Charles R. Goulding and Preeti Sulibhavi discusses HEICO’s record-breaking sales, strategic Wencor acquisition, and innovative advancements in PMA spare parts and 3D printing within the aviation industry.
HEICO Corporation has firmly established itself as a global leader in the niche market for Federal Aviation Administration (FAA) approved alternative spare parts. In 2023, the company reported record net sales of US$3.3 billion, representing a 16% increase over the previous year. HEICO now employs over 7,000 team members across its operating units. A core driver of HEICO’s growth has been its niche business focused on FAA-approved spare parts through the Parts Manufacturing Authority (PMA) program.
HEICO announced that it has completed its previously announced acquisition of Wencor Group (“Wencor”) from affiliates of Warburg Pincus LLC and Wencor’s management for US$1.9 billion in cash and US$150 million in HEICO class A common stock.
Both HEICO and Wencor have excellent 3D printing opportunities as a result of this acquisition.
Understanding OEM, PMA, and TSO Aviation Spare Parts
The aviation industry is heavily reliant on spare parts availability to ensure continuous, safe, and efficient aircraft operation. Three main spare parts categories exist – Original Equipment Manufacturer (OEM), PMA, and Technical Standard Order (TSO). OEM parts are made by the original aircraft manufacturer or approved suppliers, designed and tested to their specifications. Considered the “gold standard” for guaranteed quality and reliability, they must comply with stringent regulations. However, the strict specifications also make them relatively costly.
PMA parts are FAA-approved alternatives to OEM, made by manufacturers other than the original. Despite being non-OEM, FAA regulations require PMA parts to meet or exceed the OEM’s quality and safety specifications, verified through substantial testing. Their standards match OEM parts while usually offered at significantly lower pricing. PMA enhances market competition and supply chain flexibility.
Finally, TSO parts satisfy a set of published FAA airworthiness standards applied to various aircraft components. TSO merely ensures basic regulatory compliance, without consideration for compatibility or integration with the broader system. Meeting a TSO standard does not automatically permit installation in a certified aircraft, which requires extra verification.
HEICO’s Extensive PMA Parts Portfolio
As a leading PMA parts producer, HEICO manufactures over 30,000 FAA-approved solutions for nearly all airplane and helicopter models. Their PMA parts can provide cost savings ranging from 20% to as high as 70%, without compromising airworthiness or quality. All parts come with full documentation, traceability, and warranty.
Usage of HEICO PMA parts has surged not just among commercial air transport and private operators looking to manage expenses, but even at major airlines. Cost pressures across the post-pandemic aviation industry have shone an even brighter spotlight on HEICO’s value proposition. At the same time, HEICO ensures it uniquely complements, rather than directly competes, with OEMs to uphold the collaborative ecosystem.
Besides avionics, HEICO’s PMA strengths lie in replacement parts, consumables, expendables, and components across airframe, engine, electrical, interiors, and mechanical systems. For example, NASCAR teams rely on HEICO’s PMA brakes which offer the same safety and longevity as OEM brakes on their aircraft fleet, at nearly 50% lower cost. Such solutions allow airlines and even governments with budget air forces to maximize capability and minimize expenses.
Integrating 3D Printing Into PMA, TSO, and OEM Parts Production
Additive manufacturing, also referred to as 3D printing, holds exciting potential to further enhance innovation for spare parts across PMA, TSO, and traditional OEM categories. Although still an emerging application, 3D printing brings extensive design freedom and supply chain agility. HEICO Aerospace is at the forefront of this technology integration.
Due to its effectiveness for complex, low-volume parts production, 3D printing seems almost custom-fit for the PMA industry. Reduced lead times, lower costs, lightweight construction, and part consolidation are some noted benefits. HEICO currently utilizes high-precision 3D printing to manufacture certain approved PMA parts for aircraft engines and landing gears. With continual improvements in printer accuracy, materials, process control software, and regulatory clarity, its adoption will likely accelerate.
While metal 3D printing using laser powders currently dominates aerospace, innovations in polymers and composites are also noteworthy. HEICO sees potential in these materials to further capitalize on 3D printing to enhance its spare parts value offering. Parts related to interior linings, ducting, covers, and cowlings are areas being explored. The Stratasys Fortus line of fused deposition modeling (FDM) printers, relying on strong yet lightweight thermoplastics, shows promise for end-use structural aircraft pieces not exposed to extreme heat.
The Research & Development Tax Credit
The now permanent Research & Development Tax Credit (R&D) Tax Credit is available for companies developing new or improved products, processes and/ or software.
3D printing can help boost a company’s R&D Tax Credits. Wages for technical employees creating, testing and revising 3D printed prototypes can be included as a percentage of eligible time spent for the R&D Tax Credit. Similarly, when used as a method of improving a process, time spent integrating 3D printing hardware and software counts as an eligible activity. Lastly, when used for modeling and preproduction, the costs of filaments consumed during the development process may also be recovered.
Whether it is used for creating and testing prototypes or for final production, 3D printing is a great indicator that R&D Credit eligible activities are taking place. Companies implementing this technology at any point should consider taking advantage of R&D Tax Credits
Conclusion
As 3D printing achieves more mainstream momentum in aerospace, bigger OEM players may also likely re-evaluate certain spare parts inventory decisions. On-demand localized production with 3D printers saves logistics costs and lead time versus off-the-shelf spares warehousing. This could disrupt some aftermarket spare parts demand.
However, HEICO’s customer-focused agility, broad expertise across part categories and materials, and deep regulatory experience position it well to adapt and lead. The coming decade will uncover exciting shifts as 3D printing further penetrates the massive aircraft spare parts industry worth over US$50 billion.
