Graham wrote:
Abandoning their current products, switching to a high cost product and soliciting new orders for that product is the just about the worst thing they can possibly do
They don’t need to. The largest problem at Vans is (IMO) they have sold quick built kits at a loss. They have been built overseas, shipping cost has increased 4-5 times, lots of them had faults in the priming and were replaced (when Vans did have cash). The only thing they need to to is to built them in house and of course charge much more for them and at the same time add value by going “factory home built” like Glasair did and Cubcrafters do. If they don’t to it, someone else is for sure going to. That’s were the profit lies (as long as enough people are willing to pay, and more than enough are willing to).
Graham wrote:
Van’s has run out (or is running out) of cash – it’s not a profitability problem
They are de facto bankrupt. Vans is, AFAIK owned, or partly owned by the employees. There is no money left, they have been living of deposits. Obviously the company is worth a lot, so it is reasonable to believe someone will come and buy it, pay out the entire staff. It’s also reasonable to believe that this someone is going to change things to make it profitable. Quick built is the item they have been loosing money on, but it’s also the only item that has real potential to make money. Bringing in that Glasair dude as a interim CEO to change things, just smells factory built homebuilts from far away IMO. But, time will show.
There’s plenty of profit in the non-QB traditional kits. It’s also much lower risk, both in terms of external cost pressures and how easy/cheap it is to remedy any problems.
I’ll just repeat (because many don’t understand the difference) that this is principally a cash flow problem rather than a profitability one. Sure the effect of shipping prices on QBs didn’t help, but the primary reason they’ve run out of cash is because they weren’t shipping enough billable product and hence weren’t getting paid enough cash. This is doubtless down to having to do a fair amount of zero-revenue rework, both on primer and laser issues. All while spunking cash on the RV-15 project and the futile laser testing programme. Then they started getting defensive and rowing back on prior commitments, and that tipped their customers over the edge – trust was lost and then the money really dried up.
Getting complex, both in terms of the product and what was necessary to deliver it (return shipping across the world) was a strategic mistake.
I shall cite Van’s as a case study later this week when I argue (at work) against baking a long term pass-through cost into our professional fees as opposed to passing it through to the customer directly.
@LeSving wrote:
…Obviously the company is worth a lot, so it is reasonable to believe someone will come and buy it, pay out the entire staff. It’s also reasonable to believe that this someone is going to change things to make it profitable….
Dick VanGrunsven could buy the company back from bankruptcy court, depending on his current financial state. Unfortunately that would definitely result in the company staying in Portland. I don’t know which is worse, China, or Portland. One is communist and the other legalized and promotes narcotic drug use.
Regardless who owns Van’s in the future I imagine most of the liabilities will be dumped in court. Including most of the LCP issue. I really hope people don’t lose their deposits.
I’ve been doing business with the chinks for > 20 years and the business scene out there is pretty much ganster-country nowadays – unless you can send some of your own people out there.
RV8Bob wrote:
Dick VanGrunsven could buy the company back from bankruptcy court, depending on his current financial state. Unfortunately that would definitely result in the company staying in Portland. I don’t know which is worse, China, or Portland. One is communist and the other legalized and promotes narcotic drug use.
I don’t think it’ll go into Chapter 11.
Peter wrote:
I’ve been doing business with the chinks
I think you have to say ‘Chinese’. But yes, you’re right – as far as I’m concerned it’s not worth bothering with. My employer is attempting to gain some Chinese biotech company as a customer, and not everyone at the company shares this view but I think they’re just out-and-out crooks.
In a galaxy many aeons ago I advised some unsecured creditors committees which in effect are the new ‘shareholders’ in a Chapter 11 reorganisation, in a simplified way. The Debtor – in – possession has to juggle a lot of parties, including up to a dozen ring circus of lawyers and the judge, to avoid tipping into liquidation.
Agree with Graham this does not appear to be an obvious case to survive a Chapter 11. The builder community are in effect the unsecured creditors, and it is in their interest that the company is able to work itself out. Unfortunately, there are always holdouts, or aggressive creditors, who might seek to negotiate preferential treatment via litigation, which then tips the company in.
Hopefully the company is working out a plan which restores the business on a sustainable path, probably with some capital injection.
LeSving wrote:
Well. What they want is a new aircraft. The only certified aircraft today that has any traction to speak of is the Cirrus. People want an aircraft they can show pictures of and say, look, this is my aircraft, and people will go wow. You cannot do that with a Cessna or Piper that looks the same today as when grandpa was young
Not intending to argue, I just beg to differ on the stated motivation. I own a ‘72 Piper Cherokee 180 and love it. I don’t own it to show off, and I don’t plan to build my RV to show it off, either. I own an airplane so I can go places. I also use it to teach & fly Young Eagles (currently at 309 total & 56 for 2023). I flew it from the southwestern Chicago suburbs to Arlington, Washington (over 1,500nm) on Monday this week. I could have flown commercial in much less time, but I enjoy and prefer flying myself whenever I am able.
ccarlson wrote:
I own a ‘72 Piper Cherokee 180 and love it
Good for you.
