Business Announcement From Van's Founder Dick Vangrunsven

[howardtlcc]

Are Rian and Greg still working at Vans?

There is a new CEO but it was not clear if the previous executives have left the company or are staying?

 

[Tooch]

Go Fund Me

Is that as simple as setting up a GoFundMe page and putting out the word?

I was thinking this also. Could this work? I would donate.
Doug, you could set it up for us here. Anyone can set up a GoFundMe campaign

 

[RV6_flyer]

Why did Vans not have someone physically inspect LCP, or undertake random inspections?

All the major aerospace companies has similar issues when they outsourced without processes and procedures in place to manage, inspect, plus require that the material / product met spec / requirements.

 

[vic syracuse]

Vans will get through this. They are not the only company that has gone through these kinds of things. There are lots of external and internal factors at play that have caused the situation, but at the core we have a great industry leader in both the man and the company. They are doing the RIGHT thing by bringing in external help. Lots of companies do this, and many times you aren’t even aware of it.
I would take a breath and let it play out a bit before starting to draw conclusions such as bankruptcy, Chinese sale, etc. That’s just conjecture and does no one any good. Imagine how the employees feel.

There’ve been lots of posts here screaming about lack of communication from Vans. It takes time to figure out the right communication, but it was started yesterday, with the commitment from Van himself that more would be forthcoming. Give it time. There are still tough decisions for them to get through.

My time in the corporate world was doing turnarounds. They take time, but almost always work out. This one has really good bones as a company, a wonderful and growing customer base, and is an industry leader. There are no evil plays at work. It will most likely come out of this a much stronger company, which is what everyone wants.

Yes, I do know that for those of you that are DIRECTLY affected, it is not easy. Patience has never been one of my virtues. I do feel for you. But I do believe that for those of you who just take a pause and then continue once this all settles out, you will never regret it.

 

[bobnoffs]

a lot of emotion in this thread. as for a donation to a 50 yr old company that in the past few years sold 4000 kits in a year? $125000 X 4000 = you do the math. donations are such a drop in the bucket, and i know someone where it would make a difference.
expressions of such sadness to the owner. he is indeed a good person, a lot of us have met him and hold him in high esteem but this is a business. i have no idea of his worth but i grew up in a household supported by my father's business. a refinanced house mortgage and a line of credit was just part of the lifestyle of a small business owner. i hope and bet the owner gets thru this ok.
how such a successful, popular business could get to this point is a feat.
putting vans in the same boat as a truly desperate person who is getting donations on ''go fund me'' is a bit of a stretch.

 

[Mark Dickens]

I've started a -14 and ordered a empennage kit and a QB fuse kit. Got 99.9% of the empennage kit. Deposit paid on the QB fuse of course. Van's stated that they aren't going to process refunds or returns. It may not be that simple for them outside of a bankruptcy filing.

Selling home built aircraft kits caters to hobbyists of course, and so if these hobbyists get screwed out of deposits and orders, trust will be destroyed. Trust is ESSENTIAL for Vans. It's not like their customers are airlines or large companies that have to have their product. Any significant doubt about whether a kit will be delivered and poof goes the order. Had I known about their issues when I ordered the empennage kit, I would not have taken the risk at all.

In my opinion, the only realistic strategy is for an angel investor to come in and rescue the company in a buyout. Filing bankruptcy would be destroying the company. Vans has two real assets: intellectual property and customer trust. Blow up trust with bankruptcy and blow up their market.

 

[Brantel]

sold 4000 kits in a year? $125000 X 4000 = you do the math.

Where in the world did you come up with that $125000 number?

 

[Dugaru]

Not true!

Patience has never been one of my virtues.

I don’t buy it! You somehow figured out how to make my collection of avionics, apparently organized by Dr. Frankenstein, work in harmony.

 

[Kyle Boatright]

Where in the world did you come up with that $125000 number?

A complete kit (with engine and prop) probably does get into the 6 figure range. The 4,000 kits is what I question. I thought they recently talked about pushing 1,000 full kits (4,000 subkits) out the door a year.

