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Business Announcement From Van's Founder Dick Vangrunsven

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DonMcKee said:
I'm of the same mind. I'm certainly not as bad off as many, with 49 red/yellow/blue LCPs on the shelf, spread over 19 unique part numbers. But, if given the opportunity, I'd consider spending full retail for replacements and share the financial pain, maybe in consideration for some benefit, like moving closer to the front of the line (think toll lanes on the freeway).
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I already did exactly that. I made the decision I didn't want any blue LCP's, regardless of the analysis. I also reached the logical conclusion that 1) Vans was going to charge me most, if not all, of full list to replace those parts on my own, and 2) it was going to take forever for them to unravel the LCP mess and make progress on replacement shipping. So I called (three times actually) and placed an order for those parts, 2 weeks ago. The first call I made was Monday the 16th, and I was told I couldn't do that and it would be referred to management. I called again on the 17th, got the same story. I called again on the 18th and reached a different person - and based on my prior experience I said NOTHING about LCP's, and simply stated I wanted to place an order for parts - "Oh sure, I can help you with that..." I placed an order, at full list, for replacement parts to continue my wing build while waiting for them to unravel the rest of the mess. Now that is looking like a very good idea.

Interestingly, my parts shipped on Thursday - the day after their internal meeting at Vans, and the day before the business pause announcement.

I fully expect to pay list for the rest of my blue parts (I'll accept the green), and I would be very surprised if Vans does not replace the red/yellow as promised, even if that comes a year from now, which it very well might. Come to think of it, I think I'll go ahead and order all the rest of my blue parts now - so I can get them at the current list rate and not the +30% or thereabouts that I think we're going to see soon.
 
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That’s my thinking on it too.

The red and yellow will be replaced by Vans, blue and green we’re going to have to pay for. Personally I don’t have a problem with that.
 
airguy said:
I already did exactly that. I made the decision I didn't want any blue LCP's, regardless of the analysis. I also reached the logical conclusion that 1) Vans was going to charge me most, if not all, of full list to replace those parts on my own, and 2) it was going to take forever for them to unravel the LCP mess and make progress on replacement shipping. So I called (three times actually) and place an order for those parts, 2 weeks ago. The first call I made was Monday the 16th, and I was told I couldn't do that and it would be referred to management. I called again on the 17th, got the same story. I called again on the 18th and reached a different person - and based on my prior experience I said NOTHING about LCP's, and simply stated I wanted to place an order for parts - "Oh sure, I can help you with that..." I placed an order, at full list, for replacement parts to continue my wing build while waiting for them to unravel the rest of the mess. Now that is looking like a very good idea.

Interestingly, my parts shipped on Thursday - the day after their internal meeting at Vans, and the day before the business pause announcement.

I fully expect to pay list for the rest of my blue parts (I'll accept the green), and I would be very surprised if Vans does not replace the red/yellow as promised, even if that comes a year from now, which it very well might. Come to think of it, I think I'll go ahead and order all the rest of my blue parts now - so I can get them at the current list rate and not the +30% or thereabouts that I think we're going to see soon.
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I dunno, if their financial recovery team recommends they tell people to use the parts they're given to stay solvent then it kind of is what it is. Trust Vans engineers or pay out of pocket would be my decision if I were in their position.
 
Jonnyb said:
That’s my thinking on it too.

The red and yellow will be replaced by Vans, blue and green we’re going to have to pay for. Personally I don’t have a problem with that.
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I replaced one red LCP and that was because the hole that was super deformed held a single AN bolt that ties the elevator pushrod to the idler arm. At least riveted parts have some expansion from the rivet and other rivets to hold things together. I paid them out of pocket for that one. I'd rather do with what I have and what I can afford than run them into insolvency.
 
KatanaPilot said:
No doubt this is true. However, EAA isn't in the business of supporting kit makers. There are numerous names no longer here and EAA didn't (and shouldn't have) support(ed) them. As a Lifetime Member, I don't want EAA funds used for this purpose.

