Can an MRO afford to loose £50k?

Can a Maintenance Repair Organisation (MRO) afford to loose in excess of £50k per year off its bottom line?  In an industry were profit margins are in the low single digit, increases in the regulatory requirements of Safety Management Systems (SMS), greater regulatory compliance and even tougher competitiveness within the industry, MRO’s are loosing in excess of £50K per year or even greater in some areas.

Why?  Historically within the aviation industry, Licensed Aircraft Engineers (LAE’s) by nature of having a license are deemed to be responsible to supervise and manage aircraft maintenance inputs were a single maintenance input could be worth in excess of £80K – £100K to the MRO.  LAE’s are thrusted into the position of responsibility of supervision, accountability, customer interfacing and this inherent responsibility maybe on the shoulders of an LAE whom may have never received any formal training or experience in dealing with such responsibility.

Understandingly, within the various realms of aviation, commercial pressures take over the management teams priorities.   Management put their faith in the LAE with the hope they ‘can fudge along’ to make it work.   Surprisingly, a little devil pops up who reassures the manager that “they will be ok”.  Well, “ok until it is too late” – that is until an aircraft delays its departure or customer becomes increasingly dissatisfied with the levels of service.   A review of the pending customer invoice reveals several hidden issues: incorrect labour hours booked to the wrong task, materials booked out to the wrong task, return core items remain on the shelves – these typical issues are costing the MRO excessive daily charges which they can often struggle to get under control.

Invoice time – labour hours and part bookings need to be adjusted down to reflect an ideal reflection of the cost – not the actual cost to the business due to consistent known errors.  All hidden from the finance department.  The challenges for the MRO is to amend the invoice to the ideal what it should look like, what was agreed with the customer or amend the invoice to reflect the quote agreed with the customer; lost labour hours and parts… cost to the bottom line.

Questions are raised internally, and the cycle of commercial pressures evolve again and quickly move onto the next maintenance input forgetting to address the real root cause issues or problems within the workplace.  Year-end arrives and profits are worse.

Constant commercial pressures to get the next aircraft in and out are real – ‘on time, on budget.’ yet, still the profit margins remain constant or slip further down the points scale no matter how much effort goes into the maintenance input.

An LAE’s daily challenge is using their soft skills (core skills for every business) such as; being able to interface with their teams, have the confidence to lead, delegate responsibility, have trust amongst their co-workers, build on professionalism, motivation of others, communicate effectively or prioritise the workload.  The hard skills (knowledge, experience) are a MRO’s main focus.  However, the root cause to all the issues and challenges an MRO faces, is the result of limited soft skills within a workplace.  These are the key qualities of an organisation that build confidence within the market place and are built upon competency and capability.

The impact of not developing soft skills or providing an LAE with the appropriate training to match the responsibility means they are just about keeping their head above the water or even they could be sinking.  Causing financial losses to the business and most importantly – the bottom line!

The other departments within an MRO are the least of an LAE’s concerns; they tend to focus making the aircraft airworthy and safe for flight.  The other parts of the organisation i.e. administration (paperwork completion – errors), finances (timecards, bookings), logistics (returning the overdue cores, incorrect part allocation), workplace deficiencies (resources, tooling, people, data), management (issues, poor communication, culture, attitudes of others) are the last thing on their mind.  With little time to reflect, review and plan, leaves even less time to make sure that the team they are supervising are hitting their efficiency targets – 50%, 60% or 70%+ – tools of measurement by the Financial Director (FD).

With the introduction modern advanced aircraft technology means the purchase of new specialist tooling and aircraft specific type training is expensive.  Type training courses are now even longer (4+ weeks), more expensive than previously and are in the region of $50K+ for a modern business jet (course, per diems, hotel etc..).  Another financial challenge for the Financial Director to manage – to train or not to train highly qualified staff?  With average daily loses and the unknown return on the aircraft type investment makes it harder to justify spending further on other parts of the business.

So, every penny counts, regardless of the amount, it all adds to the bottom line.  How can an MRO improve its bottom line?  It needs to change its focus – ‘make time to change’.   They have to realise that the only way they can move forward is set aside time to make the appropriate changes.  The industry needs to address the people within it, nothing more and nothing less.  Are they ‘competent’ – have the skills, knowledge, experience and have the ‘competency’ – the right behaviours, attitudes to work within the workplace.  Providing staff with the correct training is more important than the compliance requirements that some just consider it a tick box exercise to meet the regulatory requirements.  Compliance training (e.g. type training, human factors etc..) does not give the people the confidence or abilities to improve the capabilities of the organisation.  ‘Competency is about people’, people give the MRO capability.  Providing specific and bespoke training aiming at people’s soft skills is the key to improving profit margins – guaranteed!