A thousand full kits at $125K ea would be a $125M annual business, which feels reasonable...

Which is enough to make this a business that *should* survive, although it needs a cash infusion and attention to its business practices.

 

[tfriske]

I’ll put money on the 15 right now

As would I, but I’m having a hard time remaining convinced that the RV-15 will ever see the light of day after this. If nothing else, we now know this was a profoundly foolish time for Van’s to be taking on the R&D expense. Man do I hope to be pleasantly surprised.

 

[Wrench]

For context, hes the guy that took over Glasair, and then sold it off to a chinese firm. I hate this.

Sad as this may seem it could be a solution.... Cirrus Design had similar issues,... was purchased by the Chinese...new management team installed....production streamlined, new model introduced, ( Vision Jet ),... became profitable.... all be it at some very high priced aircraft... and continues to lead all aircraft sales in the GA market.

Perhaps there is some private equity in the US that sees the opportunity here...

 

[BillL]

+1

I’ll put money on the 15 right now

If I could secure a good serial number in line - I'd be up for that too. Even pay 50% up front. Gotta get it delivered before moving to assisted living though

Or some investment opportunities for us - -lots of retirees out here, I would certainly consider.

Positives:

Vans has the opportunity to restructure and transform to the larger company structure, internal controls (specifications, purchasing, accounting) and quality that it has been able to handle so far.

They have some fantastic people.

Negatives:

A hatchet man could destroy what is there.

The balance sheet may be is just too bad. We don't know.

 

[rocketman1988]

Disagree

As would I, but I’m having a hard time remaining convinced that the RV-15 will ever see the light of day after this. If nothing else, we now know this was a profoundly foolish time for Van’s to be taking on the R&D expense. Man do I hope to be pleasantly surprised.

I would disagree; the -15 project was begun quite awhile ago and no-one can see the future. Also, there should always be something in the R&D pipeline. It is a way to move the company forward. Don't believe me? Take a look at Boeing...nothing in the pipeline to replace an ancient design or compete with other companies.

That said, we, as a group, are not privy to the internal operation of Vans; any comments on shoulda', woulda', coulda' is nothing more than pure speculation and Monday morning quarterbacking.

Vans will survive, and will likely emerge as a stronger company coming out of this difficult time.

 

[rockwoodrv9]

The 15 is an asset - maybe the best one they have that could easily be sold. I dont believe the value would be enough to solve Vans problems but it might be enough to get things moving again.

 

[turbopilot]

Van's would be a very attractive investment with a well organized Chapter 11 bankruptcy. Given it is employee owned that may be the only viable solution. I don't know how much of the company is owned by the employees, but if it is substantial it simply means their equity position would be diluted in favor of some new investors. Mikeal Via knows how to sort this stuff out. Typically customers do well in a Chapter 11 bankruptcy with a fundamentally strong company with broken financials.

Who is next? Cubcrafters appears to be in a similar position.

 

[kiljoy]

Has anyone floated the idea of crowd fund investment? I wouldn’t mind owning shares.

 

[Moshonsk]

I thought i would chime in here with my own take on the subject.
I built and own an RV-10 and will be building another Vans design at some point in the future when (not if) this current situation is resolved.

