. “We have sold it in 38 countries and we delivered the thousandth in 2010.”

He sees two main reasons for this success. “We were always forward-looking, even without state subsidies we chose the latest technologies.”

“In 1961 for example, the PC-6 was the first small turboprop. Some of those aircraft are now over 50 years old and still flying.”

Niche business

The other reason is that Pilatus has always kept its feet on the ground. “We aren’t big enough to compete with the major players such as Cessna and Embraer,” adds Kälin.

“That means we have to occupy niches abandoned by our competition by anticipating customer needs. It has paid off since we haven’t owed the banks anything for the past ten years.”  

There have been some failures along the way. The PC-11 glider, better known as the B4, was used by the world’s best aerobatics specialists, but financially was no success, while other aircraft were nothing more than prototypes.

Pilatus’ reputation hasn’t always been lily-white either. Some of its aircraft have been armed after delivery and used for combat duties according to non-governmental organisations.

“From a distance, they might look like bombs,” comments Kälin, showing some frustration as he shows some external reservoirs under the wings of a PC-6 headed for Brazil. “An armed aircraft is noticed far more than hundreds of others sold without the slightest problem.”

As we finish the visit, a blue building looms, the only one that is off-bounds.

“We are working on our latest model there, the PC-24,” explains Kälin. “We are investing SFr400 million and we will be presenting it soon. There’s nothing else I can say.”

Pilatus

Founded: 1939

Headquarters: Stans (Nidwalden)

Subsidiaries: Altenrhein (St Gallen), Broomfield (Colorado) and Adelaide (South Australia)

Employees: 1,455 (90 per cent in Stans)

Sales (2011): SFr781 million

Earnings (2011): SFr108 million

Turbulence

Pilatus has been caught up in controversy a number of times. Some of its aircraft were armed after delivery and used for military operations. Swiss law bans delivery of military equipment to countries at war or not respecting human rights.

According to the Group for a Switzerland without an Army, Pilatus planes have been used in operations since the 1970s in Myanmar, Guatemala, Mexico, Bolivia, Nigeria, Iraq and in Chad.

Pilatus says there are only two verified cases: the use of PC-7s in Myanmar during the 1980s and PC-9s in Chad in 2008.

The Group for a Switzerland without an Army also reacted negatively when the sale of PC-21s to Qatar was announced in July. “The constant human rights abuses in Qatar and the repression of the opposition make us fear that the material supplied could be used at any time against the civilian population,” it said in a press release.

In a recent interview with Swiss weekly Handelszeitung, Pilatus boss Oscar J. Schwenk said that it was impossible to arm PC-21s without the support of his company given the complexity of the aircraft.

(Translated from French by Scott Capper)