Vans Files For Chapter 11 Bankruptcy

I feel for the folks with ongoing kits, the company is unlikely to survive this because their debt service will be near credit card rates. If you need components to finish a kit, I would not procrastinate the order.
 
Clip4 said:
I feel for the folks with ongoing kits, the company is unlikely to survive this because their debt service will be near credit card rates. If you need components to finish a kit, I would not procrastinate the order.
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I hope they can work this out, but I agree on getting your parts asap.
 
WDD said:
What hurt them more? Bad laser rivet holes, or the bad primer?
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what really hurt, and nobody is talking about it, is that the price of QB kits has alwas been to low. think of how a QB kit is done. a bunch of standard kits are loaded into a container and sent to the builder. they build them into QB status and load them on containers and ship them back to vans. when covid hit, sales went up over 200 percent. a large percentage of those were QB kits at a set price. for those that don't know it, container costs went up over 400 percent almost overnight and shipping delays went through the roof. containers that cost 8000 became 25000 or more very quickly. couple that with the rise in costs of steel,aluminum, plastics and just about everything else and those kits that were at a fixed price were now at a loss. couple that with the primer problem and LCP the losses mounted quickly.

in reality, vans commitment to value was a big part of their downfall. when the order book hit more than a few months out, they should have raised prices to slow down sales and keep the order book within reason and less prone to inflation eating away at the profits.
 
WDD said:
What hurt them more? Bad laser rivet holes, or the bad primer?
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Rivet holes. Even a hundred bad fuselage or wing QB's would have "only" been a couple of million dollars. The laser stuff could be between $5 and $10 Mil, best I can tell.
 
unsafervguy said:
shipping delays went through the roof. containers that cost 8000 became 25000 or more very quickly.
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Very true. My own company saw shipping containers to/from the pacific skyrocket by hundreds of percent
 
unsafervguy said:
what really hurt, and nobody is talking about it, is that the price of QB kits has alwas been to low.
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Not in the curated spaces sure, but it's talked about plenty in the spaces where you can disagree with the politburo without getting cancelled. And yes, I agree with your assessment of the boat anchor economics of many of their offerings.

My bet would be that Mr. Via will see the issue of the QB economics that we see, and kill the option... along several other obvious low-hanging fruits in said reorganization.
 
Bill said:
Just price QB where it needs to be to make a reasonable profit and let the market decide.
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QB's are a huge part of the business today. They accelerate project pace at a nominal cost. They just have to be properly managed.

Van's has sold thousands of QB kits. Made millions (maybe tens of millions) in profits and absorbed overhead with those sales. To give that up for a couple million dollar "oops" would seem very short sighted. In addition, those thousands of QB kits brought in customers that would have otherwise sat on the sidelines and not bought anything - no engine, no prop, no firewall forward kit, nothing. The QB's are a great thing for Vans business.

Giving up QB's would have been like Ford giving up on small(ish) cars because a few Pintos went up in flames. Or DeLorean... OK, I'll stop.. ;-)
 
Is QB assembly in US still not economically viable, even with shipping costs so high?
 
Ed Haywood said:
Is QB assembly in US still not economically viable, even with shipping costs so high?
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I've been wondering the same for a while now
As a potential customer, I would add a little weight and value to "made in the USA", as well....
I have been daydreaming about building something as a retirement project in just a few years, and it seemed like a no brainer to do quick build but I was disappointed to learn that it was done overseas.

Not my idea, but I read either here or over on Van's Airforce someone making a point that it makes good sense for quickbuild to be just an external option... meaning set it up so the kit is the kit... and if a builder wanted quick build, they could arrange to ship the kits to the 3rd party builder and then a separate arrangement made with that builder at whatever the going rates would be. Seems simple and very logical to me...and I wonder why that wasn't done from the get-go!
 
hindsight2020 said:
Not in the curated spaces sure, but it's talked about plenty in the spaces where you can disagree with the politburo without getting cancelled. And yes, I agree with your assessment of the boat anchor economics of many of their offerings.

My bet would be that Mr. Via will see the issue of the QB economics that we see, and kill the option... along several other obvious low-hanging fruits in said reorganization.
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i dont see killing the option. there are plenty of people with disposable income that rank time well above the money that will by QB kits even at a higher price. the question is, what price is really needed to make it profitable?
 