As much as I want to see Van's survive, it's not EAA's purpose to pick winners and losers.
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Yeah, agreed I think.... exept I wouldn't view it as EAA picking the winner.... more like teh EAA membership has already picked the winner based on teh numbers.... so it would be them supporting what a huge number of us members want....
Anyway, I do appreciate the sentiment of the idea that EAA could and arguably should do what they can to support the industry, especially a company like Vans....

but regardless, I'm not so convinced how focused EAA is on actual home built aircraft at this point. A while back I searched for a database or listing of kits or plans built models based on criteria...such as enter how many seats, desired cruise speeds, or whatever and it would report back a list of options that fit. I was shocked that they didn't have anything close! Doesn't seem so interested in supporting the industry
 
ccarlson said:
Honestly, no dice. This has been discussed at great length in the other thread. To put it bluntly: Van’s marketed kits as having CNC punched parts as a key kit feature, they refused to accept LCPs as returns, and they are no longer having LCPs produced. I am not asking for anything more than what I paid for. And to be clear, I want Van’s - and all of their deeply connected cottage industry contemporaries - to survive & thrive. I just want an honest and fair shake consistent with the agreement in place when I put down my money.
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So this argument really confuses me. Vans announced that they were going to start using laser cut parts to improve their throughput. If LCPs were never going to be acceptable to you, why didn’t you either contact Vans to request only punched parts or cancel your order?

I think this sucks just as everyone else (and have affected parts), but I don’t think you can retroactively decide that this was always a problem for you.
 
Blw2 said:
Yeah, agreed I think.... exept I wouldn't view it as EAA picking the winner.... more like teh EAA membership has already picked the winner based on teh numbers.... so it would be them supporting what a huge number of us members want....
Anyway, I do appreciate the sentiment of the idea that EAA could and arguably should do what they can to support the industry, especially a company like Vans....

but regardless, I'm not so convinced how focused EAA is on actual home built aircraft at this point. A while back I searched for a database or listing of kits or plans built models based on criteria...such as enter how many seats, desired cruise speeds, or whatever and it would report back a list of options that fit. I was shocked that they didn't have anything close! Doesn't seem so interested in supporting the industry
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As a former member of the EAA Board of Directors, I can say for a fact that EAA ***IS*** focused on the homebuilt community. It is *also* supportive of several other communities as it has become what many view as one of, if not THE organization looking out for general aviation (in general) and Experimental Amateur Built Aviation (in particular). There will always be arguments that they should do more. But it is all about strategic balance.

EAA having some financial "reserves" is what made it possible for us to survive COVID. Many organizations that get a major portion of their annual revenue from one annual event would have to shut down if that event was totally lost for a year.

I agree though with the person that said that EAA should not be viewed as a funding source for Van's or ANY aviation company. Non-profits should not be funding for profits. Blanket organizations should not pick "winners" or they will lose all OTHER supporters.
 
TheEnthusiast said:
I just placed the order for the balance of my kits, standard build, including the $17,000 finishing kit I won't need for 2 years, and paid the deposit
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I didn't think you could place a kit order right now. Per the announcement from Van's "During this period, shipments will be delayed, kit orders will not be processed..." I'd be interested in hearing whether they accept your order/deposit. I was just about to order the Finish Kit for my 14, now I'm wondering if I missed out locking in the current price, or if it wouldn't have mattered (if Van's is going to raise prices for all undelivered orders anyway), or maybe I lucked out (if they end up in Ch 11 who knows what becomes of your deposit).

Hoping they'll get it sorted out, but I was already feeling the pain of the significant price increases to date (finish kit is several $k more than it was a couple years ago and the IO-390 has gone up $20k). Dunno how much Van's will need to raise prices to cover current production profitably plus recover the $millions lost on LCP, but I'm afraid it's going to be a lot. This will likely help them out with their problem of too much demand and reduce lead times, but if the price hikes are too large it may start the vicious cycle that certified aircraft manufacturers have experienced where fewer people can afford the product, which in turn further increases the price, etc, until the middle class guy is completely eliminated from the customer base. Not sure how many more tens of thousands in price increases I can cough up before pulling the plug and just getting out.

Fingers crossed and hoping for a good outcome.
 
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I have RV14A kit all of which arrived just before the LCP came up. So it is affected. I first started seeing/hearing about cracked dimples on this web site. And so I did a search on this web site looking for cracked number 8 dimples. I found many threads on the subject. All the way back to 2007. So I asked a few RV owners with older kits about it. They said had some problems but in one case he lubed the tool up and it seemed to go much better.

So then I am thinking, this has always been a tricky thing to do and although some laser cut parts maybe have a slight issue, it is not necessarily a big deal. I bet a lot of them over the years have unnoticed dimple cracks. Ones that cracked due to fatigue. So I sort of dismiss it.

