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poormansairforce

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While there are some truth's to the "Volume made argument" there's still a huge PINK ELEPHANT standing on everyone's toes that has answered that they seemingly ignore. We are getting Screw'd because we have been conditioned to accept it. Look at how many commentators defend it rather than rebel against it.

The Continental and Lycoming's have long since paid back their tooling cost and amortized off their engineering cost as well. The fact that they charge what they charge is just b/c you are stuck with no choice. An aircraft itself has ZERO value as an engine OH can cost more than a sales price for an A/C.

In my business I make, design, manufacture a lot of different castings in Stainless, Aluminum and Bronze. I get charged at the foundry by the pound of material, the labor and material it takes to make the negative shape in a Green Sand, an the labor and material it takes to make the core's, plus a profit on these parts and the profit on the energy to heat the material.

An engine case like these in quantities of like 50 units would be less than $300/side un-machined raw.

The hand built argument is a bit over rated as it's hard to automate much more than some bolt torquing in engine assembly. Also Continental has their "Titan Engine" line where they charge more for a "Hand Built Engine" inferring that their standard production is automated, or to some degree at least.

That being said, I know that GM pay's $17.000 per head to have the raw castings machined for a Small Block. Volume makes the price drop for certain. GM has less than $600.00 in a complete LS small block engine (minus electronics)... That's labor, machining, etc... A complete LS engine ready to go out the door.

This is why "Viking" is using a Honda engine, Aeromomentum is using a Suzuki engine and the diesel engines are a Mercedes Sprinter Van engine (which cost way more than 2 of the complete van's they come in) making them noncompetitive in the market.
Just to be clear I've quoted your first post implying we are bending over and taking it because nobody does anything about it. No wall needed.
 

Pops

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We can't really know if they are maximizing their profits just from the sale price per item. If they charged $2 million each and sold none, that's probably not the best plan. Supply, demand . . .

I'm still not sure what solution your posts are proposing. But as far as what this >thread< was about, the OP had an observation about his perception of the relatively high price of a Casler 1/2 VW. That's a funny example because Scott Casler enjoys very little pricing power. He has no regulatory or certification "moat" to create artificial scarcity. He has no exclusivity/proprietary part/patent protection leverage: anyone can easily buy exactly the same parts he uses, and from many suppliers. The plans to do what he does are widely available at a low price--he'll even sell a copy of those plans to anyone. And he's got a long waiting list of folks wanting to buy his completed engines at the price he has set, so if anything he is undercharging for his labor and expertise. At least that's what the market says, and that's more important than what sideline snipers of any persuasion think. Me included.
After building a cut case 1/2 VW , I would not do it again. With all the machine work, Scott is working very cheap. Doing it again, I would just buy a 1/2 VW from Scott Casler. Try welding the counter weighs on the crank and make the equipment to balance it and get back with me and tell me its a piece of cake.
 

TFF

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Lycoming makes 1500 new engines a year and overhauls the same number. Continental has similar numbers. They are really in the same boat as Casler. The days of 10,000 of just O-320s a year are well over. Without them being alive the industry would be over. The stuff made by the Chinese is for their own consumption but they are using the west as test subjects. Just like Chinese watches, they learn the technology and sit on it until they have a use. They are in no hurry. No real need for profit. Intellectual property and will use our laws to make us play to them. If you don’t think casting up 1500 new engine is low volume and it will cost a lot, I don’t know what it would be.
 

Hephaestus

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Curious that we don't have a chinese O320 clone actually...

I mean they clone the Rotax engines already...
 

BJC

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Curious that we don't have a chinese O320 clone actually...

I mean they clone the Rotax engines already...
Taiwanese O-235 clone.
No “News” on their web site - might be another dead project.

BJC
 

PMD

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The main reason aviation stuff is so expensive is product liability insurance, probably makes 90% of the cost on an engine.
That is one HUGE component of anything to do with aircraft. Until the USA gets out of the LLL (Legal Liability Lottery) business, insurers will continue to rape aviation as hard as they feel like doing. The other major factors are the shift of the North American economy from creating wealth to merely re-distributing it by specualtive activity and thus purely inflationary results. Instead of sticking capital into productive business, where a 5% per annum return would be sufficient in a stable economy, having everyone throw cash into Casino Capitalism that inflates the living crap out of the greenback means "investors" no longer invest, but put money into Wall Street to see the value grow along with inflation through endless speculative transactions that create zero wealth - but make a few people very wealthy. As a result, airplanes and airplane engines are no longer made by the people who's name is on the door, but belong to mega conglomerates who's MBA whiz kids have to milk more and more money from consumers to prove their worth - at our expense. Then of course there are the outside predators (AVIC for instance) who could care less about the consumer at the other end of the line, but have a much larger and purely predatory interest in the business - and the cash behind them to do whatever they feel like doing (not bound by any of the normal market forces) - but worth noting they seem to be able to offer a new recip SI or CI engine for less money than their domestic competitor. Helps when you can afford the luxury of a brand new plant with all of the latest CNC toys without the fuss of having to be accountable for the cost.