Graham wrote:
I’ll just repeat (because many don’t understand the difference) that this is principally a cash flow problem rather than a profitability one.
I think most people understand what you mean. Most people here are at an age where this have been experienced first hand in their own line of work, perhaps several times. Besides, this is how the GA industry works by the looks of it. Cessna, Piper, Diamond, Cirrus and so on, over and over for most of them. You can of course just wipe this under the rug as a “cash flow problem”, and the only thing needed is a bit of reorganization and restructuring, and everything will be fine. In some cases it is, but is that the case with Vans? IMO you are also blinded by the LCP issue, because it happened to you personally. Laser cut parts are only the tip of the ice berg, a minor issue that in normal circumstances would be handled in a timely manner. The truth is, it wouldn’t even exist if the circumstances were anything like normal.
If you take a step back and look at the whole situation, you will get closer to reality. Vans is in GA terms huge. As mentioned earlier, Cirrus is the only certified aircraft (SEP) with any traction whatsoever outside of flight schools. They are number one by far, and have been so the last decades. Nevertheless, more RVs have been built and are flying during the last 20 years than Cirruses. This doesn’t even account for all the kits they have sold that are not yet flying. In GA terms, Vans is the biggest player, period. Even so, in absolute terms they are peanuts. Vans is like the typical small local manufacturing shop that stay alive due to happy and dedicated workers producing some niche product that few others are interested in producing, or even capable of producing, mostly because the market simply isn’t there for any big scale production. Enthusiasm is a key ingredient. Enthusiasm for the community and for the product.
What happened is this:
In essence, what Vans did was to sell unprecedented amounts of kits at set pre corona prices (as long as people paid deposits) , and no way to produce these kits at pre corona cost (no way to produce them at all, at whatever cost for a long time). In particular the quick builts had lots of issues, not only to produce them, but quality issues. Primer trouble being the largest. On top of that, when things went back to normal, the people who wasn’t all that interested in building an airplane in the first place (they would never do it in a normal circumstance), suddenly lost interest. This is very similar to people getting themselves dogs during Corona. Then Corona ended and – oops I got a dog here, WTF!
Then came the laser cut parts, which for a “normal builder” under normal circumstances certainly would be extremely irritating, but it’s very far from the end of the world. This has to do with the understanding of who is actually building that airplane. It’s not Vans. But when people look at themselves as mere customers, they also use customer logic in defining their “rights”. This is what we see on the internet, and also on this site. Lately, I have noticed a sort of wave of more correct understanding of the problem though. So the internet isn’t all bad 
From what I can see, the typical set back in terms of cost considering the LCP parts have to be purchased all over again, is about a percent of the total budget, certainly less than 2-3 percent (a couple of thousands of US$ and less than 4-5). A manufacturer of an aircraft, which the builder is, who is crying over an increase in cost of 2% while the main subcontractor has had an increase in what? 30-50% all in all due to unforeseen world wide happenings. I mean, this is certainly ridiculous. Any owner of any kind of aircraft (and I mean whatever kind of aircraft you can think of) who think that an added extra cost of 4-5 thousand US$ is a big deal, he should find something else to do in his spare time.
Vans will never become a super lucrative business opportunity for big dollars in any sense of the word. The best they can hope for is to somehow get back to were they were pre corona. The problem is that the world has changed. We all see it. Something happened during Corona. Lots of people stopped flying and haven’t come back. The average age is increasing as never before, the interest in GA is at an all time low for sure. There are glimpses of hope here and there, but that’s all there is at the moment. This is something the new CEO of Vans has to take into consideration. We can only speculate about what will happen. I have said what I think will happen. I may be completely wrong of course, but I don’t see any other way to keep the company together and afloat in the foreseeable future.
@LeSving I’m afraid I’m done discussing it with you.
Your understanding of this (and other issues at Van’s) is way off, your conclusions are way off, and your attitude towards customers who simply want what they contracted and paid for is deeply unpleasant.
I would suggest you take a look at your posting style and in particular your tendency to crow over issues people are experiencing and belittle their efforts, commitment, knowledge, etc. There are things you have said (in this thread, not necessarily this post) that if you said them to someone in a bar, you’d risk getting a smack in the mouth.
A forum is a more civilised place if we conduct ourselves as though the usual in-person rules of restraint and politeness apply, even though they don’t.