And since then it has turned into a storm. I wonder if Van's has made this into a bigger problem than it is by poor initial responses and then over reacted to correct it.

I guess I will know more when we start to work on it.
 
themiller said:
So this argument really confuses me. Vans announced that they were going to start using laser cut parts to improve their throughput. If LCPs were never going to be acceptable to you, why didn’t you either contact Vans to request only punched parts or cancel your order?

I think this sucks just as everyone else (and have affected parts), but I don’t think you can retroactively decide that this was always a problem for you.
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It isn’t an argument, nor is it retroactive. It comes down to marketing and timing. I ordered my kits in July 2022. There was and is no mention of laser cut parts in the RV-14 marketing materials, but the value and virtues of punched parts are mentioned twice. None of the documentation I signed as part of my purchase indicated 317 laser cut parts would be used in lieu of 317 punched parts, nor was that possibility communicated to me during any phase of my purchase transaction. Since I wasn’t a Van’s customer prior to July 2022, I received no announcements from them.
 
LET'S HELP VAN'S WITH SOME IDEAS

.Van's has a big backlog.
.Van's has an inventory of B grade product.
.Van's has many customers that have LC products that they want replaced. .Van's has some customers that want out of their LC build.

My thought.... After Van's introduces their new price structure, Van's could place an identifier on all LC QB kits and offer them at a discount, with the identifier in the serial number and maybe a restriction on aerobatics. The test results could be provided with the kit.

Customers that currently have any LC parts or finished sub kits could offer them for sale here on VAF to people that are looking to build on a budget and understand what they are buying.

Van's has a list of kits that are affected by the LC issue, and can be a clearance house for people that want out of their project and people that want to save some money by creating a section on their web site that explains the issue and provides the connection info between the buyer and seller.

With the amount of builders affected, there is probably someone within driving distance that wants what you have.... Not everyone builds a show plane.

Let's get the people that want out, their money back. And give a guy that wants to build a great airplane on a budget a chance to start on it without waiting a year or two.

I am sure there are many people in their 60s and 70s that could care less if their RV will last another 20 or 100 years. Or what happens to their RV's after they get their last set of wings.

If Van's could offload their LC QB kits to people that WANT THEM, that would be a big step in the right direction.... Same with current owners. Then they can decide if they want to pay the higher price for a PUNCHED kit.

Moving forward from here with deposits, Van's should request a modest deposit to hold a non-transferable spot for a future ship date. Payment in full before shipment, or Van's moves on to the next name on the list.

I am sure Van never sent out a set of plans for the 3 or 4, on paper that was not paid for.
 
If you want to buy a new lotus car which can have a long wait list you pay a small deposit which is basically just booking a build slot. The price you pay will be the price at the time it is ready to be delivered. If you don’t want the car at that stage then you can get your deposit back, no questions. Vans could do something similar so the price you pay is the price at the time the kit is ready to crate.
 
mmcelrea said:
If you want to buy a new lotus car which can have a long wait list you pay a small deposit which is basically just booking a build slot. The price you pay will be the price at the time it is ready to be delivered. If you don’t want the car at that stage then you can get your deposit back, no questions. Vans could do something similar so the price you pay is the price at the time the kit is ready to crate.
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That is a sensible business approach for when demand exceeds supply. It's the same here for certain models of Toyota. A refundable $2000 deposit secures a place in the line and in 3 years time when the Series 70 is ready you pay whatever is the price or give up the option to the next buyer. It does not make business sense to lock in a contract price so far in advance during a period of inflation and uncertainty.

I'm optimistic that the consultancy (https://hamstreet.net/about-us/ ) that Van has appointed will help to re-structure the organisation and get things back onto an even keel. Even if the price of kits and parts must go up, as is expected, it will be in everyone's long term interest.

I don't know how they will deal with the LCP liability issue but it will be interesting to see the solution.
 
mmcelrea said:
If you want to buy a new lotus car which can have a long wait list you pay a small deposit which is basically just booking a build slot. The price you pay will be the price at the time it is ready to be delivered. If you don’t want the car at that stage then you can get your deposit back, no questions. Vans could do something similar so the price you pay is the price at the time the kit is ready to crate.
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I think this issue will bring lead times down to a more manageable level. But going forward they need to revise their terms of business. There’s nowhere else I know where you can lock in a price for delivery 18+ months ahead.

I have no doubt that Vans will emerge leaner and stronger from this ordeal. What concerns me is how much pain is going to be inflicted on us and them in the meantime.
 
