Bell Helicopter facing headwinds as it marks 65 years in Fort Worth

Almost every day, helicopters are taking off and landing along Highway 10 at Bell Helicopter’s Fort Worth headquarters.

This year, the company owned by Rhode Island-based Textron is celebrating its 65th anniversary in Fort Worth with an expanded training center, a new commercial helicopter and a recently unveiled tilt-rotor drone. Bell’s 4,100 employees work at a renovated headquarters campus after a $235 million makeover and consolidation in far east Fort Worth.

But Bell’s business is facing one of the toughest times in its history as military orders for its V-22 aircraft are declining and sales of commercial helicopters are sluggish due to the oil industry slump.

“We’re in a little bit of a perfect storm where both [military and commercial] businesses are a challenge,” said Brian Chase, Bell’s vice president of global communications.

Last year, the company cut 1,100 jobs and offered voluntary early retirement packages to workers. And this summer, a prototype of its new 525 Relentless helicopter crashed, killing two test pilots and delaying development of the large commercial helicopter by perhaps more than a year.

Bell is hoping that its new 505 Jet Ranger helicopter, which costs about $1 million and will be assembled at its plant in Mirabel, Canada, will be certified and ready for customers by the end of the year. It also expects to begin flight tests next year on its V-280 Valor prototype being developed with Lockheed Martin for the Army’s next-generation helicopter competition. The company also continues to assemble the V-22 at its Amarillo plant, where it employs 750 workers.

“The market conditions are a challenge. There is no doubt about it,” Chase said. “But we are not losing focus on investing in new products and investing in innovation.”

Turbulent times

Helicopter sales have been slow at Bell for the past two years.

Since its peak in 2013, Bell’s shipments of commercial helicopters declined 17.8 percent while its military shipments of V-22 and H-1 helicopters dropped 27 percent, according to the General Aviation Manufacturers Association.

“There is no doubt that the market has had a big impact on us,” Chase said. “The industry is off dramatically. It is impacting everybody.”

To deal with the downturn, Bell has trimmed its global workforce from 11,500 about four years ago to 7,200 today.

“They are heavily dependent on one customer, which is the U.S. government,” said Richard Aboulafia, vice president of the Teal Group. “Meanwhile, they are attempting to build the most ambitious civil product they have ever embarked upon at a time when the market for that segment of helicopter is tanking.”

The 525 Relentless is the largest commercial helicopter Bell has ever developed, designed to seat 16 to 20 people. Targeted at oil and gas companies to transport workers to offshore rigs, the Relentless was expected to be ready for sale by the end of 2017. But the fatal crash of a test aircraft in July has delayed the program.

Chase said the company is continuing with 525 Relentless development even though its two test helicopters remain grounded during the NTSB investigation, which could take up to a year.

“We are not going to fly them again until we are confident that we understand what happened,” Chase said.

Analysts say it’s fortunate that the 525 Relentless delay is occurring at a time when the oil and gas industry isn’t ordering any helicopters. With the drop in oil and gas prices, the industry has cut back on its offshore production.

In 2015, Bell received about 58 percent of its revenues from the U.S. military and 42 percent from commercial sales. Industry analysts predict Bell’s revenues will drop this year about 4 percent to $3.3 billion.

Bell has also slowed production of military helicopters, delivering only 48 V-22s in 2015, down from 61 the previous year.

“Military spending is strong. It’s just that the military rotorcraft side of the budget is not strong. It’s weakening,” Aboulafia said.

New facilities, products

One of the new products being developed at its Fort Worth headquarters is an unmanned tilt-rotor drone called the Bell V-247 Vigilant.

Unveiled last month in Washington, D.C., the drone can fly a 450-nautical-mile mission and has a cruising speed of 250 knots. It can also carry torpedoes or missiles as part of its payload.

“The Bell V-247 Vigilant is the next leap in innovation making the future of aviation a reality today,” Bell’s chief executive, Mitch Snyder, said in a statement announcing the drone. “It’s a testament to the power and versatility of tilt-rotor flight.”

The company is also competing for the Army’s contract to replace Sikorsky UH-60 Black Hawks and Boeing AH-64 Apaches with its V280 Valor joint venture with Lockheed Martin.

“That would replace 3,000 helicopters over time, and that would be one of the biggest programs out there,” said Jefferies equity analyst Sheila Kahyaoglu.

She expects the V-280 to sell for $30 million to $35 million each, putting the program’s value at more than $10 billion if Bell is successful in winning the contract.

Bell is also expanding its training facility to handle more pilots and mechanics who need annual training and certifications for its helicopters. Currently, the facility serves about 4,000 students per year with an even split between pilots and mechanics, said Ray Lamas, Bell’s general manager for global customer training.

Unlike Bell’s old training facility, previously located at Fort Worth’s Alliance Airport, the new facility has a full-flight simulator for the Bell 407GX. Lamas said he also has space for a Bell 525 Relentless full-flight simulator that should arrive by the end of the year.

“We’re looking to shift more and more of our training into simulators,” Lamas said. “Simulators are a fantastic training tool where you can safely throw people into bad weather.”

65 Years in Fort Worth

In 1951, Larry Bell moved his helicopter company from Buffalo, N.Y., to Fort Worth, breaking ground for a new building on a 55-acre site.

“One of the reasons [Larry Bell] picked Fort Worth was the frontier environment accepting of new ideas and new technology,” Chase said.

Hundreds of H-1s were assembled at the Fort Worth plant and sent overseas during the Vietnam war. Eventually, the original headquarters building was demolished to make way for the new four-story headquarters, which opened in 2014.

The company received a 10-year incentive package from the city of Fort Worth as part of the $235 million makeover of its corporate campus. At the time the headquarters project was announced, the company had 6,500 employees in Fort Worth and committed to keep 4,500 at the campus.

However, with several rounds of layoffs and buyout offers in the past few years, Bell currently has 4,100 employees at its Fort Worth headquarters. As a result, it only received a percentage of the tax rebate it was eligible for from the city in 2015.

Bell says it is committed to remaining in Fort Worth. According to a recent economic impact study commissioned by the company, Bell projects it will have $38.4 billion in economic impact in North Texas and generate $1.8 billion in local taxable spending in the next 10 years.

Fort Worth Chamber of Commerce Chief Executive Bill Thornton, who helped negotiate the incentive deal between Bell and the city, said he remains optimistic about the future of Bell in Fort Worth and the company’s continued impact on the community.

“The talent and creativity out there is still pushing the envelope, and we’re just glad that they’re doing it here in Fort Worth, Texas,” Thornton said.

Andrea Ahles: 817-390-7631, @Sky_Talk