As a former business owner I am by no means a finance expert but as a retired successful contractor I do have some insight into how things work in the real world. As a company you are always at the mercy of your outside sources be they material suppliers or subcontractors. It is a somewhat one sided relationship as ultimately the company, as the purchaser of these outside services, is responsible for any issues or problems with your suppliers or subcontractors.
Typically the company's only recourse or compensation for any failed suppliers is only up to the amount of money they are still withholding from the supplier and up to maybe the total value of the contract or work done.
For the instance of the LCP consider that the value of the actual cutting work done is maybe 15% of the cost of the materials cut and shaped. Best you could do is recoup that cost from the vendor. Sure you can sue them and maybe come out the long and expensive end with some Laser cutting equipment and maybe someone's house but that's after spending a few wheelbarrows full of money and a protracted amount of time. As I understood it these LCP suppliers were domestic so there is some legal benefit there in terms of recouping costs but it is still probably a very small well to draw from.
Having said that then what is the total unfunded lability inherent in the LCP parts? Vans said there were 1,800 customers involved. Lets say the cost to replace the parts is only $1,000 per customer. That's still 1.8 MILLION dollars just to replace the parts picked for replacement. I think the issue would go further than that and customers will be demanding more help in terms of parts damaged during the removals and perhaps for work that progressed further. I'm sure there are already some lawsuits and perhaps class action lawsuits brewing already for this. Let say for argument the dollar figure is closer to $10,000 per customer. Vans is now looking at $18,000,000 for the LCP issue. This is just a guess on the number but it's obvious of the potential scale of this one issue alone.
Throw in the statement that they are losing money on all the kits sold and not delivered in the last two years and you can see where the scale of this situation is currently.
I believe that Vans aircraft will survive probably emerging from bankruptcy or on behalf of a buyer or benefactor with very deep pockets but it will take awhile. The transition will be painful for everyone from Van himself, to the management right on down through the employees, suppliers and other companies that produce products for the RV line. I don't think any crowd funding or similar campaign will put a dent in the problem but i commend those who want to help out in that way.
I can only sit back and wait until things settle out and start budgeting for my next Vans based on whatever the kit prices and lead times eventually work out to.

 

[DanH]

At his firm they have a Rapid Business Improvement team . How it works, is the business basically shuts down for a few weeks, they come in, evaluate all aspects and tell you what is wrong and HOW to fix it quickly. He said this is very common when “ good businesses “ mismanage a crisis and get into cash flow issues because of it.

It takes time to figure out the right communication, but it was started yesterday, with the commitment from Van himself that more would be forthcoming. Give it time.

That said, we, as a group, are not privy to the internal operation of Vans; any comments on shoulda', woulda', coulda' is nothing more than pure speculation and Monday morning quarterbacking.

Thank you gentlemen, well said all.

I trust Dick. He asked for a couple weeks. Let's calm down and give it to him.

 

[Doug Rohrer]

Two words

Shark Tank.

 

[spatsch]

The more important question than LCP is where all the deposits went. To have no cash at hand means they have all been spend. Some in ongoing expense (staff, study on LCP, ..) some into producing inventory.

The difference of collected deposits and sellable inventory will be one of the key numbers they have to assess.

As Vans says on their website they have been selling below cost so this could be a mayor liability much bigger then LCP.

Oliver

 

[jbDC9]

Has anyone floated the idea of crowd fund investment?

Only a coupla dozen times...

 

[Tlrguy]

In the end, turns out the problem was so much bigger than just LCP.

I wonder where the deposit for my TB IO540 is? My particular engine is due for build any day now.

 

[Pskluz]

Next, customers that have parts that were cut via laser and are not “happy” can purchase punched parts at additional cost with no refunds. Yes their cost will go up but we are talking experimental airplanes here and quality has always rested on the builder
.

So, those of us with LCP parts, Van's own engineers say must be replaced, in our QB wings and fuselage or completed assemblies are now just not "happy". Comments like that makes our blood boil for those of us caught up in the middle of this debacle! Stop blaming us for this situation. We are some of the customers with the most to lose.

 

[Paul Thomas]

Has anyone floated the idea of crowd fund investment? I wouldn’t mind owning shares.

We'd have to have a better handle on the company's financials and path forward; I'm not even sure the company knows that yet. I wasn't surprised to hear they sold kit at a loss, I'm surprised they didn't know they were selling kits at loss.

I want to see Van's survive. I have a finishing kit on order and hope it will get delivered. I'd imagine it's going to be severely delayed because I'm not sure they have the cash flow to fund the order and may take a loss on it.

With securities laws, I don't foresee shares being offered.

 

[Mistfarer]

The more important question than LCP is where all the deposits went. To have no cash at hand means they have all been spend. Some in ongoing expense (staff, study on LCP, ..) some into producing inventory.

Aaaand it's gone.