Jonnyb said:
I have no doubt that Vans will emerge leaner and stronger from this ordeal. What concerns me is how much pain is going to be inflicted on us and them in the meantime.
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Much depends on how bad the cash flow difficulties actually are - it's a broad spectrum.

At the one end we could be talking about a situation where the CFO has flagged an impending issue and this is a sensible and timely intervention, but no-one other than customers awaiting delivery is actually owed anything.

At the other end you could have a situation where all lines of credit have been exhausted, the overdraft maxed out, multiple suppliers are owed significant sums, payroll has been missed and the power company are threatening to turn out the lights.

Or anything in between. I really do hope it's closer to the former than the latter.

It's hard to see how Chapter 11 could work for them - my (limited) understanding is that it needs a cash flow and an asset base to re-organize around.
 
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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.

Glasair shifted to high end buyers, dumping their low wing airplanes completely and concentrating on the Sportsman. They marketed to the profile type that could afford the very quick builder assist program. Eventually, it all fell apart under new management long after they sold out, and recently moved to China.

When I say “they sold out”, there was a wealthy angel investor that actually owned the company when this all took place. The point is that Via has experience with this before, and if the only recourse is “offshore financing”, then I’m not surprised to see his name in the article.
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Why does this announcement make me feel uneasy about the future of Van's more than anything else Van's said...? I see his (Via's) involvement in Glasair, which I wouldn't describe as the ideal future outcome for Van's. And then I also see his most recent involvement (before becoming a full-time independent consultant) in Eclipse Aerospace, which is a business that's no more (according to Wikipedia). I also see his training as a "Trial attorney". Keeping my fingers crossed for continued American ownership. I do still want to build an RV 10 with punched parts. Should never have sold my 7. Dang.
 
Going public might be better than going Chinese. But I don't think the SEC generally approves IPOs for openly distressed companies.

If they sold bonds I might buy one. Maybe two.
 
garyg1 said:
I have RV14A kit all of which arrived just before the LCP came up. So it is affected. I first started seeing/hearing about cracked dimples on this web site. And so I did a search on this web site looking for cracked number 8 dimples. I found many threads on the subject. All the way back to 2007. So I asked a few RV owners with older kits about it. They said had some problems but in one case he lubed the tool up and it seemed to go much better.
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I can recall way back when that Van's was adamant that punched holes needed to be match drilled, to remove the axial scratches that the punch left on the inner surface of the punched hole. The thinking was that you risked the hole cracking when it was dimpled, or cracking later after N-thousand (million?) cycles due to fatigue. That may have only been on the larger rivets or #8 screw holes, I can't recall. But it did make sense to my engineering mind that match drilling would remove those scratches and leave a cleaner hole.
 
VANs = Inherent Aviation Value

GrahamF said:
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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Asset rich and cash poor in a time of rising interest rates. I must unfortunately agree with GrahamF. There are only a few paths available. Fortunately, like Warren Buffet often focusses on - VANS has an underlying product with currently unrealized Value. How do they get through this cash shortage. Basically, how do you generate cash and still remain viable? Raising prices is a certainty - however sales have likely slowed to a trickle so it doesn't help the cash shortage today - it helps it in the future. Cut costs - hard to do when you actually need more manufacturing capacity to meet deliveries - I agree certain Models will be considered to be discontinued. Bonds and debt - a necessity - but they need cash to service the debt - debt upon debt is usually a bad idea unless very short term. A public stock offering - this would be a huge change for the company. Its likely going to be a little of all of them with perhaps the stock offering not on the table unless all else fails. I personally would not give them money as a donation - never a good idea to throw good money after bad. However, I would seriously consider investing in a public stock offering. Again - VANs has inherent "Value". I believe that value will be the force that allows its product to survive. -- OH, and for all those builders that have two years of kits on order at the low prices. Ask yourself. Would you rather experience a price increase in breach of your purchase agreement, or a long drawn out delay with a high deal of uncertainty? I know my answer to that question. I do wish VANs the best success in this extremely difficult situation. Bottom line, I have a personal confidence in the long term the quality of their product will enable them to survive.
 
squeakersc063 said:
Honestly since their engineering is showing the parts are usable they really should just make anyone who wants replacement pay full retail price. They've tested the things to an exhausting extent and their testing shows the parts will last longer than the plane will even with the cracks. I've certainly seen worse stuck in military planes that fly 9Gs and have been for the last 40 years.
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I have all confidence that Vans IS NOT going to provide free replacements for the parts that have been proven to be acceptable as they are. That ship has sailed. Vans chose to spend the $ on scientifically confirming they are OK and now there is no cash left to provide free replacements. Clearly the right call in my mind, but that does nothing to stop the arm chair engineers that think they know better and are demanding free new parts.
 
