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Business Announcement From Van's Founder Dick Vangrunsven

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Van’s Financial Issues

For those who have followed Vans Aircraft for longer than I, is this the most significantly worrisome financial event in the companies history?
 
Thanks for the open and honest communication Van!

I for one stand behind you and your company!

To the employees and Van: Keep your chin up and let us know how we can help!
 
They go insolvent and you cant finish your aircraft is the ultimate effect.

I’m in the same place as you….half way through a 7. Deposits on finishing and engine. We have a vested interest in the company staying solvent. How do we do that? I don’t know….but yes it will involve money out of our pockets…pledging donations is another way. Last thing I want to do but I would. I figured these issues they were facing due to the radio silence was bad.

With 10000 vans kits out there $100 pledge would yield $1000000 operating capital….of course you would never get everyone to do this but ultimately they are in trouble from bad or unlucky decisions…..and we may not have the ability to finish or support our aircraft in the future. Perhaps it’s now become our responsibility to help the company survive should we wish them to remain solvent.

Awful situation for everyone.
 
Donations

What about coming up with a donation program?
Save Van's
Larry

I have been self employed most of my life and I know how easy it is to get kicked in the teeth.
 
I have had a Vans kit or aircraft since 1993. Never has there been anything like this. Van always managed with controlled growth and solid performance. In a world of many kit manufacturers coming and going, Vans has been rock solid. Being transparent in this situation makes me think they will work through this situation. High rates of growth can often lead to cash flow issues.

I bet the RV-15 development and for that matter any new development projects get put on hold.

I’m rooting for Vans team.
 
Van

To Van and the employees at the company:

Stay strong, move forward. I, for one, believe in the Company and the great people that are employed there.

A stated in a previous post, what can we do to help?
 
Builder and Owner Community Support

Van's has provided builders with a remarkable product for over a half century. More importantly, they are the foundation for a community of aviation enthusiasts which can only be described as a family. I believe it's our duty to find ways to give back and help Van's through this challenging time.

Let's start a thread where those of us who want to see them even stronger on the other side of this can put our heads together in that effort. Most of us will agree, helping Van's stay in business is much better than the alternative. Whether you are an owner, builder, supplier, enthusiast etc.

I'll start with two ideas.

1. Crowd funding. Yes, I'm talking about simply giving money to a company that has made a few missteps recently, but overall has a 50 year track record of success.

2. VOPA. A formally structured Vans Owners and Pilots Association could take on a life of it's own as a non-profit. Classes, youth programming, safety training, fly-ins and much more. What's more it could provide a structured way to provide Van's with guidance, governance and support when needed. This could be a good way to provide Van's with a funding source initially, then grow from there as a member driven organization.

Like many of you, I am a builder who is impacted by this. IMO, Van's has shared very openly, and humbly, that they could probably use our help.
 
This is really sad. Van had been using customers deposits as operating cash flow. I'd imagine lots of people cancelled their orders and that they are not getting the amount of new orders they used to. The long lead time between order and delivery meant a lot of risk for Van's when prices change so quickly.

Dick Vangrunsven can only fund operations for so long but I don't think it's the end as people are saying in other forums. Worst case, the company will go bankrupt, but the assets will be bought out and Van's will operate under a new name; hopefully, many of the employee are able to keep their jobs. Those waiting on kit orders may lose out. The product is too good for the company to fail but it could be a rough road ahead with cost of capital going up and credit tightening.

I wonder how much my finishing kit will be delayed. I would have thought they'd want to push orders out... but if they are selling below cost, completing an order is still a loss.
 
I honestly don't mind a donation program. I'm not sure if it would garner enough cash to make a dent however. But I am going to talk with my wife tonight and see if we shouldn't budget to go ahead and order the Fuselage and Finishing kit just in case things do go south. That way I could at least get my RV-7 completed.

I will also say that I really admire the open and honesty in that announcement.
 
From the Kit Plane article:

"interim CEO, Mikael Via"

Hmm. Does it mean at Vans or at Hamstreet? There will be a lot of changes coming.
 
Everwild said:
2. VOPA. A formally structured Vans Owners and Pilots Association could take on a life of it's own as a non-profit. Classes, youth programming, safety training, fly-ins and much more. What's more it could provide a structured way to provide Van's with guidance, governance and support when needed. This could be a good way to provide Van's with a funding source initially, then grow from there as a member driven organization.
Click to expand...

I am a big fan of this 2. VOPA. idea. An initial "Lifetime membership" contribution would allow for a good amount of cash that could be loaned to Vans at a good rate. I am sure there would be support from other organizations as well.