Joke aside (or is it?), for me, unfortunately this is probably the nail in the coffin. With all the price hikes, building my RV8 was already gradually becoming unaffordable. With whatever is coming, I fully expect I will be priced out. And the resale value of the tools/kits will take a hit as well, as I imagine many builders are like me and will abandon their project, willingly or unwillingly. I bought tools with the underlying assumption that they would hold their value reasonably well. I am not so sure now. This is just really bad for everyone. We are witnessing the worse case scenario unfold before our eyes.

I am hoping for a miracle but I am under no illusion. What a shame. It was a nice dream.

 

[jrs14855]

Vans Aircraft

NO ONE is paying attention to my previous post. Vans has been an employee owned company for "several years". How much if any Van owns does not appear to be available information. The only thing I found is that "Van still keeps a desk" at the company.
I consider Van a person of great integrity. Pure conjecture but I like to believe that Van never would have gotten involved in LCP parts.

 

[squeakersc063]

What sucks the most is that the C suite are great dudes but there's no way that the blowback isn't directed their way. As much as it sucks it may have been more prudent to have started rejecting orders once they got to the point their existing infrastructure couldn't handle it rather than do the massive expansion to meet the demand. At least that way they would have stayed solvent and actually met the needs of the customers. As it is some of us have been waiting on parts from kits we ordered 2 years ago and that's without LCP influence. The other factor is that they very easily could have just stipulated that it's experimental, if you have LCP sucks to suck but from their viewpoint there is no liability issue. Their testing shows the parts are safe for the design life of the planes and it's experimental so we're buying risk building the things ourselves anyway. I wouldn't be surprised too if they just stopped offering quick builds. I in no way can imagine that it's profitable.

 

[Kyle Boatright]

I wouldn't be surprised too if they just stopped offering quick builds. I in no way can imagine that it's profitable.

I'm sure QB's are very profitable. In addition, they open the door to selling things like props, engines, FWF, kits and all sorts of miscellaneous parts to a much larger segment of builders.

 

[airguy]

NO ONE is paying attention to my previous post. Vans has been an employee owned company for "several years". How much if any Van owns does not appear to be available information. The only thing I found is that "Van still keeps a desk" at the company.
I consider Van a person of great integrity. Pure conjecture but I like to believe that Van never would have gotten involved in LCP parts.

It's a private company - they have no requirement to release that information, and nobody outside the company has any right to know it.

You could go work for them, and find out...

 

[lr172]

IMO Glasair wasn't a viable business by that time.

I think Van's is a viable business, but failed to protect itself from vendor failures and inflation. The inflation issue in particular had to be really bad, since Van's took deposits on a fixed price basis and absorbed all of the cost increases until kits shipped. Think about what a year or 18 months of inflation looked like post-covid and how that gutted profit margins. Never in Van's 40 year history as a major manufacturer did the company experience both long lead times AND significant inflation simultaneously. The business model was extremely vulnerable to that and they didn't react appropriately to it. They needed to tie the final payment to an inflation index so they got paid for the full value of the kit, not yesterday's value.

I agree. It would appear that the leadership just didn't read the cards right. They invested far too much money trying to keep up with the demand bubble that covid created and then failed to take proactive steps (price hikes, etc.) once inflation ramped up. Someone made a rookie mistake of using deposits to pay for these investments, not truly realizing it was a house of cards; An easy trap to fall into for small companies that tend to have more passion for their products than financial street smarts. The killers on top of all of that were then the QB primer fiasco and then all of the builders refusing to accept their guidance on the usefullness of LCP's. On top of all of that, I have to guess that new orders have come to a screeching halt. This brought the whole thing crashing down.

I badly want them to succeed, but this is a tough nut to crack. Some major changes need to take place before anyone is going to throw cash at their problems and doubt they can do anything to fix it without that cash at this point. Lenders tend not to lend to those who badly need it: that is more the domain of specialized investors with practices more closely resembling loan sharks than banks.