I am not sure if it will help but I just ordered a couple of items for several hundred dollars. I don't need them right now but I saw that they had inventory and figured that converting inventory to cash was a good thing.

I have admired Van, his aircraft, and his company for over 40 years and I hate to see what they are going through right now.

If you have been waiting to order some parts or accessories, maybe now would be a good time to consider helping them reduce some of their inventory?
 
mmcelrea said:
If you want to buy a new lotus car which can have a long wait list you pay a small deposit which is basically just booking a build slot. The price you pay will be the price at the time it is ready to be delivered. If you don’t want the car at that stage then you can get your deposit back, no questions. Vans could do something similar so the price you pay is the price at the time the kit is ready to crate.
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I think you can expect the new leaders to implement something like this even for the current backlog waiting to ship with promised price points. The depositors will be quite upset, but the fact of the matter is that vans needs to pass along the effects of the last 2 years of inflation if they are to stay solvent. Without the QB primer and LCP issues, they probably would have just eaten that from reserves. But they happened and the reserves are gone, so this pretty much needs to be. I would be shocked if the new team didn't implement something like this.
 
JRM-FlyRV12 said:
Asset rich and cash poor in a time of rising interest rates. I must unfortunately agree with GrahamF. There are only a few paths available. Fortunately, like Warren Buffet often focusses on - VANS has an underlying product with currently unrealized Value. How do they get through this cash shortage. Basically, how do you generate cash and still remain viable? Raising prices is a certainty - however sales have likely slowed to a trickle so it doesn't help the cash shortage today - it helps it in the future. Cut costs - hard to do when you actually need more manufacturing capacity to meet deliveries - I agree certain Models will be considered to be discontinued. Bonds and debt - a necessity - but they need cash to service the debt - debt upon debt is usually a bad idea unless very short term. A public stock offering - this would be a huge change for the company. Its likely going to be a little of all of them with perhaps the stock offering not on the table unless all else fails. I personally would not give them money as a donation - never a good idea to throw good money after bad. However, I would seriously consider investing in a public stock offering. Again - VANs has inherent "Value". I believe that value will be the force that allows its product to survive. -- OH, and for all those builders that have two years of kits on order at the low prices. Ask yourself. Would you rather experience a price increase in breach of your purchase agreement, or a long drawn out delay with a high deal of uncertainty? I know my answer to that question. I do wish VANs the best success in this extremely difficult situation. Bottom line, I have a personal confidence in the long term the quality of their product will enable them to survive.
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The one twist to this story is that they are sitting on A LOTTT of undelivered orders (future committed revenue streams). If the delivery price of those orders could be reset to reflect the new reality and the customers re-confirmed their commitment to accept those orders at those prices, that is a very strong argument for bridge financing to cover the operating expenses necessary to deliver those products, albeit at a slower and more controlled delivery schedule. Obviously this depends how deep in the red they are - none of us know that. And it would take a pretty significant effort to re-confirm buyers intention to complete their purchases. My guess/hope is that they were struggling, but not on death's doorstep. The recent onslaught of return of parts and deposit cancellations is likely what caused the immediacy (not enough cash to satisfy those demands). To me, this seems a place to put some hope that this is nowhere near as bad is it could be.

Most of the bad stories in this area involve companies with shrinking demand and therefore revenue. Many companies mismanage this shrinking revenue pool and don't adjust operating expenses accordingly. While the short term LCP fiasco throws some doubt on this, it is my belief that the demand for Vans products is still very strong and this strength becomes a big part of finding a successful path out from the cash shortfall. To me, this doesn't look anything like Glassair's situation (too little customer demand vs too much). Vans has a pretty robust business opportunity, they just made some significant mistakes, but those mistakes don't change the opportunity.

All of that said, as the poster mentioned above, this is a BAD time to be looking for bridge loans, as they will be costly and extend the path to solvency in a significant way.
 