There is even precedent for this type of organization, like the American Bonanza Society.
 
For those of us who have all the kits but we’re waiting to request the final paperwork prior to DAR inspection I wonder if we should go ahead and request that paperwork and keep somewhere safe at our own home?
 
I wonder what the motivation is behind this announcement. Wouldn't it have been better to sort out the details behind closed doors. Vans needs cash now and then comes from new kit sales. With this announcement, I have to imagine their would be some customer confidence impact as to whether they should invest in a new project. Personally, I would have just sorted it out behind closed doors and came back with an announcement of "we were in a bad place, now we sorted it, let's move on"
 
When you buy a certified aircraft, you pay percentages as the aircraft build goes on. On the final delivery day there is only 5% left. This is to ensure cashflow to build the thing.

I would be happy to pay in instalments if they would communicate with me on how the kit assembly is going. When 50% of the parts have been made I’ll pay another 25% etc.

Instead you pay a deposit and you get radio silence for 6 months or a year.
 
This is a frustrating turn of events. I've dreamed of building a Vans RV since 2011, finally was able to order my RV-14A empennage in early 2022, and received it in late 2022. Until today, the LCP issue was a mild annoyance to me because I've been a slooow builder and do not have to rework anything.

I need to contemplate today's announcement for awhile before I decide if I have enough confidence in the company's long term prospects to proceed with construction of my dream airplane, or change course with a different manufacturer. At this point, the money I've invested in the kit and tools is substantial, but doesn't break the bank; I'm worried about making and potentially losing the additional major investment needed to finish the project.

Van's has earned a stellar reputation for well engineered products throughout their history and it is disappointing to see that an unfortunate parts manufacturing decision and the resulting backlash has the potential to sink the company.
 
I believe in VANs - team of talented professionals! Want to wish them to stay strong and move forward.
This situation is not the end of the world, it is just another strength test.
;)
 
Keep in mind this cash flow crunch is the result of HIGH DEMAND for Van's Aircraft kits. Additional facilities, additional employees, an additional aircraft design and even trying new manufacturing techniques (laser holes instead of punched) to keep up with this increased demand have all contributed to this current situation. A company with a rich history for quality products and high volume of product on order isn't going down easily; there will be a solution. Be patient.
 
Mr Grinch said:
He took Glasair over through chapter 11 and eventually sold the company to a Chinese firm. Heard that he made a bundle.
Click to expand...
Hmmm…give or loan money to Vans, from which I may never see a cent back, to help keep them from Chinese ownership.

Call me a sucker, but where’s the PayPal link?

ds
 
Amadeus said:
Keep in mind this cash flow crunch is the result of HIGH DEMAND for Van's Aircraft kits. Additional facilities, additional employees, an additional aircraft design and even trying new manufacturing techniques (laser holes instead of punched) to keep up with this increased demand have all contributed to this current situation. A company with a rich history for quality products and high volume of product on order isn't going down easily; there will be a solution. Be patient.
Click to expand...

Agreed but sunk costs at this point. With today's news I don't anticipate a huge wave of new orders coming in (which would generate what Vans needs most... Cash)
 
Ownership

Vans became an employee owned company several years ago. Van still has some modest involvement, how much is unknown.
 
gtrplaya101 said:
I wonder what the motivation is behind this announcement. Wouldn't it have been better to sort out the details behind closed doors. Vans needs cash now and then comes from new kit sales. With this announcement, I have to imagine their would be some customer confidence impact as to whether they should invest in a new project. Personally, I would have just sorted it out behind closed doors and came back with an announcement of "we were in a bad place, now we sorted it, let's move on"
Click to expand...


"...some of the typical day-to-day operations at Van’s will be affected while our team develops plans to correct the problem.

During this period, [1] shipments will be delayed, [2] kit orders will not be processed, and [3] refunds will not be issued. We will be [4] unable to conduct factory tours and demo flights..."


If they didn't make an announcement, the internet would be rife with speculation about (1) why shipments are delayed, (2) kit orders are not being processed, (3) refunds are not being issued and (4) factory tours and demo flights are not available.
 
Dad's RV-10 said:
"...some of the typical day-to-day operations at Van’s will be affected while our team develops plans to correct the problem.

During this period, [1] shipments will be delayed, [2] kit orders will not be processed, and [3] refunds will not be issued. We will be [4] unable to conduct factory tours and demo flights..."