In the end, I agree that Vans will survive this as a brand. However, not so sure it is going to look much like the Vans we have come to know and love. I am most scared by the turn around outfit. They NEVER do this kind of stuff out of charity and always walk away with LARGE piles of cash at the detriment of the companies customers. I certainly hope I am wrong on that point, but the history here is pretty consistent. I really would have wished that Vans just hired a couple of good leaders to rebuild and then go hat in hand to their customers asking for accommodation, patience and new price points. However, generally once you are too deep in the red, that doesn't work as no one will give operating loans at that point to keep the business running, at least not until they produce a solid, realistic business plan taking them back to cash flow positive and likely profitability.

My good wishes go out to Van as he navigates these challenging waters. I am cheering you on.

Larry

 

[Carl Froehlich]

I'm sure QB's are very profitable. In addition, they open the door to selling things like props, engines, FWF, kits and all sorts of miscellaneous parts to a much larger segment of builders.

Perhaps not. The massive increase in container shipping to Brazil and the Philippines, plus the cost to set up new shops and train people most likely resulted in a short term loss on each QB sold.

Carl

 

[bertschb]

1. Vans has been in business for more than 50 years
2. They sell more kits than anybody else
3. They have more flying kit planes than anybody else
4. They have a huge number of existing orders
5. The RV-15 is a highly anticipated airplane and should sell extremely well
6. Vans is Lycoming’s largest customer
7. I would guess Vans customers make up the largest portion of Garmin’s experimental avionics sales
8. Vans has an outstanding reputation as a kit manufacturer
9. Vans has an extremely loyal customer base

It’s for these reasons that I think Vans will come out of this OK. They aren’t failing because they have poor sales or no new products in the pipeline for continued growth. They just need working capital and some tweaks to their business model. I believe they will get the funding and leadership changes they need to move forward with continued success.

 

[Jack_G_S]

…Typically the company's only recourse or compensation for any failed suppliers is only up to the amount of money they are still withholding from the supplier and up to maybe the total value of the contract or work done.
For the instance of the LCP consider that the value of the actual cutting work done is maybe 15% of the cost of the materials cut and shaped. Best you could do is recoup that cost from the vendor. Sure you can sue them and maybe come out the long and expensive end with some Laser cutting equipment and maybe someone's house but that's after spending a few wheelbarrows full of money and a protracted amount of time. As I understood it these LCP suppliers were domestic so there is some legal benefit there in terms of recouping costs but it is still probably a very small well to draw from….

You are assuming that some of the fault was caused by the third party LCP vendors. What if Van’s provided them with the code to produce the parts. I say that because apparently there were several vendors and they all had similar “features”. We know that the story of this being caused by one vendor changing programming doesn’t line up with reality.
It’s possible Van’s had to pay these vendors for breaking contract with them.

 

[N546RV]

I’m surprised there isn’t some level of recourse for Vans against the suppliers of the QB products that were either 1. assembled wrong 2. primed wrong 3. not cut via a process that was to spec.

Is that one of the reasons overseas production is such a cost savings? Lack of recourse in the case the product doesn’t match specifications?

IMO the real question is: what would this recourse look like? Assuming such an avenue exists, I imagine it would involve litigation, which could take who-knows-how-long.

Put another way, even if they do have recourse against the contractors, that doesn't mean they can immediately get the cash in hand.

 

[Jonnyb]

Having rewatched the video I do wonder if Van himself is bankrolling the company out of this.
I wonder if he got to the point where he said no more money unless you do this (call in help), and then he will sort out what needs to change with his own cash.

 

[Jose_Antonio]

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"

Dick said, "We are short on cash. So, until our cash situation improves, we will not be issuing any refunds." The news would've gotten out once they started denying refunds and folks started reaching for their pitchforks and torches.

 

[lyosha]

What sucks the most is that the C suite are great dudes but there's no way that the blowback isn't directed their way. As much as it sucks it may have been more prudent to have started rejecting orders once they got to the point their existing infrastructure couldn't handle it rather than do the massive expansion to meet the demand. At least that way they would have stayed solvent and actually met the needs of the customers. As it is some of us have been waiting on parts from kits we ordered 2 years ago and that's without LCP influence. The other factor is that they very easily could have just stipulated that it's experimental, if you have LCP sucks to suck but from their viewpoint there is no liability issue. Their testing shows the parts are safe for the design life of the planes and it's experimental so we're buying risk building the things ourselves anyway. I wouldn't be surprised too if they just stopped offering quick builds. I in no way can imagine that it's profitable.