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I have spent way too many hours, reading all of the opinions on this issue over the last few months. But I will offer my opinion, buried in the masses. One of the things that has made Vans so successful from a sales standpoint, is the price point. I can’t afford a Lancair. I can’t afford an RV 10 but with very careful planning I have been able to afford to build my RV7. But it’s been a long journey. I agree that in today’s market, these planes are undervalued. The problem is the entire aviation market is slowly pricing out a huge segment of potential owners. At the end of the day, our hobby is exactly that for most of us, a hobby. I could make a case for a $100,000 airplane built over a long period of time. I cannot make the case for a $200,000 airplane. The problem that I am seeing, even before the LCP issue, is that aircraft costs have gone up substantially faster than inflation. Generally speaking, airplanes, including vans, have doubled in value, and in some cases tripled. Now, add in all of this discussion about significant price increases, and you’re going to see a huge reduction in demand. I could not build an RV today, let alone after additional price increases.

Long story short, we are seeing the end of an era. That’s not to say the new era won’t be OK, but this was really the last kit manufacturer that could be built on an average middle-class budget. With all of the other component prices increasing exponentially, like engines and avionics and props, I think we are really seeing the end of the traditional budget home building era.
 
So many assumptions, opinions, and some very good points taken.
I’ll throw mine in, with a grain of salt.

File for protection from debtors, or sell for cash.
If there is another path out, I would like to see a good example from any industry.

The Kit Plane business has always been precarious. There is no finished product. The manufacturing of parts is labor intensive and requires expensive capitol equipment unless you stay small. Add to this a huge portion of the value of the product isn’t manufactured by Vans: engines, avionics, etc….
To complicate things further, many high value parts are not manufactured by Vans. Ribs, heat treating , gear legs, canopies, wheels, etc…..
This leaves Vans very dependent on their outside vendors, vendors who are probably owed money.

I am sorry. Those that think they can crowd source the kind of cash that a company of Vans size needs to satisfy vendors, keep employees working, and service debt, you’re simply mistaken.

I hope I am wrong. I have been a Vans supporter and ally for over thirty years. I hangared and flew with many Vans employees including a past President. I am as invested as most, but really feel for those folks that are having their dream turn into a nightmare. I also feel bad for the employees who will be affected, and for Van. Not the way things should go at this stage of his life.
 
olegburlacu said:
Just placed an order for my second RV-7A.
I'm ready to help Vans by buying parts they have in stock.
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That's great! More orders coming in will help definitely help push the outcome in a more favorable direction.

The fact that Van is still involved is what gave me the confidence to put in the rest of my 14A order this weekend.
I thought he was completely out, but I suspect he'll fight tooth and nail to keep his legacy alive.

And don't forget the interim CEO, regardless of past exploits, is still just the interim CEO. He was hired to do a job, and presumably that job is to save the company, not just save the employee-owners' investments.

He very well may recommended selling the company, but he alone won't have that authority.
 
meloosifah said:
One of the things that has made Vans so successful from a sales standpoint, is the price point. I can’t afford a Lancair. I can’t afford an RV 10 but with very careful planning I have been able to afford to build my RV7. But it’s been a long journey. I agree that in today’s market, these planes are undervalued. The problem is the entire aviation market is slowly pricing out a huge segment of potential owners.
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This was one of my decision point of building the RV8. 20 years ago, even the Glasair and Lancair were over my affordability. When I purchased the RV8 kit over 5 years ago, the goal of flying cost was $80K. The actual flying cost is closer to $110K with no frills. I know a few builders at the field did not build the RV and built the Zenith or Sonex because of the cost. If the price rises higher than it is today, it will reduce the affordability of the kit. Much like how Glasair priced itself out when it introduced the Glasair III which cost a high premium compare compare to the average kit price at the time. Same for Lancair. Both priced themselves out of the kit plane market.
 
spatsch said:
Are you sure? If they are selling under cost as Van’s says wouldn’t every order make the problem worse?

Oliver
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No. Problem one is no cash to fulfill backlog of current orders, therefore no revenue and it crashes fast. Again, we have no idea if they are just a bit short or a week from closing the doors; all just speculation for us. New orders stem the tide with new cash, at least from insolvency risks. Step two is to raise prices, sell some assets and slow production to manageable levels to reach profitability while repairing cash flow imbalance and rebuilding cash reserves.

