Archives

International Trade

This category contains 53 posts

Finding Suppliers in Taiwan

Are you looking to expand your global supply base?  The Taiwan Trade Center is raising awareness about the Taipei Aerospace & Defense Technology Exhibition (TADTE), which will be held in Taipei on August 17 – 19.  In order to entice potential business partners to the show, the Taiwan Trade Center is offering generous subsidies to MARPA members interested in attending the exhibition.  Here is their offer:

For qualified buyers, we offer the following incentives:

  1. For companies with annual sales exceeding US$30 million that are related to the industries profiled in the show, TAITRA will offer 1 R/T economy-class ticket scheduled stay during two full show-day periods between August 17 and August 19, 2017, 1 room with a maximum allowance of NT$15,000 (tax included) to be used toward lodging (up to 4 nights being in August 16 to August19, 2017) and airport pickup to-from the accommodating hotel. Attending procurement meetings is requested.

  2. For companies with annual sales exceeding US$5 million that are related to the industries profiled in the show, TAITRA will offer 1 R?T economy-class ticket scheduled stay during two full show-day periods between August 17 and August 19, 2017. Attending procurement meetings is requested.

  3. For companies with annual sales exceeding US$0.3 million that are related to the industries profiled in the show, TAITRA will offer 1 room with a maximum allowance of NT$ 15,000 (tax included) to be used toward lodging (up to 4 nights being in August 16 to August 19, 2017) and airport pickup to-from the accommodating hotel.

In order to accept this offer from the Taiwan Trade Center, MARPA members must complete the 2017 TADTE Registration Form. The completed form should be emailed to Unice Wu from the Taiwan Trade Center – New York at unicewu@taitra.org.tw. There are a limited number of subsidies available, so apply ASAP!

 

Taiwan Details:

Despite the ‘One-China-Policy,’ Taiwan has its own Civil Aviation Authority which is separate from the CAA of China. Taiwan has processes for issuing TSOA and PMA. Under a bilateral agreement, the US accepts new TSO appliances from Taiwan that meet the performance standards of an FAA TSO under an FAA letter of TSO design approval. They also accept replacement parts for those TSOA articles. The U.S. currently does not accept PMA parts from Taiwan.

EASA has a working arrangement with the Taiwan CAA for the validation of EASA certificates. This appears to be a one-way arrangement; EASA does not appear to have a process for validating Taiwan CAA approvals.

In defense contracts, Taiwan is treated by the United States as a major non-NATO ally (22 C.F.R. § 120.32).

US Government Seeks to Remedy Unfair Competition Affecting Aerospace Trade

I had a great conversation today with the International Trade Administration (ITA).  They are concerned about non-US companies misusing intellectual property (“IP”) claims to in ways that give them an unfair commercial advantage.  I pointed out some situations where IP rights are claimed, but do not really apply, and this is used as justification for a foreign company failure to comply with regulations, causing commercial disadvantage to US companies who do comply with the regulations.

Our next step is to try to entice them to meet with some members to hear their concerns.  We focused in our initial discussion on IP because tat was the focus of the people who were present, but they felt that some of the issues amounted to technical barriers to trade and suggested that they might want to have a technical barriers to trade specialist hear about these issues, too.

I offered to assemble a few affected parties from US aerospace companies who could tell them “the whole story.”  That is where YOU come in.

   Are any of you interested in attending a meeting (not sure if it will be in-person or telephonic) where you would have an opportunity to discuss the details of IP situations with ITA representatives? 

Remember that ITA’s focus is not going to be on general unfair competition – just unfair competition that affects international trade and puts the US at a disadvantage – so we need to be focused on those issues.

Remember also that this meeting is still in the early planning stages – they have not committed to it yet and if it happens then I want to make sure that we have some strong issues to share with the ITA.

If you feel that your aerospace business is being affected by unfair competition from non-US competitors (especially as a consequence of intellectual property claims), please let us know as we work with ITA to set up the next meeting.

MARPA Attends 2017 Aviation Summit

On March 2, MARPA had the opportunity to attend the U.S. Chamber of Commerce 2017 Aviation Summit in Washington, DC.  The event featured addresses and panels by the presidents and CEOs of aerospace industry leading operators, manufacturers, and service providers. Although the focus was primarily on operational issues affecting air carriers like Open Skies, airport infrastructure, and air traffic control, there were a couple of points raised by speakers that are relevant to MARPA members and the PMA industry.