Good guys who apparently made some very bad financial and engineering decisions trying to expand beyond previous best practices in the name of not increasing lead times like just about every other kit manufacturer.

I hope the new guy hikes everyone's kit prices by 50% so life goes on and I can continue to build. I wouldn't even be salty - happy to pay a fair price for reputable goods - so long as they don't send me any LCPs.

 

[cactusman]

This...really...sucks. Hate to see it.

1. I'm all in on a donation program....even some kind of public offering for shares/bonds etc to raise cash. Lots of airline folks are getting decent retro checks right now - would be an excellent time to offer paper to them to pay back to the hobby.

2. I wonder if Vans had established an advisory/trustee board with sub-panels for engineering and finances and the like if this could have been avoided? Maybe they have one I dunno. No guarantees of course but there are a lot of talented folks who count this as their hobby who could meet monthly and advise. Seems to me there were a lot very experienced engineers on VAF who raised their eyebrows when LC holes first proposed.

3. Not a fan of these money guys who come in. We all know what they are gonna do. Some of it will be justified, some will be a pure money grab. In the end they are all just another version of Gordon Gekko.

4. I think if VA gets back to its roots it will be fine. Kits, parts, support. Hey charge me an annual fee for unlimited support after the first year or something....I'm good with that. How many of us pay $100 a year for the "privilege" of shopping at Costco?

 

[fl-mike]

Van's is the most valuable kit aircraft company in the world. There is NO way that they disappear.

Van's kits have always been underpriced in my opinion. Take a look at any the cost of any other kit that is in the same class. I have, and I can never find a better bang-for-the-buck than an RV. Not even close.

I have never understood why Van's announced impending price increases. All that did was create a flood of orders that had to be produced at a lower profit, or a loss. Good for short term cash flow, but not for profit.

Personally, I have never seen outsourcing result in an increase, or even maintained quality level. The suppliers just don't have any "investment" in what they are making. All to often, quality plummets and costs eventually increase. ( the "teaser, get-the-work" pricing never lasts)

Just go back a year and look at all the posts screaming about long lead times. Vans tried to respond to those complaints, and here we are.

Van's is probably also suffering from what lots of other older company's suffer, and that is support of old products. The only folks buying 4's are to build Rockets, and the 3 sales/year are probably counted on one hand. With the introduction of the 15, which will be a big seller, they have to cull the herd.

I expect:

• Increased / market prices, to provide a healthy profit margin
• Retirement of certain models
• External financing to bridge the gap and LCP liabilities
• Staff changes/reductions and a severe pullback on expenses (no demos, no shows, advertising) until there is a return to profitability

They, and we, will come through this, but there will be some pain.

 

[rocketbob]

So, those of us with LCP parts, Van's own engineers say must be replaced, in our QB wings and fuselage or completed assemblies are now just not "happy". Comments like that makes our blood boil for those of us caught up in the middle of this debacle! Stop blaming us for this situation. We are some of the customers with the most to lose.

Nowhere does the engineering assessment say "must be replaced". In fact the word "must" is nowhere in this document. The term used is "recommended replacement". If you carefully read the assessment, failures even under the worst circumstances of fatigue are unlikely. It says "Parts classified as “Replacement Recommended” are somewhat susceptible to fatigue damage over the life of the aircraft, but pose no immediate risk to the safety of flight."

Seems to me its possible to add a few additional rivets for various assemblies to prevent the possibility of LCP hole failures. This can be done without disassembly in most cases.

As others have stated here folks need to be patient and let Van's work thru LCP and getting product shipped.

 

[howardtlcc]

NO ONE is paying attention to my previous post. Vans has been an employee owned company for "several years". How much if any Van owns does not appear to be available information. The only thing I found is that "Van still keeps a desk" at the company.
I consider Van a person of great integrity. Pure conjecture but I like to believe that Van never would have gotten involved in LCP parts.