I'll state again, it is my speculation that a rash of return requests and deposit refund requests have brought this rapidly to the crisis point. Vans pretty well laid that out in the announcement. Not saying that they didn't cause this with poor handling of communications. But, if you really want to help, convince your RV brother to sit back and wait for a bit before requesting their deposit back. The faster we charge the doors, the greater the chances it all goes bust and depositors get nothing; Depositors are considered unsecured creditors and the last to get relief. Go research the bank runs in the 30's and see how it is now done with the FDIC freezing things and forcing an orderly way out. The former is chaos with the vast majority losing and the latter leaves most parties with only minor damage. Deposits in a bank are only backed up with a small amount of cash on hand. This is conceptually not a lot different than you placing a $5K deposit while vans spends $25K to make you something that you will not pay for untill the end. All it takes is a few unfortunate problems to drain the operating cash and now you can no longer float the production costs to get the revenue. When you are a small player, this is a bit of a shell game. It all woks fine until a significant portions of the depositors want out, then it crashes. None of this is new and why most CFOs spend the bulk of their time on cash flow and NOT profit.

IMHO if you want to help vans get out of this, donations are not the answer. Find a way to slow down the refund requests / deposit refunds and let them regain their footing.
 
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spatsch said:
Are you sure? If they are selling under cost as Van’s says wouldn’t every order make the problem worse?

Oliver
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We'll re really don't have any context behind Vans' statement. Is every part they're making selling for less than cost? Likely not. SB kits as a whole? Maybe, but probably not. QB assemblies with shipping both ways? About guaranteed.

Or does he simply mean that they're operating at a loss due to a couple of badly times crises and poor management?

Either way the previous statement is correct, they need cash, they need to move excess inventory even if at a less than ideal price point, and the need builders who want out to please have a little more patience before bombarding them with refund demands or calling your cc provider. At least give them the 2 weeks he asked for.
 
Pappy said:
I am not sure if it will help but I just ordered a couple of items for several hundred dollars. I don't need them right now but I saw that they had inventory and figured that converting inventory to cash was a good thing.
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I was ready to order some LCP replacements at retail price to keep working, but they show out of stock with a prompt to call to order.
 
Agree, lot of people commited to build in the covid time, having spare money / time. And now, I expect more than a half of them made the maths that a complete airplane will cost 150k+, and requested refunds (only 500usd is the penalty). So I expect that Vans has a large inventory of undelivered parts, especially empenages..
 
It took about 20 months from order date to deliver my QB kits. I honestly was flabbergasted that they honored the list price from that long ago. I was fully braced for a price increase, you know the way supply and demand usually dictates.

I believe this is a big part of what has brought on their cash problem considering how much the cost of everything else in our lives has gone up in that short time. Yes, perhaps they should have been more on top of the situation.

Those who are part-way through their build should expect significant price increases and be understanding that this truly necessary. I still have a kit to buy and am expecting to pay much more for it.
 
jimbom said:
It took about 20 months from order date to deliver my QB kits. I honestly was flabbergasted that they honored the list price from that long ago. I was fully braced for a price increase, you know the way supply and demand usually dictates.

I believe this is a big part of what has brought on their cash problem considering how much the cost of everything else in our lives has gone up in that short time. Yes, perhaps they should have been more on top of the situation.

Those who are part-way through their build should expect significant price increases and be understanding that this truly necessary. I still have a kit to buy and am expecting to pay much more for it.
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Final kit price will have to be determined at the time it's ready for delivery, that's the only way going forward I see this working. Kit price 'estimates only' may become the new norm.

Knew I should have just bought all the kits in 2019 when I started. Trying to do this without having to borrow anything to get it done.
 
MIKE JG said:
Final kit price will have to be determined at the time it's ready for delivery, that's the only way going forward I see this working. Kit price 'estimates only' may become the new norm.

Knew I should have just bought all the kits in 2019 when I started. Trying to do this without having to borrow anything to get it done.
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I’m in the exact same position.

Would have been way cheaper to just borrow a load of money at 2019 rates and order all the kits!

Hindsight is a wonderful thing.
 
jimbom said:
It took about 20 months from order date to deliver my QB kits. I honestly was flabbergasted that they honored the list price from that long ago. I was fully braced for a price increase, you know the way supply and demand usually dictates.
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QBs have to be the main problem here. They're taking a risk on international shipping prices 12-24 months out, which is crazy.

The business I work in (clinical research) delineates our pricing to customers into professional fees and passthrough costs. Professional fees are a quote and are valid for the 2-5 year project with inflation baked into the rates, passthrough costs are an estimate and the customer pays whatever it costs when it's incurred with no markup.