On the LLL front: also worth noting that the largest volume aircraft engine manufacture in the world (Rotax) is NOT a US company - by very careful choice. It is damned hard for the ambulance chasers to reach across international borders to reek the kind of havoc on BRP that they can freely do to Continental, Lycoming, Cessna, Piper, Beech, etc. As it is, though, even in Canada the mere mention of the word "airplane" in your manufacturing, repair or job-shop business can drive insurance costs through the roof - as the insurance "industry" is common to the continent for the most part.

Getting down to the 1/2 VW question: I once built airboats with VW drive and 37 years ago to make a "airworth/boatworthy" engine and prop was costing nearly 3 grand in parts and my time (we made a LOT of stuff in house). Made a lot more money by buying Rotax 503s that gave me 50% more thrust for 1/3 the cost and 1/10th the time. I can tell you that what Casler does - cutting the **** thing in half - will be a lot more work than re-machining (line boring, etc.) and building up a full case and making drive system and I am amazed he can do it for the price he charges. When you think that we now live in a world where some dksht finance guy (or girl) can "earn" a billion$$ annual bonus for doing nothing but inflating the value of some imaginary instrument why would we begrudge a person with actual skills and integrity from making something tangible and valuable at a reasonable cost?

If you think we boing-boing engine guys are hurting with $100k IO-540s (and we certainly ARE!!!) consider what happened to the turbine people who enjoyed a really good and cost effective Walter 601D....until GE bought the company and increased many of the parts costs by as much as 1,000%. On a related note: one thing making it hurt to buy cars, boats, planes, etc. is the fact that our big buck competitor for discretionary spending these days is real estate: the free ride on tax bill for real estate speculation means a lot more of our money is put into "location, location" than into locomotion for our airplanes.

Sorry for the long post, but it is a pretty important question/topic.
 

Alessandre

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I would consider this statement true if their non-certified version had a price close to reality, which I think is that there is a lack of competition in this sector, anyone who wants to enter this market offering a product with the same characteristic of simplicity and reliability with slightly lower price to exclusively serve the non-certified aviation market, when they saw the quantity that this new manufacturer would sell and how they would be left behind maybe the situation would change, but what usually happens is that new manufacturers come in based on the price of traditional ones already thinking in high profits as Rotax and Jabiru.
 

Pops

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Getting down to the 1/2 VW question: I once built airboats with VW drive and 37 years ago to make a "airworth/boatworthy" engine and prop was costing nearly 3 grand in parts and my time (we made a LOT of stuff in house). Made a lot more money by buying Rotax 503s that gave me 50% more thrust for 1/3 the cost and 1/10th the time. I can tell you that what Casler does - cutting the **** thing in half - will be a lot more work than re-machining (line boring, etc.) and building up a full case and making drive system and I am amazed he can do it for the price he charges. When you think that we now live in a world where some dksht finance guy (or girl) can "earn" a billion$$ annual bonus for doing nothing but inflating the value of some imaginary instrument why would we begrudge a person with actual skills and integrity from making something tangible and valuable at a reasonable cost?

PMD------
Very true--- There is a lot more work in making the 1/2 VW over the 4 cylinder VW engine. I'm sure Scott is not making very much profit (if any) on the 1/2 engine. Scott is also a stand-up man standing behind his work.
 

Vigilant1

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[QUOTE="PMD, post: 538830, member: 37833] I can tell you that what Casler does - cutting the **** thing in half - will be a lot more work than re-machining (line boring, etc.) and building up a full case and making drive system and I am amazed he can do it for the price he charges.
[/QUOTE]
FWIW, he will make whatever kind of 1/2 VW a customer wants--full case or 1/2 case.
 
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pwood66889

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"When did you live in Roswell?"
1993-4 the first time, 2004-9 the second. Earned A&P from ENMU-Roswell.
Job took me to the South, and now in Hot/Humid south of Tallahassee.
I loved the weather as well! we got others here from the Land of Enchantment.
 