Typically the way this goes down (assuming it is an ESOP) is that the ESOP borrows money from a third party to fund buying the owner(s) shares. The shares are held by the ESOP and employees can vest. The loan is paid from the profits and the previous owner/founder gets cash (there is a tax angle where the founder buys other investments and gets to inherit the basis in their private company stock).

It can work out well but the company has an obligation to pay the loan. The loan is backed by the other investments (stocks/bonds) that the founder bought. So, it is in Van's interest to make sure that loan does not default.

Above is conjecture based on the term "employee owned" but my parents used this to cash out of their company.

 

[Mike S]

Seems to me its possible to add a few additional rivets for various assemblies to prevent the possibility of LCP hole failures. This can be done without disassembly in most cases.

Had the same thought.......wonder if it is reasonable to look into?

 

[Jonnyb]

Had the same thought.......wonder if it is reasonable to look into?

I wondered about going up to a -4 rivet, as long as you have edge distance. That way hopefully you have removed the HAZ.

 

[AlpineYoda]

An IPO isn’t a workable solution. No investment bank will touch a company using an IPO to stay afloat. I started my career on Wall Street in lower Manhattan in investment banking and I’ve worked on a number of IPOs and mergers.

Go fund me is nice, but the numbers in these stories and threads are very large. 1800 kits affected? Thousands of dollars needed per kit? That’s millions. If we can raise that, fantastic. But I doubt it will happen. I love my plane and I am eternally grateful for the experience that Van’s has given me. But do I want to chip in $5000 to subsidize the cost of someone else’s kit who is buying parts below fair value, just to save the company? I’m sorry, but I’m not that generous.

Maybe a bunch of us could do an “angel round” of financing and buy equity or preferred equity, but there are limits on this. I think you need to be a qualified investor and depending on the legal structure of the ownership, there could be limits on the number of buyers. Startups often do a “friends and family” round of financing before the venture capitalists get involved. A limited number of Vans Air Force people with deep pockets could do this, but Van himself will have to give up a lot of equity.

The two workable solutions are private equity money or bankruptcy / restructuring. Maybe a PE firm comes in and provides working cash flow to rescue the company for a big stake in it. Current orders get saved, but prices will be jacked waaaay up for any order placed tomorrow. The PE firm needs to see a return in a few years, and future orders will give them their profits.

Option two is bankruptcy or restructuring. I haven’t read the terms recently for deposits, but those could be lost. Or bankruptcy could be used to break contracts on placed orders to raise prices retroactively.

If Van’s is losing money on every delivery and has exhausted its free cash flow, then one way or another, the solution is to find a way to turn a profit on deliveries for parts already ordered. That’s what the bankruptcy courts are for - no one is happy with the outcome, but maybe the company can be saved if its debts (I’m counting a deposit on a future kit as a debt / liability) can be restructured.

 

[alpinelakespilot2000]

I was modestly able to build and raise a family on a limited budget when I started in 2005. Yes, while you could spend $100+ thousand then, you could also build a really nice two-place RV for $60K or so. That was the attraction for Van's vs. virtually all other kit manufacturers. Since then I've seen the price of the basic kits (not to mention engines/avionics etc.) increase dramatically to the point where even though I'd really like to be able to build an RV-15, for example, I probably could not justify it financially.

What I wonder now is how many in the RV community (who were/are builders like me) will choose to invest in the significantly higher prices that are almost certain to come? I worry this reorganization, as necessary as it may be, will lead to the lancair, glasair/glastar phenomena where those able to afford to build an RV became such a small market pool that the companies simply fell by the wayside for lack of customers. Maybe Van's will be different. Here's to hoping...

 

[lyosha]

Maybe a PE firm comes in and provides working cash flow to rescue the company for a big stake in it. Current orders get saved, but prices will be jacked waaaay up for any order placed tomorrow. The PE firm needs to see a return in a few years, and future orders will give them their profits.