During the manufacturing panel, HEICO Corporation Co-President and past MARPA Annual Conference keynote speaker Eric Mendelson, discussed the importance of choice and competition without which it becomes difficult for carriers to operate cost effectively. He used the decrease in suppliers relied upon by Boeing for successive new aircraft to illustrate the challenges facing both operators and aftermarket parts manufacturers, as competition becomes more and more restricted. He noted that the original 777 had three engine options, and approximately 17 component suppliers provided 75% of components. For the 787, those numbers fell to two engine options, and about four component suppliers for 75% of components. In the case of the new 777 there will be only one engine option and fewer still component suppliers.

This on-going reduction in suppliers means that operators face fewer and fewer choices both at the initial purchase stage and in terms of maintenance over the life of the product. This also means that those suppliers have a great deal of leverage in locking operators into long-term service agreements, which threaten PMA manufacturers.

In order to fight this phenomenon, it is vitally important that our customers be educated through their organizations as to the value of ensuring PMA is viable replacement part option, to ensure that they aren’t locking themselves into unfavorable maintenance agreements that needlessly restrict their replacement part options and drive up their costs. This will become even more important if fuel prices begin to rise, causing operators to look more aggressively for areas to realize cost savings.

Another interesting point was made later in the day, by Dennis Muilenburg, Chairman, President, and CEO of Boeing. He noted the importance of the Ex-Im Bank to financing export of US-manufactured goods, and stated that there is approximately $30 billion in deals merely awaiting the Ex-Im Bank’s board to reach a quorum. This requires one more confirmed nominee (currently, only 2 of the 5 seats are filled, and a quorum is required to approve deals over $10 million).

Although MARPA’s members aren’t generally making deals that require that level of financing from Ex-Im, having Ex-Im move out of limbo would be valuable for MARPA’s members. We’ve talked previously at conferences about the various ways the Ex-Im Bank can support MARPA’s members in exporting goods to credit-worthy customers abroad who may otherwise lack the cash flow to complete a large purchase. If Boeing’s willingness to throw its weight behind Ex-Im results in securing the stability of the bank for the future, the benefits would ripple out to the rest of the industry.  This is something we will be keeping an eye on.

If you have questions about how Ex-Im can be leveraged help your PMA business, don’t hesitate to let MARPA know.

 

New Required Language for Exports

A new regulation has changed the destination control statement (“DCS”) that is required on all exports of PMA aircraft parts.

PMA aircraft parts are typically exported under the jurisdiction of the Commerce Department’s Bureau of Industry and Security (BIS).  If you export aircraft parts, then the BIS regulations require a DCS.  These regulations have been changed to harmonize the DCS to the same language as the ITAR DCS.

Te DCS is placed on each export control document that accompanies an export shipment. The export control documents that are required to show this statement include the invoice, the bill of lading, the air waybill, and any other export control document that accompanies the shipment from its point of origin in the United States to the ultimate consignee or end-user abroad.

This is sometimes known as the ‘non-diversion statement’ because the current version includes language stating that “diversion contrary to U.S. law is prohibited.” The purpose of the DCS was to alert parties outside the United States that the item is subject to the US export regulations.

The rules have always held that compliance with the comparable ITAR requirement was an acceptable means of compliance where the shipment included both ITAR and EAR-controlled articles. The comparable ITAR requirement requires slightly different language. Many people nonetheless found the different language in each regulation to be confusing.

The Commerce Department has changed their DCS language to harmonize it with the ITAR-required-language. This is meant to make compliance easier. Starting on the implementation date of the rule (November 15, 2016), exporters of articles subject to BIS jurisdiction (those with ECCNs) should use the following destination control statement on all exports:

“These items are controlled by the U.S. Government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations”

In addition, the DCS should show the Export Commodity Classification Number (ECCN) for any 9×515 or ‘600 series’ (nx6nn) items being exported.

There are exceptions to this DCS requirement for EAR 99 exports and also for exports under license exceptions BAG (baggage) and GFT (gift parcels and humanitarian donations), but typically these do not apply to exports of PMA aircraft parts.