Rik-

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I would consider this statement true if their non-certified version had a price close to reality, which I think is that there is a lack of competition in this sector, anyone who wants to enter this market offering a product with the same characteristic of simplicity and reliability with slightly lower price to exclusively serve the non-certified aviation market, when they saw the quantity that this new manufacturer would sell and how they would be left behind maybe the situation would change, but what usually happens is that new manufacturers come in based on the price of traditional ones already thinking in high profits as Rotax and Jabiru.
Jan at Viking made a statement this week on FB that he has sold over 1,000 units of his Honda converted engines to the experimental market. I believe he even made similar statements in an article in “Flying” magazine this month also,

This seems to piss everyone off, but pilots are as a collective whole a bunch of cheap SOB’s. Yet so many are brain washed into defense of the status quo with Lycoming and Continental. I was reading where a guy bought a C150 for $12K and he spent $20k on his IO200 rebuild. Someone pointed out to him that new the engine is $31k with an 11k core exchange and a factory rebuild is $27k with the same 11k core exchange meaning he could have purchased a new one off the same $ and a factory rebuild for less $.
 

wsimpso1

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If these were such high profit places to operate, you would think there would be Initial Public Offerings and high dividends on the stocks of these outfits. Not so.

I begrudge no one a fair price for their enterprises. How do you know it is a fair price? If there is more than one company in the market, prices are similar, and none of them are wildly profitable, the price is probably fair. If there is only one company and no one else is rushing to compete, you have to wonder why. I mean, if it were such a great place to sell, wouldn't someone else jump in?

Without folks trading money for goods and services at rates sellers and buyers jointly find favorable, we would all still be living in the bush, wearing skins, and dying before 30. I prefer this system...

Billski
 

Alessandre

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Jan at Viking made a statement this week on FB that he has sold over 1,000 units of his Honda converted engines to the experimental market. I believe he even made similar statements in an article in “Flying” magazine this month also,

This seems to piss everyone off, but pilots are as a collective whole a bunch of cheap SOB’s. Yet so many are brain washed into defense of the status quo with Lycoming and Continental. I was reading where a guy bought a C150 for $12K and he spent $20k on his IO200 rebuild. Someone pointed out to him that new the engine is $31k with an 11k core exchange and a factory rebuild is $27k with the same 11k core exchange meaning he could have purchased a new one off the same $ and a factory rebuild for less $.
One thing and fact, a simple engine, direct drive, without double camshaft, without any electronics and air-cooled would always be the best option within aviation and also as the VW engine should be cheap, the VW engine was for decades one of the cheapest engines to buy and rebuild in the world. While a simple low-tech carb engine costs more than a new SUV ready for use, I think personal aviation tends to disappear and it is precisely because of that that there is little competition, nobody is willing to invest in a dying market.
Anyone who is against initiatives like Jam by Vicking is unfortunately helping to throw a piece of sand over this grave. Especially in experimental aviation, which I believe, has its reason for continuing to exist because it brings together those who love aviation, but who do not have enough dollars to buy a brand new SR-22.
There will always be someone proudly saying that they spent 50k on an O-540 or 30K on an O-360 because they opted for security, but apart from millionaires I believe that such an amount is a significant portion of their year of work that was invested in a piece of metal that estimating high didn't even cost 5k to produce.
 

PMD

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There are more than a few "catch 22"s involved in making aircraft engines.

IF you are a small company, the profit from the hand labour to rebuild (or build) an engine may seem expensive to one of we typical tightwad little airplane people, but the prices we are seeing are NOT much different from what the car, truck and boat guys have to shell out. I had to do an inframe on a million++ mile DDEC2 on the road a few years back, and it set me back well over $25K US. My best bud's kids forgot to open the sea cocks to the coolers for his twin CAT diesel boat, and the rebuild bill came to $130K+ Cdn. We built a ZZ4 crate 572 up for a shoebox project, and the bill for parts alone (eng, FI, exhaust, bellhousing, clutch) was well over $30k Cdn - and that was 10 years ago. As I mentioned a few posts back: we live in a world where real estate and finance people are making MILLIONS every year, and the cost of doing business means even as a small biz, you had better be making hundreds of thousands in profit if you expect to be around next year.

