So You Want to Be a Composite RC Sailplane Manufacturer?
Part IV: Shoulda, woulda, coulda.
In the last article of this series, I am going to take a look at what happened and what I could have done differently — twice. Hopefully after reading this comedy of errors you’ll learn a few things that might be helpful — JH
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…” — Charles Dickens
And at Aeroic, it was the age of disaster. What a comedy of errors. You’d think all those highs and lows and examples of misplaced trust should have taught me something. In fact, although my experience until that point was not good, apart from the last part it was not totally bad either because valuable lessons had been learned. Determined to find out but still mystified and wary I sat down to re-think the entire proposition. What had happened? How had it come to such a calamity? What had I done wrong? Was it my fault? These questions rotated noisily around my mind like a can dumped in a garbage disposal unit. I had to set it straight and as always that required analysis, so my trusty list came out. I jotted down my thoughts on what had been done and what the outcome had been — good to the left and bad to the right.
Adding it all up, taking it all away, multiplying it, and trying a few other mathematical tricks unfortunately always produced the same result. I was effectively considered worthless by the company I’d been trying to help, and though the reason for the catastrophe was baffling; it was nevertheless there before my eyes. Until, finally, the proverbial penny dropped.
Show Me The Money
The shocking fact was that since I had not demanded money, taken money, nor invested money then I had no value. The catalyst, I deduced, was that at the time of the calamity many would-be designers had been in contact with the company and so they must have deduced that designers, those previously elusive people that had had so nearly caused their closure a couple of years back, now seemed to be two a penny. And, after all a designer is a designer — they are all the same…right?
The whole thing, baffling for me until then, slowly began to materialize in my poor brain. On reflection I realized that my motives for doing what I did must also have been hard to understand for the company I was involved with. I wanted to make good models available, for reasonable prices, to younger, or maybe not so well-heeled people who did not have so much cash available to pay the prices the European concerns were charging. But the new investors — as I soon found out, were entirely profit driven and everything and anything to do with money was a priority.
As experienced businessmen, they knew well indeed that how much you invest can be a good gauge of how much you were likely to make. Ergo: something that did not cost anything — like myself — was not worth anything. Added to that I knew that I was really far too soft and easily manipulated, and I just didn’t see the monster lurking in the cupboard.
Looking back at it now, after more than a decade has passed; I made a shed-load of mistakes but I cannot help feeling somewhat gratified to observe that it was always, and in fact still is my designs that are the top sellers for this company. And to this day I have never seen a model produced by them that was ‘designed by a world champion’. Indeed, several times there have been third-party overtures to try to woo me back into that fold. Needless to say, all were sternly resisted.
What? Not Again!
Yes — I’m completely out of my mind; certifiably bonkers. I was going to do it again but do it commercially, and do it right this time. As usual I sat down to consider my options. I knew I could design models so that was not in question. But as I had made abundantly clear to myself, I was yes-way an engineer and no-way a businessman. The problem was, how to manage the whole thing — how to actually produce models, and at good quality, and for sale?
Sale was a new word in the equation as far as I was concerned as I’d never done it before. First, I had to find a new manufacturing partner. That proposition, in principle turned out to be simpler than I had anticipated. With the passing of time, several new companies had sprung up all started by former workers who did their time at my original partner company. I was going to find one; partner with them on my terms; and get it right this time.
Second Time Lucky?
Soon enough I guess, the word got around that I was a designer adrift, and I was contacted by three of the spinoffs from the original venture. One in particular turned out to be a small outfit with only two people, but with a lot of enthusiasm, and for reasons that I cannot even now explain, this attracted me. This time I invested a lot of time and money into the project — a mistake I’m still regretting. Gradually, over a period of six years I brought them up the skill levels and quality required to be real contenders in the market. At the end there was a new factory, a full order book, and good production processes and controls, plus a bunch of skilled workers. They had seven of my models in manufacture, for which the CNC work and production moulds I had financed completely. Of course, as with any business it wasn’t smooth all the time, and as always dealing with Chinese companies, things could get a bit crazy on occasion, but overall, we were generally making progress.
Go West Young Man?
Well, dammit, that’s what happened. Almost inevitably it seemed, it began to go west. Things started to go horribly wrong with the quality, just as the company moved to pretty good profitability. The owner stopped supervising the workers and decided that as he was now a captain of industry, nay, a full-blown Tycoon, so he might as well start acting like one. To cut a long and nasty story short he decided that he was going to be the new boss of the entire enterprise — including me. As he put it, (quote) “after all you are only the designer”, so he was going to “take over my business and all of my agents and distributors” and “kick me into the gutter”.
Tycoons say things like that, apparently?
Well that particular threat and several others like it didn’t materialize, but the ‘coup’ did leave me with my model business cratered, a $60,000 USD hole in my finances, and more financial tatters if you count lost business, but more importantly no way whatsoever to recover any of it. Later I discovered that even if I had had a cast iron contract from the get go, which I didn’t, it still would have been totally useless. Though I wanted to put an end to it by litigation, I soon found out that nothing can be done with intellectual property rights (IPR) disputes as the laws in China heavily favors the OEM manufacturer while the legal processes are normally decades long and incredibly expensive.
Its apparent that a verbal contract is not worth the paper it’s written on.
Third Time Lucky? So Far Yes!