Option two is bankruptcy or restructuring. I haven’t read the terms recently for deposits, but those could be lost. Or bankruptcy could be used to break contracts on placed orders to raise prices retroactively.

Bingo.

For what it's worth option 1 will likely mean the end of the company. Asking new customers to pay outside the market range to maintain 1800+ liabilities will for sure end in few orders and doors shuttering.

The sooner we the builders all realize that the best option for us is to fork over extra cash and pay a premium on the kits we have on order - that those orders will not be delivered at the quoted prices and terms one way or another - the better long term for all of us.

 

[airguy]

You are assuming that some of the fault was caused by the third party LCP vendors. What if Van’s provided them with the code to produce the parts. I say that because apparently there were several vendors and they all had similar “features”. We know that the story of this being caused by one vendor changing programming doesn’t line up with reality.
It’s possible Van’s had to pay these vendors for breaking contract with them.

Whole lotta hypothetical in that one... and hypothetical helps no one.

 

[Bavafa]

Seems to me its possible to add a few additional rivets for various assemblies to prevent the possibility of LCP hole failures. This can be done without disassembly in most cases.

As others have stated here folks need to be patient and let Van's work thru LCP and getting product shipped.

I am not affected by the LCP issue but if I was building a plane, had paid for good parts and received inferior parts that the company recommend replacing, I would never take it upon myself to randomly put a rivet here and there thinking this is going to do it.
If nothing else, this will certainly affect the resale value of the plane and why settle for that when I have paid full price.

Would you accept a tire with a slight bald spot and just put some shoe goo on it! If so, I have a pair that is up for sale.

 

[garyg1]

Nowhere does the engineering assessment say "must be replaced". In fact the word "must" is nowhere in this document. The term used is "recommended replacement". If you carefully read the assessment, failures even under the worst circumstances of fatigue are unlikely. It says "Parts classified as “Replacement Recommended” are somewhat susceptible to fatigue damage over the life of the aircraft, but pose no immediate risk to the safety of flight."

Seems to me its possible to add a few additional rivets for various assemblies to prevent the possibility of LCP hole failures. This can be done without disassembly in most cases.

As others have stated here folks need to be patient and let Van's work thru LCP and getting product shipped.

I asked Van's engineer up at Oshkosh the following: Is this a recall? Are you asking for the old parts back? Because otherwise you will be able to find them for years. They said no to both. They might ask for a photo to old parts were destroyed. I read the test data and I am wondering why they even needed to be replaced. I don't think they can fully justify the expense for the small pay back. But Vans has pretty much now that they said it is a problem are trapped into replacement. I also suggested a structural adhesive between the riveted parts because people were suggesting that this would never come apart again. The Van's person scoffed at adhesive. I said I have aerobatic biplane in front of IAC that has wings that only have glue holding them together. I still don't know if it would be unsatisfactory to have rivets and a structural adhesive but it seems an easy fix for most of the condemned parts. It would never crack to be sure.

Also somewhat unrelated but my biplane is plans built with few pre-made parts and lots of errors in the drawings. And hard to find technical support. It took me 13 years. I shared a hangar with a plane that took 30 years and it crashed on first flight. Another plane that may not be completed until its 20 th year. I think Van's people must be spoiled to get such a well developed kit, lots and lots of choices, a pretty decent price, and loads of technical support with representative planes everywhere. There is even help to disassemble and replace the parts that were believed to be acceptable when they were assembled.

Hitch Hikers Guide has the perfect response to all this: "Don't Panic". In two weeks or so, it will be all settled.

 

[rocketbob]

The Van's person scoffed at adhesive. I said I have aerobatic biplane in front of IAC that has wings that only have glue holding them together. I still don't know if it would be unsatisfactory to have rivets and a structural adhesive but it seems an easy fix for most of the condemned parts. It would never crack to be sure.

Agree 100%...adhesives would be a good way to fix in my opinion. Number of airplanes flying with nothing but adhesives bonding ribs to skins with 50+ years of service. Grummans, Beech Siearra's and Musketeers etc.