Your country needs you
Bashir Abdel Hadi, CEO of MRO services provider JorAMCo, explains why blooding new Jordanian recruits will secure the company's future.
How has the company developed during the past 12 months?
2007 was a busy year and there were several ambitious projects ongoing. Mainly, we built new hangars and employed more people. We also started our own academy for training engineers and incorporated a maintenance IT solution to support our business.
The hangars, which became operational last summer, almost double our capacity to five wide-body based facilities that can handle up to 13 aeroplanes of different sizes.
What made you decide to expand the company?
We always had a bottleneck in capacity. I believe in the bicycle theory that we must keep pedalling and unless there is a specific reason to stop, the normal development is growth.
Having achieved a level of growth from a capacity point of view, we are now concentrating on training, a continuous improvement programme that we adopted a couple of years ago, and issues like health and safety.
We will also concentrate on enhancing sustainability management, where we not only look at business development and finances but also our environmental and social performance.
Growth and adding new people to any organisation is always about getting people to fit in and maintain the company culture. It's also about enhancing the culture with newcomers rather than weakening it and that's what 2008 is all about.
Which clients have you secured during the past 12 months?
We have a long-term agreement with a number of low-cost carriers in Europe such as Niki and Central Wings. We have clients in India and Russia and a new customer from Turkey.
Our strength is airframe maintenance and 80% of our business is that. We have component and engineering services to support aircraft in the hangar. Our strategy at this stage of expansion is to concentrate on components that are required to support the company's airframe business.
How important is it to secure business from growing markets like India and China?
We have been working with the Indian market for the last three to four years but recently signed contracts with new airlines. We previously worked for Air India for several years and are now working with other clients as well.
Are there any US carriers also on your radar?
The US is far away. We can serve a radius of five hours for narrow bodies, which covers all of India, Russia, Europe, most of Africa and the Middle East. For the wide bodies it could be further, but a 10 hour radius is reasonable. There are potential clients that we are in discussions with, most of which are from Europe and we expect to announce something soon.
How do you deal with competition in this region?
Competition is worldwide. There is big competition because aeroplanes are meant to fly and they have the freedom to go anywhere. There is competition in this region, but maybe not too much. In Europe it's not great because of the price difference. The prices in Europe can be prohibitive in airframe maintenance.
There is some competition from the Far East in places like Singapore, but in general our position is quite strong because of the value proposition.
The cost structure in Jordan is reasonable and the wages, although we are increasing them to keep the qualified people at the company, are reasonable compared to other places. We rely on local expertise while others in the region turn to expatriates, which is more expensive.
What are you doing to overcome the shortage in skilled MRO workers?
The major bottleneck in aviation right now is finding qualified people. It takes time to train individuals and fresh graduates will require four to six years to become certified engineers. This is why we started our own training academy where we take people from high school and provide them with a comprehensive four year programme approved by the UK Civil Aviation Authority.
Within four years they graduate with EASA 66 at B1 or B2 and this is a fast track to qualification. We have two courses going on right now, but it will take three to four years before the first batch is ready.
In the long run, this is the solution because education in Jordan is an important thing and all youngsters are looking for good opportunities and career paths. This is what we offer. When we are talking about competition, it relates more to people where companies pinch qualified staff from each other.
So poaching staff is an ongoing problem for you?
Traditionally, JorAMCo was a source for many companies in the region. It was frustrating but at the same time it permitted us to develop more people. Now we are expanding we feel it more, which is why we redesigned our pay structure for certified staff and started the academy.
It was set up last summer for around US$1.5 million but not as a business enterprise. It's purely a strategic requirement and we invested quite a lot. The objective is not to make money - this will come by default in the coming years - it's to provide people.
What training do students receive?
Any student has to go through an IQ test and proper screening selection, which involves English language and basic science. It's a four year course, so we don't want to get the wrong people for our and their sakes. We don't want to waste time on somebody who isn't up to it.
On the first course, we received 100 plus applicants and selected 28 people. Our programme involves taking in 28 people every six months, so 56 each year. They receive the basic training required for the EASA 66 certificate, which has 13 EASA modules towards B1 or B2.
In addition, we provide two more modules for JorAMCo, one being English and the other an induction to the company. It's a sandwich course and they usually require three years, but students will study for six weeks and then receive three or four weeks training.
They will then do practical work for about six months every year and this helps us integrate them gradually into the system. It also provides students with both a practical and theoretical education. The advantage is we have the MRO facility, academy and training at the same organisation. We have flexibility, which other schools might not possess.
Which countries do you receive applicants from?
We have students from outside Jordan, but since our main aim is to get people to work for JorAMCo we encourage locals to apply. We cannot close the door on anybody - we take them by merit and look at the bigger picture to get the best on these courses. By virtue of being in Jordan most of the students are Jordanian. Among them, we have two women involved in the training.
Do you expect more women to join your course, and subsequently the aviation industry, in the future?
This job won't be appealing to women because of the working hours and conditions. Aircraft maintenance specialists need to work around the clock in different departmental conditions and get their hands dirty, which is probably unappealing to women. In six years, we have had a few women join and, one way or another, they elected to move into office work.
How does the Middle East's MRO market compare with other regions?
The MRO industry has always been developed in the Middle East but it was mainly the result of flight carriers and legacy airlines having their own maintenance facilities.
They have all been developed during the past 40-60 years so there is a good base of MRO business from a technical point of view. Many of these companies are looking to separate from the mother company like GAMCO (now ADAT) or JorAMCo. They want to separate from the airline and work independently.
The interesting thing happening relates to DAE in Dubai and ADAT in Abu Dhabi. We have seen in Dubai the scale is always huge, and companies there always set high targets that they achieve. With regard to DAE, it will be a significant operation on a global scale. This presents competition but also more opportunities.
Aviation in the region was on the weaker side, in terms of size and development, but now it's established in the global market. This presents great opportunities, especially with the high price levels that we see in some other areas and regions.
Few airlines are profitable because of high overheads. Is this the same for MRO operators?
The overheads for MROs are high because it's a labour intensive business. It relies on people and their development, with training needed for many years before we see results. The infrastructure is expensive and with development of aircraft systems and equipment ongoing, upgraded tools are always required.
Again, it's the same position as airlines regarding overheads. If competition forces companies to compete and drag each other into a no-profit zone, the margins will become so slim that any small shake will see them losing out.
So far, this hasn't happened but there should be collaboration between MROs, especially regional ones. Competition will always be there but we should work together to help reduce costs and stay in the profit zone.
What impact will increased aircraft orders have on your operation?
It is how we look at the future - we look at the number of aeroplanes being ordered. As long as aeroplanes fly, there will be a need for maintenance. The element of labour and work will continue to be there as aircraft develop.
In the coming years, there will be significant MRO facilities cropping up across the Gulf region, India and China. European MRO companies will concentrate on component support and high-tech work, and maybe pool the logistics of the material requirements.
When did you join JorAMCo and what were you doing before?
I joined JorAMCo at the end of 2000 and before that I was in the team charged with restructuring and privatising Royal Jordanian Airlines. One of the jobs I did before I came to JorAMCo was help separate it from the airline and create an autonomous MRO company, so coming here was an easy move for me.
It's important in any business for the manager to move around. It helps because you see things from different angles and appreciate other people's position.