I always push strongly to resist any tendency (popular with some in the business) to change this and absorb some passthrough costs into overhead and bake them into the charge-out rates or quote them as a fixed fee.

QB shipping is a perfect example of why, and I will cite it when I next have to argue the point.
 
MIKE JG said:
Knew I should have just bought all the kits in 2019 when I started. Trying to do this without having to borrow anything to get it done.
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I ordered all the kits, engine and prop in 2021 & beginning of 2022, and now I have 3 kits with LCP, and $20k of deposits that may go poof. I was given the option to push out delivery of my finish kit. Wish I hadn't done that. Point being, you never knew. You could be damned if you do, or damned if you don't.
 
TheEnthusiast said:
I just placed the order for the balance of my kits, standard build, including the $17,000 finishing kit I won't need for 2 years, and paid the deposit.

A gamble sure, but to me the possible reward outweighs the risks. .....Me putting my money where my mouth is...
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Same for me. I have deposits on everything for a 14. Have received the tail kit already and am totally enjoying myself building it. The instructions are phenomenal. I ordered QB fuse and wings. If they tell me I can only get slow build - no problem - I'm still in. If prices go up within reason (15-20%?) I'm good with that because I would still get an airplane that was among the biggest bangs for the buck out there. What I would hate the most would be longer delivery times that result in lots of idle workshop time. Other than that, I am ready to write the checks.
 
Jonnyb said:
I wondered about going up to a -4 rivet, as long as you have edge distance. That way hopefully you have removed the HAZ.
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MS oversize rivets are available in half sizes (ie. 3.5). I've used the 9/64" after botching a rivet removal. Might not be too hard to just drill out and replace the LCP ones which are accessible
 
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JRM-FlyRV12 said:
Bottom line, I have a personal confidence in the long term the quality of their product will enable them to survive.
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That confidence (yours and so many others), Van's history, and Van's being brutally honest about their problems point to a likely positive future.

As I see it from the outside, a successful long-term solution, consistent with Van's reputation, keeps all of the creditors from a loss. Particularly those who have ordered kits.

As others have said, Van's reputation and goodwill is likely their biggest asset at the moment. Any outsiders looking to step in with substantial capital/assistance must understand this.

The business Van's is in is unique and requires assistance from those who can understand.

General investment from "the Street" is not tailored/designed to understand the dynamics of a business like this.

There is financial help available. Much of it private and that understands this business. I hope the help comes from a source like that.
 
I've been trying to think of what *other than parts made from sheet metal* Van's kits contain. That is, let's assume they pack it in, and another company buys up the IP (the CAD files and such). It's not overly difficult to start manufacturing ribs and spars and stringers and whatnot from raw metal for the airframe. But what *else* would they need to stand up a full-fledged kitplane company? I.e., procure from a vendor and add to their kit to sell customers.

Canopy
Some weldments like engine mount and canopy frame, gear legs
Maybe some fiberglass things like wingtips

What else? That is, things that they would HAVE to include in the kit, because most customers couldn't just buy them from a supplier on their own (like rivets, hardware, SCAT tubing, engine, prop, interior, avionics, wheels, brakes, etc., etc.

IOW, just the bare-bones airframe and a few items that are particular to it. The rest is up to the builder.

I wonder if that is an option for a potential buyer...or do customers now expect really complete kits AND package deals with engine/prop manufacturers, etc.?
 
Parts

The round gear legs are produced by Langair in Oregon. Langair started operations long before Vans.
There are at least two sources for canopies, the one in Ohio is the best known.
Many, maybe most of the weldments are from another vendor.
 
Jonnyb said:
Was going to the same, but like you, everything is on back order
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Call them and order - that's what I did. I got my order in on the 18th and they are scheduled to be at my door tomorrow. Yes, it says call to order, and yes they will show as backordered - but it's apparently a quick fix on their end.
 
Ribs are formed and heat treated by an outside vendor.
What you get from Vans is a proven design, instructions, support, and some sheet metal. The value is in the completeness of the “kit” and I would venture a better overall price than if you sourced all of the hardware and odds and ends yourself, not counting the time to do so.
If you go “quick build” you get some cheap labor and pay some $$ for time saved.
You also, for next to nothing, get the largest experience base of any airframe manufacturer. That would be all of those that have gone before us, and still are going strong. That value is immeasurable.
 
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