Become a Supplier to Embraer

For years MARPA has talked about opportunities that exist for PMA manufacturers willing to look for non-traditional customers.  One of the most under-appreciated possibilities, and one that MARPA President Jason Dickstein has emphasized, is to act as a supplier to OEMs.  OEMs are very often massive companies with a need for quality, reliable suppliers, and many MARPA members are ideally positioned to take advantage of OEM purchasing needs with high quality approved parts on the shelf and ready to ship.

The U.S. Department of Commerce is presenting a program on becoming a supplier to Embraer.  Because many PMA companies are already manufacturing parts for Embraer aircraft, this may be an excellent opportunity to broaden your customer base for your Embraer parts.

The program will begin with a presentation made by Embraer representatives on how to initiate a relationship with Embraer. This presentation will be made by webinar on October 28, 2016. Participation in this introductory webinar is a mandatory part of the program, so if this is something your company may even be remotely interested in, you should plan to register and participate.

Interested companies will then be asked to fill out an online questionnaire from which Embraer engineers will evaluate companies and select suppliers for a second round of webinar discussions with Embraer’s engineering department. Embraer may then invite select companies for a further in-depth interview.

There is no cost to participate in this program, and it presents an opportunity to potentially expand parts sales.  MARPA has often said that OEMs should be thought of as no different than air carriers from a customer perspective: they need parts, and we manufacture and sell great parts.  This could be an excellent opportunity for MARPA members to diversify their customer base.

If this opportunity sounds like something your company may be interested in, you can register for the mandatory introductory webinar at the following link: http://2016.export.gov/california/losangelesdowntown/events/embraer/eg_us_ca_102435.asp.

MARPA Returning to Japan

As part of its ongoing drive to increase the export of U.S.-made PMA parts and increase global knowledge and understanding of PMA, MARPA has in the past few years traveled to Japan to speak with potential customers, government contacts, and manufacturing partners.  MARPA is happy to announce that it will continue these efforts this year at the Japan International Aerospace Exhibition 2016, in Tokyo, Japan, October 12-15.

We have worked closely with long-time MARPA member and MARPA supporter Akira “Jay” Kato of JK Tech Consulting to make valuable contacts in Japan and discuss PMA at a very high level with Japanese customers and government officials. These efforts include both explaining and educating air carriers and their purchasing groups about PMA, as well as, importantly, promoting the use of PMA by discussing the safety, value, and reliability PMA provides.

2015-10-15 MARPA Staff and Tokyo Govt Rep and Jay Kato

From left to right: MARPA volunteer staff Judy Dickstein and Harvey Dickstein, MARPA VP of Government and Industry Affairs Ryan Aggergaard, Tokyo Metropolitan Government Supervisor for Aviation Industry Participation Support Project in Tokyo Chikako Nagase, and Tokyo Metropolitan Government Aviation Industry Participation Support Project Adviser (President, JK Tech Consulting, Inc.) Jay Kato at the MARPA booth at the 2015 Tokyo Aerospace Symposium.

These efforts are one prong of MARPA’s ongoing MDCP efforts supported by the U.S. International Trade Administration.

MARPA hopes to continue to make valuable contacts in the Japanese aviation community, and particularly to make additional inroads on behalf of the PMA industry with customers in Japan.

While MARPA always enthusiastically promotes the benefits of PMA where ever it goes, we would like to be able to provide a more targeted benefit to our members. We would therefore like to offer to our members the opportunity to display your marketing literature in the MARPA booth at the Japan International Aerospace Exhibition.  This will allow us to direct visitors at the MARPA booth to those members who can best serve their needs or might be an ideal partner for future business.

If you would like to have your literature displayed in the MARPA booth this October in Tokyo, please contact Senior MARPA Program Manager Katt Brigham at katt@washingtonaviation.com no later than September 30.

Help MARPA Help the Commerce Department

As our members know, MARPA has been working over the past two years with the U.S. Department of Commerce’s International Trade Administration (ITA) under its Market Development Cooperator Program (MDCP).  Under the MDCP the ITA provided MARPA a $300,000 matching grant to help MARPA promote PMA around the world with the ultimate goal of increasing exports of U.S.-made PMA parts, with the additional benefit of potentially adding U.S. jobs.