If they didn't make an announcement, the internet would be rife with speculation about (1) why shipments are delayed, (2) kit orders are not being processed, (3) refunds are not being issued and (4) factory tours and demo flights are not available.
Click to expand...

Other than #4 what has changed regarding #1-3?
 
It's a pretty easily solved problem, raise prices- the demand is exceeding supply, quality is suffering- so raise the prices

Price discovery will follow, and everything will fall back in line

For those of you who have completed/finished RV's, your value will go up if the cost to build goes up
 
bkthomps said:
It's a pretty easily solved problem, raise prices- the demand is exceeding supply, quality is suffering- so raise the prices

Price discovery will follow, and everything will fall back in line

For those of you who have completed/finished RV's, your value will go up if the cost to build goes up
Click to expand...

Man I wish it was that easy. The reality is that Vans has an order backlog of 2 years at what they are calling "unprofitable" prices. These prices are already locked in. Plus since they have been using the 25% deposit to fund operations that money is sunk and gone. Essentially they have a 2 year backlog of unprofitable kits where they have already lost 25% of the revenue off the top. And this is of course is before any real resolution to LCP has been addressed.
 
Reading from the Kitplane article, Vans probably will have to borrow a lot of money to keep payroll and its operation. Creditors will not lend a lot of money without having their people watching how the money is spent. Usually that means they make the decision who runs the company.
 
PhatRV said:
Reading from the Kitplane article, Vans probably will have to borrow a lot of money to keep payroll and its operation. Creditors will not lend a lot of money without having their people watching how the money is spent. Usually that means they make the decision who runs the company.
Click to expand...

Vans has already named an interim replacemant CEO: Mikael Via

That ariticle also mentioned there would be a new C-suite as well.

I'll refrain from posting speculation, I've seen this sort of thing a few times with other companies in the tech world.
 
Sometimes it is good to rethink operations, but this is big news. I just ordered the FF items that Vans has a good deal on, hope that helps their cash flow. All were in stock for me and I hope they get them out to me in good order.

The RV's are a good solid proven product; I'm sure they will figure it out. I wouldn't be surprised to see some older models phased out.
 
I hope it all works out! I'm not sure what it would take to have me throw in the towel, but I'm not there yet. I still eagerly await replacement parts and am trying to get started with what I can on my empennage.

I'm trying to finance my build without loans - a delay (within reason) means that'll be easier for me to do. I do hope it works out and Van's Aircraft can remain the same well-known and respected brand that it is and was when we all chose to build their kits instead of any number of other options I'm sure we all considered.
 
For anyone who is interested in who Vans new interim-CEO is, per his LinkedIn


Mikael Via

President / Chief Operating Officer
Glasair Aviation
2001 - 2012 11 years

Greater Seattle Area

Purchased company assets out of bankruptcy; relocated business and assembled a new team of employees; created innovative customer support, sales and marketing plan to reverse damage to brand image; re-negotiated contracts with vendors (who were collectively out millions of dollars due to previous bankruptcy); acquired second aircraft product line; formed in-house composites manufacturing department and in-house production of carbon-fiber fuselage assemblies; developed in-house aluminum wing manufacturing, etc.

Led the design, development and introduction of a new carbon-fiber aircraft (Sportsman).

Created "Two Weeks To Taxi" Program (which revolutionized the experimental aircraft industry by creating a rapidly accelerated process to complete an experimental aircraft in two weeks), revitalizing the company.

Key contributing member on FAA Aviation Rulemaking Committee to revise industry regulations.

Initiated strategic plan to sell the company; successfully negotiated and sold the company.
Click to expand...
 
Mr Grinch said:
Not me! If they don’t have the cash to pay employees to assemble, crate and ship existing kits, it’s foolish to send good money after bad.

This is a financial situation that calls for ruthless objectivity, not emotional decisions.
Click to expand...

Agree! Pretty sure the product will survive too good to go away. There are many healthy companies around that have a bankruptcy in their past … .

Oliver
 
I wish both VANS and the customers that are badly affected well. It is indeed a very difficult and sad situation and I hope things turn out well for both affected parties (company and customers)
 
Wow, a lot of bad news and historically speaking these kinds of events don't generally end well for us.

Loans are what today, 10%? ouch.

Best case is they will reorganize and things will move ahead slowly but will be a lot more expensive.

Worst case we we all ready know..........

I agree, some sort of investment process from us to help them get things in order. But at this point in time we have no idea on how much is at stake but it's going to be a lot and no guarantees that it won't happen again unless the right people are in place.

