Montreal’s Essential Turbines Inc. does what it takes to keep its customers flying

Montreal’s Essential Turbines Inc. does what it takes to keep its customers flying

Sector series: Aerospace

In its first year, Essential Turbines Inc. made $10,000 in profit. It’s come a long way from those humble beginnings in 1993. Today, the company boasts $10 million annually in sales and has customers and agents across the globe.

Essential Turbines Inc. (ETI), based west of Montreal, is a maintenance, repair and overhaul (MRO) specialist that works on fixed-wing pure-thrust engines, turbo-prop gas-turbine engines and helicopter turbo-shaft gas-turbine engines.

ETI came about when Mike Guntner Jr. approached his father, who was then managing an engine MRO facility in Texas, saying he had five aircraft companies that were willing to be customers, as well as an investor, who would help them launch an aeronautical engine repair and maintenance service company. Not only did they pay off those loans with their initial year’s gross of less than $1 million, they managed a small but tidy profit of $10,000. “It was poverty for a couple of years, but it’s worked out quite well for us,” Guntner Jr. said.

From a shop that consisted only of father and son in 1993, it has grown to employing 30 people at its headquarters in Montreal, with sales and maintenance agents at strategic locations around the world.

Customers include the Polish Air Force, for which ETI maintains the engines from its flight-training program. In the U.K., ETI employees work with Eastern Atlantic Aviation, which sells helicopters all over the world. They also work with the Thai government, Airbus helicopters and foreign governments’ Alpha Jet programs.

“Customers are commercial and government agencies all over the world,” Guntner said. “We don’t manufacture the engines, we do the MRO, which essentially keeps them serviceable for the life of these engines,” he said. Manufacturers they promote, service and support are Rolls-Royce, SNECMA, Honeywell and Turbomeca.

MRO is a sustainable business because an engine has a considerable lifespan. Guntner said there are some Rolls-Royce engines still in operation from the 1960s and added that they don’t technically have an expiration date. Rather, they operate in TBO (time-between-overhaul) segments, typically 3,500 hours of flying. But that lifespan can be refreshed by ETI for another 3,500 hours, and on it goes.

It can be an exciting business because, with tight budgets and few spare aircraft, customers often require ETI to show up quickly and perform some form of field maintenance activity to get the aircraft back in the air. If an engine needs a more comprehensive repair, it can then be sent to Montreal, where more extensive inspection equipment and test cells are located.

“We do what it takes to keep the customers flying, therefore allowing them to generate revenue. If the aircraft is on the ground … they can potentially struggle with cash flow resources and we are very conscious of this,” Guntner said.

To help with its own cash flow, the company has often called on the services of Export Development Canada.

“They helped us with the Polish contract in 2015, for example,” Guntner said. “At that time, they guaranteed the contract, which allowed us to borrow the cash flow required to complete it. They also insure some of our foreign receivables.” This type of help enables the company to pursue opportunities such as the Polish contract, which was worth $1.2 million.

“That contract has resulted in ongoing business,” Guntner said. “We’ve taken that template and used it with several other customers. We couldn’t have done it without EDC — if Essential Turbines Inc. had to support those cash flow requirements, it would have presented us with significant challenges and perhaps the success would not have been there.”

EDC account manager Alexandra Bell said Essential Turbines fits into a niche market for MRO in the aerospace industry.

“They’ve managed to build a good reputation and have a global presence,” Bell said of her client. “Now business opportunities can come from anywhere in the world. Having insurance to help them mitigate risks of non-payment matched with financing for their pre-shipment period really allows Essential Turbines to win additional business.”

Five export questions with Essential Turbines’ vice-president and founder Mike Guntner

1. What was your first export sale?

First export sale was Coastal Helicopters, a helicopter maintenance organization located in Panama City, Florida.

 

2. How did that sale come about?

The principals of Coastal Helicopters already had a relationship with Mike Guntner Sr. through his previous employer. In fact, this relationship has now expanded considerably beyond engine MRO to other strategic businesses that no doubt will positively impact Essential Turbine Inc.’s growth.

 

3. What do you know now that you wish you’d known then?

Now we know how to maintain customers with geographical challenges instead of thinking of them as one-time transactions. We can look at long-term potential and put plans in place for all of the customer’s engine maintenance schedule. We look at the number of aircraft, then equate the revenue potential we can generate, then we can approach the EDC team. We look at all programs available to support this potential, which can include export guaranties, insurance and potential financing with the help of both EDC and our financial institution.

 

4. How has the trading world changed since you started exporting?

Today, we need a larger investment in inventory because speed is “essential”. We used to benefit from lead times for projects, but now there’s very little. Customers today have very restrictive budgets and fewer resources that present significant challenges on our ability to support them. There’s a lot more pressure because they don’t have the financial resources to have any significant spares or aircraft backup. They expect us to be their inventory and if we have it ready when they need it, we win the business. When we get a phone call today, we have to move like lightning.

 

5. What is the No. 1 thing new SMEs should know about exporting?

Be patient and be organized. It isn’t easy and as good as EDC is, there are still challenges that you have to meet. Being a small business sometimes means you’re wearing several hats and the effort you may have to invest with EDC can seem exhaustive. Nobody knows your business better than you. You need to remind yourself that the person you are communicating with cannot learn your business in twenty minutes, and therefore understand all you need to be successful. However, if you hang in, you’ll be rewarded.

And the most important thing we need to do is to listen to the customer. They are telling you how to win the business. Armed with this information, you can now communicate this to your organization, the EDC team and collectively formulate the game plan to move forward and be successful.

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