One of the conditions of MARPA’s receipt of the MDCP grant is that we are required to report back to ITA on the increase in exports our members are seeing. These reports allow the ITA to demonstrate the results of the program to Congress and keep open the funding to support increasing U.S. exports in various industries around the world.

This requirement is why we need our members’ help.  We need to hear from you to know if MARPA’s efforts are working, and if the PMA industry is seeing an increase in export sales. MARPA therefore needs your help in gathering data on new exports of PMA parts.

MARPA is always sensitive to its members’ business needs, so we want to assure you that any information provided to us will be kept confidential, and the only information that is shared with ITA will be the country of export and the value of the export, and no other sensitive business information or data.

We are asking that our members fill out the export survey found by following this link.  MARPA needs to know the following information: for any exports that are traceable to a MARPA effort under the MDCP–the MARPA Europe Conference, the domestic MARPA Annual Conference, MARPA’s presence and promotion at trade shows around the world–to what country was the export (or contract for future sales), and what was the value of the export or future export?

That’s it! Just country and dollar value. We don’t need to know your customer’s name, the specific parts or product type involved, or any other detail. Even your company’s name will be kept anonymous unless you expressly tell us to release it to ITA.

If you wish to provide MARPA additional information so that we can better focus our efforts, of course we welcome it. But we only need for the sake of our MDCP requirements a report on export country and dollar value.

Please help MARPA fulfill its obligations to ITA under the MDCP. The ITA was generous in supporting MARPA with this grant so that we can increase our efforts to expand the global PMA market. MARPA needs to make good on its requirement to report back on our efforts and help ITA keep this valuable program going!

If you have questions about MARPA’s reporting obligations under the MDCP or wish to report export data directly rather than by using the survey form, feel free to email VP of Government and Industry Affairs Ryan Aggergaard directly at ryan@washingtonaviation.com.  MARPA sincerely thanks our members in advance for their help!

Are Leases Getting Looser?

Everyone in the PMA industry knows about the challenges that arises when selling PMA parts to customers operating leased aircraft. These challenges very often arise from restrictive clauses in lease agreements that prevent the use of PMA on the asset. This can cause particular headaches when the customer is a low cost carrier (LCC) whose business model should make them the ideal PMA customer, but whose largely (or exclusively) leased fleet means that restrictive clauses (either perceived or actual) restrict use of PMA.

The good news is that lessors’ position with respect to use of PMA appears to be loosening as lessees demand the right to use PMA, lessors become more familiar with PMA, and the industry continues its shift toward ever greater PMA acceptance.

The first, and most important, step in greater PMA acceptance on leased aircraft is demand by the operators.  We have already heard at least two air carriers–Delta Air Lines and Copa Airlines–state unequivocally that they will not sign leases with “no PMA” clauses in them.  But at MRO Asia Pacific last week, we heard multiple parties–both LCCs and lessors–state that the use of PMA on leased aircraft was a common occurrence; the lessee (the air carrier) just has to ASK.

Lessors typically enter a lease negotiation with a set of boilerplate terms.  Those terms, however, are subject to change to suit the lessee’s business model and to satisfy the needs of both parties.  Ananta Widjaja from Sriwijaya Air pointed out that a lessor will never give a lessee anything outside of the boilerplate unless the carrier asks for it.  This point was echoed by a number of lessors over the course of the conference, who recognize that use of PMA is a reality in virtually every air carrier’s operation.

This is an important point for PMA manufacturers to take to their customers.  Remind air carriers that most lessors will permit PMA to be used on leased aircraft (with a few exceptions); the carrier just has to demand the right.  As lessors continue to grow more familiar with PMA, and recognize that use of PMA does not in any way devalue their asset, they grow more willing to waive the “no PMA” clauses in their lease agreements.  This is beneficial for the lessee and lessor, as the lessee can continue to realize the savings and reliability improvements provided by PMA, and the lessor opens up more potential customers by allowing the use of PMA.

A number of the LCCs at MRO Asia Pacific pointed out that they especially use PMA during the middle of the lease.  The lessor community explained that the most important part of any lease is the return conditions, because these are the terms that dictate the condition of the aircraft for the next lessee.  Lessees take advantage of this fact by using PMA throughout the term of the lease (as allowed by the lease terms) but if necessary return the aircraft to an “OEM-only” condition (such as exists, which we in the PMA community know is a fiction) during C-check prior to the return of the aircraft.