I agree, the last thing we want is offshore investment.

Good Luck Vans

Tim
 
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I wish both VANS and the customers that are badly affected well. It is indeed a very difficult and sad situation and I hope things turn out well for both affected parties (company and customers)
 
??

Jslow2 said:
So is Rian and Greg gone?
Click to expand...

I have not heard, however, it seems reasonable that many, if not all, of the "upper management" would need to be replaced or reassigned in order to restore consumer confidence.

My 0.02 is that pricing and demand simply "got away from them" and before long, it all went down the rabbit hole. Personally, I wish Van's would get rid of the quick build kits (seems like that is where a lot of unfixable problems developed), and return to a simpler business model. At the risk of being snarky, the first person I would fire is the guy in charge of Quality Control...whoever was responsible for the LCP and QB Primer approvals....and everyone please stop blaming Covid. It's becoming an embarrassing cliche.

Also, if a sensible plan develops, I would be interested in sending a donation...but not to the "current" management team.
 
Well, if it scares folks to “hurry up” and get their order in, then there may be be a business benefit to the announcement.



gtrplaya101 said:
I wonder what the motivation is behind this announcement. Wouldn't it have been better to sort out the details behind closed doors. Vans needs cash now and then comes from new kit sales. With this announcement, I have to imagine there would be some customer confidence impact as to whether they should invest in a new project. Personally, I would have just sorted it out behind closed doors and came back with an announcement of "we were in a bad place, now we sorted it, let's move on"
Click to expand...
 
swift12 said:
They go insolvent and you cant finish your aircraft is the ultimate effect.

I’m in the same place as you….half way through a 7. Deposits on finishing and engine. We have a vested interest in the company staying solvent. How do we do that? I don’t know….but yes it will involve money out of our pockets…pledging donations is another way. Last thing I want to do but I would. I figured these issues they were facing due to the radio silence was bad.

With 10000 vans kits out there $100 pledge would yield $1000000 operating capital….of course you would never get everyone to do this but ultimately they are in trouble from bad or unlucky decisions…..and we may not have the ability to finish or support our aircraft in the future. Perhaps it’s now become our responsibility to help the company survive should we wish them to remain solvent.

Awful situation for everyone.
Click to expand...

i don't see this happening because someone would swoop in and buy out the company and everything would go back to normal.
 
Pilot135pd said:
i don't see this happening because someone would swoop in and buy out the company and everything would go back to normal.
Click to expand...

What business wouldn't want to have a two year order list? Some entity out there will buy the business or make a loan; no doubt.
 
Vans kits have always been shockingly inexpensive. It’s one of the reasons I chose the -7 over a bush plane. Those airframes are sometimes 2-3x the cost. I hope vans can right the ship by adjusting prices to reflect the value of their product.
 
gtrplaya101 said:
The reality is that Vans has an order backlog of 2 years at what they are calling "unprofitable" prices. These prices are already locked in. Plus since they have been using the 25% deposit to fund operations that money is sunk and gone. Essentially they have a 2 year backlog of unprofitable kits where they have already lost 25% of the revenue off the top. And this is of course is before any real resolution to LCP has been addressed.
Click to expand...

rph142 said:
I hope vans can right the ship by adjusting prices to reflect the value of their product.
Click to expand...

Folks saying this or similar are, I'm sorry to say, probably strong on their aero / engineering knowledge and short on accountancy.

It's not a cost / revenue problem. Anyone can calculate margins and set a price. It's very simple math: work out what it costs to build, add your overheards and add your margin to reach a selling price.

It's a cash flow problem. Van's is a fundamentally profitable business that ran out of cash and became unable to pay its staff (the meeting was to furlough many of them) or its suppliers.

It ran out of cash because orders (deposits) and final kit payments dried up. When the LCP issue broke, and when it became clear it was being handled poorly, customers became cautious. They stopped placing new empennage orders, because who would be crazy enough to insert themselves into this situation? Those who were part-built held off ordering their next kit, firstly because they were waiting for the kit they had in hand to be sorted out, secondly because why would they increase their exposure while the future was uncertain? Those with orders on deposit declined Van's request to make the final payment months in advance of an uncertain shipping date because it sounded shaky.

So Van's was left paying all its usual costs, suppliers, utilities, staff working 24/7 in production - and almost no cash was coming in. No business can sustain that for anything more than a very short space of time.

That's how we've arrived at where we are today. It's not a pricing issue, it's a cash flow issue caused by the decisions they made (LCP) in order to try and reduce the lead times.
 
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