What?! I went and did it again? By now you are probably doubting my sanity, and truth be told, so was I. But here I do readily admit that a lot of my next maneuverings were at least partially motivated by good old-fashioned revenge. But as the man said, revenge is a dish best served cold, and by the time I decided to make my next move into manufacturing my brain was operating at zero Kelvin, minus 273.15 degrees Celsius, or indeed negative 459.67 degrees Fahrenheit. I had icicles projecting from each ear and my beard had turned a frosty white.
I made a deal, and signed a contract with a new outfit and tried really hard not to do anything I had done previously. As part of the contract, I set down how the models would be produced to the finest detail, and I sought and received agreement that nothing in the model construction could be changed — not the material nor the procedures without prior discussion and written consent. Three years have passed, five models are in production and we are going through an expensive but needed move to new and much larger premises while the manufacturing standard operating procedures and instructions are being reviewed and revised to suit. So far? Its looking good and its my hope that as a result, the model quality will climb up another rung on the ladder.
Shoulda, Woulda, Coulda
Now after two decades, let’s have a hard look at what I should have done had I had the experience I have now. This could maybe make a template or a checklist for a newcomer wanting to go the same route. One thing above all else — if you have the chance to do this by yourself, with your own people, in your own facility then this will always be the best choice. Whatever mistakes you make will be your own fault — but if you can do it well, so will all the profits.
The Model
Things to consider and things to make sure of:
- Target market — The model you design has to fit the market segment you have targeted as exactly as possible, and there has to be a market.
- Model Cost — Your plane has to be in the right ‘cost envelope’ that will make it a good value proposition for the dealer — or for the flyer if you intend to sell directly.
- Model Fashion — Your plane has to be fashionable. It doesn’t matter how much you know and can prove one design feature is better than another, if it goes against current fashion, it will not sell.
- Durability — It must be durable; designed to withstand a certain amount of rough handling such as bad landing stresses and tail whips, with the right strength, and the right diameters, all in the right places.
- Testing — The model has to have been thoroughly flight tested and any kinks ironed out.
- Ease of Production — The plane has to be as easy as possible to produce, with no complex mechanisms, or hard to make features.
- My Baby — There is no room for the dreaded ‘my baby’ syndrome here, so listen to suggestions from the OEM who probably has a lot more experience of durable and reproducible construction than you do.
The OEM Partner
At this point most of the OEM manufacturers are located either in the Ukraine or various other dissolved ex-soviet Eastern European countries, or in Mainland China. I’m not sure this is going to be the case forever as the cost advantages of manufacturing in either region are eroding just as fast as their economies are improving.
It’s probably better for an intelligent startup to consider manufacturing on their own doorstep and improving the production processes to make cost savings rather than hunting around the world for lower labor costs.
- China
I choose China for good reasons: I live in Taiwan, close to China and under normal circumstances a quick trip to see the OEM is not a big deal timewise or financially.
Second: I speak the language, and this can and has made a great deal of difference at times.
Last, the Chinese OEM can be flexible in ways that could be a deal breaker in other places.
- Eastern Europe/Ukraine
I have done OEM deals with at least one European manufacturer, but the main problem is that generally they don’t really want to act as an OEM, preferring to promote their own models and brands. If you are someone well-known — especially as a designer — then that might make a difference. There could be a possibility to sell your model/IPR if its good enough. Costs of mould manufacture and models produced can be high.
The Business Side
- Legal — Sign a contract. It probably won’t be much use to you if the kaka hits the electric cooling device but having one is a heck of a lot better than not having one — even if it’s just for your own peace of mind.
- Be a Businessman — Don’t have misplaced sentimental motives for considering an OEM deal to make your model. I don’t care how you do it, it won’t work.
- Concentrate — Understand and orientate your entire drive towards creating a commercial product and making money from it — or walk away.
- Model Pricing — I mention this again as its critical. Have a good idea what price point you want to sell your model at — will you sell it yourself? Or will you go through a dealer? What would you reasonably pay for this model? Remember that the more parties that are involved, the more diluted the profit will become, and also remember that the selling prices can be adversely offset by shipping costs.
- Investment — Understand that unless you sell the design, you will be asked to invest in your model — there is no other way — and investment is likely to comprise several thousand dollars. This could be CNC costs to make positive moulds only, or it could also include production mould making costs — it depends how you do the deal. These costs have to be built into your model selling price.
- Partner’s Share — Know from the start that whoever you partner with will need to make his own profit — and that his costs and profits are all part of your cost. Negotiate, but be fair.
- Baby Steps — Understand that the profit from this venture is unlikely to be much in the beginning and indeed it won’t be — but it could be enough to pay your modelling expenses — and we know the glider widows really like that. So do a deal that will be profitable and will leave you with something to sell — because however small that profit is in the beginning it can be built on as your sales and reputation grow.
- Ferrari — Don’t order one.
So, finally we reach the end. If you do decide to go further then please let me wish you the very best of British luck!
©2021 James Hammond
All images are from the Hammond Collection, unless otherwise noted. Also, there’s a bankable rumour out there about a new James Hammond series being in the works; the third in the New RCSD. Signed up for the RCSD mailing list to be notified when that’s out. Read the next article in this issue, return to the previous article in this issue or go to the table of contents. A PDF version of this article, or the entire issue, is available upon request.