Lessors are becoming more accepting of PMA for a couple reasons.  The first, which we’ve touched on, is demand by their customers.  Lessors need to have their aircraft leased in order to realize a return on investment, so it makes sense to permit the customer to use PMA if that is what it takes to get the lease signed.

Second, lessors have begun to realize that it is simply not possible for many carriers to operate without any PMA.  PMAs, especially on interiors and air frames, are a reality for a significant number of carriers.  Some carriers simply cannot operate without the use of PMA to control costs and reliability.  Air carriers, LCCs in particular, want to control costs and improve reliability to the greatest extent possible, and this drives use of PMA. (As an aside, if anyone manufactures a PMA lavatory mirror for the lav setup on the A320 family, Tigerair out of Singapore would love to hear from you.)

Lessors recognize this.  Lessors have even started to realize that this is the case with respect to engines.  And though most lessors remain squeamish about PMA in the gas path or life-limited PMA, the simple fact is there are very very few PMA that meet this description.

Finally, lessors are becoming more flexible in allowing PMA because it is impractical not to.  When leasing older aircraft, lessors recognize that it is simply not possible to get “OEM” spares. They also recognize the significant lead times for OEM parts, when PMA parts are available off the shelf.  This makes a big difference in turn time when delivering a leased aircraft to the next customer.  Finally, lessors are beginning to understand that many new aircraft are, in fact, built new using PMA parts! It simply makes no logical (or legal) sense to demand no PMA be used when the aircraft are delivered new with PMA throughout.

There are still many hurdles for PMA in leased aircraft.  Lessors remain nervous about PMAs in engine gas paths, LLP and rotable PMAs, and PMA in high-value components.  The fear is that PMA could devalue these articles and reduce the resale or part-out value.  This means that we as a community must continue to educate the leasing community and the valuation community to allay those concerns, by explaining that PMA meets the exact same standards as TC/PC parts, and must meet or exceed the performance of the OEM part.

Lessors are also concerned about the practices of many OEM repair shops to threaten to void the warrant of an engine if it includes PMA, or pull off PMA parts during maintenance and replace them with OEM parts (and bill for it), thus depleting maintenance reserves required under the lease. These protectionist tactics are something we will continue to fight.

Ultimately, lessors are becoming more and more accepting of PMA in leased aircraft. Air carriers must remember that everything is negotiable, and that if PMA plays and important part of their maintenance and cost saving strategy, they need to demand use of PMA be allowed by the aircraft lease. PMA manufacturers should make it a point to remind their customers that lessors will allow (or at least negotiate) the use of PMA.  But they won’t allow anything if the carrier doesn’t ask.

Korea PMA Workshop – a Success!

MARPA and the Korean Trade Promotion Agency (KOTRA) delivered a PMA workshop in Seoul this week.  Hosted at KOTRA Headquarters in Seoul, the workshop provided an opportunity to begin educating the Korean aerospace community about the value of FAA-PMA parts.  It also afforded the PMA community an opportunity to begin strengthening business relationships  with the Korean aerospace industry.

The MARPA Perspective

MARPA’s President, Jason Dickstein, spent the first day of the workshop laying the goudnwork for understaing the PMA process.

The room was packed with about 60 participants from all sectors of the Korean aeroaspace community.  MARPA discussed issues like the parts approval process, the safety, reliability and economic advantages afforded by FAA-PMA, and strategies for partnering with US PMA companies in order to increase trade and increase the profis of both companies.

Three of our members attended the workshop.  Representatives from Heico, Jet Parts Engineering, and the Wencor Group joined us at the workshop and had an opportunity to network with potential suppliers from Korea’s manufacturing community as well as potential customers from MROs and airlines.  

The Government Perspective

We were honored to be joined by Ha Girl Chung, the Deputy Director of Aircraft Certification for Korea’s Ministry of Land, Infastructure and Transportation.  Mr. Chung was a key negotiator in the recently updated technical implementation procedures for the US-Korean bilateral aviation safety agreement.  He reviewed the elements of Korean law that permit the acceptance of US PMA parts in Korea, and he also explained Korea’s own ability to issue PMA for parts made in Korea.  