Even if you want to "grow organically" it takes something that small business just doesn't have access to: BIG capital - for the reasons Billski already pointed out: there isn't enough volume to attract the world of finance to put money into this sector. Look at the companies who are significant: Lycoming has more than a century of history, but got its big kick from making generator engines in WWII (and no doubt a lot more): Continental was making a lot of car engines and that funded them getting into aviation once again when a war came along and pumped a LOT of cash in. Franklin IIRC a similar story - nearly 120 years old, but bankrupt and sold off MANY times. Look at today: Thielert made a fair number of certified engines using the production equipment of Mercedes, the engines were very expensive but and it looked like he was making big bux...until reality was that the risks inherent of building airplane engines bankrupted the firm. Austo is funded by the airframe manufacturer that NEEDS its engines (at any cost) and once more defers a lot of parts costs to using automotive production bits. Look at Superior - a company that did grow "organically" from an aviation background. They were going to take the LSA market by storm (Gemini) but once again, the harsh realities of aviation saw them go bankrupt due to Thielert, get sold off to Chinese interest, and again find that building airplane engines has some BIG risks and are probably struggling today - hardly the kind of profile that will have Wall Street running to their door to bail them out. How about SMA? Here's the backing of REALLY big money (SAFRAN) that started as Gnome benefitting once more from a war (WWI), grew as arm of government, spun off to finance with BILLIONS in defense and transport contracts but even using the wiz kids from the Renault F1 team they couldn't build a successful light plane engine and NO WAY a private company could spend that kind of money - sell only a couple hundred engines in more than 10 years and still be around (never mind pour billions more into another new engine - the 460). Today only Continental is a big potential player with modern machinery - but note that this only happened when AVIC (government of China) stepped in with a wide open pocket book to try to get a market position in a strategic sense - cost no object. The cost of having the equipment to build an airplane engine with all of the latest CNC equipment is so great nobody who must answer to normal business pressures and demands is going to be able to do it. Then, let's look at the largest engine count and most successful one of all: BRP Rotax. They did not chose to go into the aviation business, they were dragged in kicking and screaming by Ron Shettler (Kodiak Research) who used the financial clout of an engine manufacturer owned by a massive conglomerate of aviation, recreational products, railcars, etc. to adapt snowmobile engines to aviation use. Once again: a company that DID come in as a profitable business, and one that has sold 30,000+ 582s, 50,000++ 4 cycles and who knows how many tens of thousands of air cooled 2 cycles before all of that but they need at LEAST $200/HP for a normally aspirated aircraft engine and up to $300/HP for turbocharged ones.

The current exception to this rule is EPS. They have been very good at raising money to get their 350-450 HP engine certified and into production - but note that you can expect to see a 20-30% premium over Lycoming. Since a TIGO 540 MSRP is something over $160K ($355/HP!!!) there is a possibility EPS could come in at $200,000 a crack (closer to $440/HP)

Maybe now you can see that around a Benjamin per HP for a lovingly, hand built Casler is actually one heck of a good deal.
 
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Toobuilder

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In a free market, the customer sets the price. The fastest growing segment of GA is E-AB - and of that segment, the RV series is a HUGE force. These guys are far from rich, and the overwhelming choice of FWF is a new Lycoming. Yep, they are expensive and I wish they were significantly less, but it's an expensive lifestyle. Same with race cars and powerboats.

If the market finds value, the market will pay.
 

rv7charlie

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I've flown RVx-s since 1994. There's a -7 fuselage behind me as I type this, and a flying -6 in the other side of the hangar. I can tell you right now that RVers, *as a group*, are the least experimental experimenters you'll ever find. (I know that Toolbuilder knows this. :) ) For all practical purposes, at this point RVs are just much better performing certified a/c. I'll bet that not one in 100 actually experiments with the engine, beyond purchasing a plug&play ignition or fuel injection system. Stroll over to the VAF forum's alternative engine section and peruse the abuse the handful of alt engine guys face.

Pilots tend to be conservative in general, because most of us can evaluate risk. That drives *most* of us away from real experimenting. (I say this with a Mazda rotary in front of the firewall on the -7.) That, in turn, drives the market for engines. I have no doubt that Lyc & Cont could sell their engines a lot cheaper, but why should they? As a group, we're willing to pay for reduced risk.

On the liability issue, I truly believe that there's no more liability in aviation than any other field (likely less), but just like the economies of scale when building the product, there are economies of scale with liability. If you can spread your incident risk across 7,000,000 vehicles a year, it's much less of a problem than spreading it across 700.

Charlie
 

PMD

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On the liability issue, I truly believe that there's no more liability in aviation than any other field (likely less), but just like the economies of scale when building the product, there are economies of scale with liability. If you can spread your incident risk across 7,000,000 vehicles a year, it's much less of a problem than spreading it across 700.
Charlie
It is not so much that aviation as a practice has greater liability, it is that the lawyers and insurers see aviation as a sacred cow they can milk for anything they want. In the days before the TINY tort reforms of '90ish the end of Cessna piston engine production came because more than half he cost of a 172 was insurance premiums. I can't think of another business outside of the Russian Roulette Home Kit where the insurance premiums are greater than the actual cost of production. If you know anyone who had a flying training operation that was in business after 9/11, ask them what happened to THEIR insurance costs.

Liability is a big deal in business, and one that investors run from in droves.
 
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