Privately, Mr. Chung told MARPA that Korea would like to begin issuing domestic PMA.  This was foreshadowed by last years update to the US-Korean technical implementation procedures, which left a specific reservation (a place holder) for US acceptance of Korean PMA parts. 

Mr. Chung poses questions Wencor’s Mark Powell

The Airline Perspective

Asiana and Korean Air Lines were both well-represented at the event.  Hoon Yong Kim, from Korean Air, delivered a presentation about his air carrier’s PMA policy.  He explained that his carrier does not currently use critical PMA parts, but that they would like to expand their current use of non-critical PMA (critical PMAs are less than 1% of all PMAs).  Mr.Kim said that they are particularly targeting interiors parts, right now, but they would like to increase both the quantity and the scope of the PMAs that they use.

What specific qualities does Korean Air seek?  Mr. Kim explained that parts partners need to hold FAA PMA (other nations’ systems are currently not on his radar) and they should be prepared to support Korean Air in cooperative analysis.  He described one situation where a supplier helped Korean Air perform a root cause analysis. Despite the fact that the root cause was unrelated to the supplier, the supplier provided continued engineering support.  During subsequent conversations, Mr. Kim confirmed that he is looking for companies that have established systems like MARPA’s Continued Operational Support (COS) program.

The PMA Perspective

All three of the MARPA members who were on hand had an opportunity to meet and speak with the attendees.  Steve Johnson from Jet Parts Engineering added some insightful questions to the workshop.  Joe DePaoli of Heico explained that his company and his peers from other PMA companies were interested in opportunities to work with Korean manufacturing companies with specialized technologies, and also with Korean manufacturing companies that are already making certain types of parts and who could use those skills to manufacture parts that could be approved under FAA-PMA.  

Mark Powell of the Wencor Group delivered the anchor presentation at the end of the workshop, and he summarized the process that helped to ensure that PMA parts met the highest standards.  

KOTRA

KOTRA and MARPA have begun a partnership to promote US-Korean aerospace trade with a focus around PMA parts.  MARPA members should expect – and should look forward to – future oppotunities to increase their trade with Korean businesses.

MARPA Partners with the Association of European Airlines for European PMA Conference

UPDATE: Due to an unforeseen conflict the dates of the AEA/MARPA PMA Aircraft Parts Conference have CHANGED!  The new dates are May 25-26, 2015 in Istanbul, Turkey.  Please visit the conference website for latest hotel and registration information.

Over the past several months MARPA has been in discussions with the Association of European Airlines (AEA) to work together to put on a PMA conference specifically designed to further education about PMA in Europe and the Middle East, and open new export opportunities for our members.  MARPA is pleased to officially announce its partnership with the Association of European Airlines and formally announce the dates and location of our first ever European MARPA conference.

The AEA/MARPA PMA Aircraft Parts Conference conference will be held May 18-19, 2015, in Istanbul, Turkey at the Hilton Istanbul Bosphorus.

AEA and its members have expressed considerable enthusiasm for this event.  AEA has pledged to work with its members to ensure their attendance at the conference, and will be holding its own meeting the afternoon of May 18 to provide additional incentive for its members to attend.  AEA and MARPA expect a significant number of the European air carriers to be in attendance at the conference.  MARPA is also reaching out to contacts in the Middle East to encourage air carriers from that region to attend as well.

This will be an excellent opportunity for MARPA members to meet and network with European and Middle Eastern air carriers, or to continue to develop preexisting relationships.  Of course, we will also present a slate of educational and informational speakers to give attendees the very latest information about PMA, export regulations, and developments in air carrier and leasing issues.

The AEA/MARPA PMA Aircraft Parts Conference is one element of MARPA’s partnership with the International Trade Administration under its Market Development Cooperator Program, intended to increase the export of U.S.-made PMA parts.

MARPA is very excited to work with AEA to present an excellent conference program and provide substantial opportunities for our members to meet and network with air carriers.  Be sure to mark your calendar for May 18-19, 2015 in Istanbul!  For more information, visit the conference website at http://www.pmaparts.org/EMEAconference/about.shtml.

MARPA looks forward to seeing you in Istanbul!