Ed Haywood said:
Is QB assembly in US still not economically viable, even with shipping costs so high?
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Let's say US and Philippine assemblers work at the same pace and the experienced ones can assemble a set of RV-10 wings in 300 man-hours. In the PI, you're paying what, 10-20% on the dollar for the labor? In the US, I'd expect labor rates (not loaded with supervision and all the other stuff, just the labor rates) to be >$30/hr including benefits. So even if the premium is "only" $25/hr, that's a $7500 increase. And we know that the supervisor costs more, the building costs more here, etc. So (excluding two way shipping), Vans is spending >$10K more on both the wing and fuselage kit. Once Vans applies a margin to that, each QB sub-kit is $15K more expensive.

So now we've gone from an airframe kit of ~$50K for a slow build kit, to a $65K Philippines built QB to a $95K US made quickbuild. How does that play in the market? I dunno.
 
My guess is the quickbuilds from Vans are history. There are plenty of guys that will build it to QB stage here so why take the risk? Focus on putting the kits out quickly and getting people the parts they need to finish what they have. Sell the rights and development staff for the 15 to a group of investors or another company. That would streamline operations and help save the company.
 
Clip4 said:
I feel for the folks with ongoing kits, the company is unlikely to survive this because their debt service will be near credit card rates. If you need components to finish a kit, I would not procrastinate the order.
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Their founder is providing the credit line. I doubt he'll be that usurious.

Paul
 
rockwoodrv9a said:
Sell the rights and development staff for the 15 to a group of investors or another company. That would streamline operations and help save the company.
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I think they will pause the -15, but also think the market demand is there. It is probably a good way to get guys like me who've already built one RV-whatever to build another airplane using technology and tools we already have. So basically, it starts off as a type that is primarily ordered by repeat offenders. Later, as newbie confidence increases, you'll see more orders from them too. Probably a good product to release at Oshkosh next summer if they can.
 
Someone at VAF posted that kit orders are back online with new pricing. Changes from before include no additions or deletions to kit orders and no RV-3 kits as yet.
 
iamtheari said:
Someone at VAF posted that kit orders are back online with new pricing. Changes from before include no additions or deletions to kit orders...
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With a ~32% price increase announced on kits and most parts. I was wondering about the 'custom packaging' aspect when they started asking for builder numbers when ordering certain parts. I think that's a smart move to speed shipment processing and inventory management. I may, however, be in the minority. :)

iamtheari said:
...no RV-3 kits as yet.
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At the risk of repeating myself across threads, at least my RV-3 and RV-4 plans have sufficient details to enable building from scratch. What used to be "if desired" may become "if required."

Nauga,
tinbashing
 
How many of the people here certain that Vans won't survive this have seen the balance sheet?
 
The product line will survive one way or another. RV’s products are too large of a GA market to let them fade into the past. Even if the current ownership collapses I’m certain there will be plenty of investors waiting in the shadows. Owners on VAF were even discussing taking donations! :rolleyes: I don’t know the details of the Chapter 11 agreement but even if their orders are a fraction of what they were they should be able to return to profitability.
 
Lindberg said:
How many of the people here certain that Vans won't survive this have seen the balance sheet?
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I‘m not certain of anything, but I’m glad i no longer own a kit, And I will not be ordering from them any time soon. And yes, I had still planned on building a vans one day.
 
Grum.Man said:
The product line will survive one way or another. RV’s products are too large of a GA market to let them fade into the past. Even if the current ownership collapses I’m certain there will be plenty of investors waiting in the shadows. Owners on VAF were even discussing taking donations! :rolleyes: I don’t know the details of the Chapter 11 agreement but even if their orders are a fraction of what they were they should be able to return to profitability.
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The product thrived at the current price point. Between the loss of reputation and the increase in kit costs Vans may survive in some capacity but will likely never be as big as they once were. Think about all the orders they are losing out on right now because of the situation they put themselves in. Those orders were the future of the company. At some point they will enter a downward spiral due far fewer new orders coming in. The question is if they will be able to scale back and downsize quick enough to catch the downward spiral before it gets completely out of control and they are no longer able to recover.
 
WDD said:
What hurt them more? Bad laser rivet holes, or the bad primer?
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The lack of QA and basic incoming inspection on the work they were getting from suppliers.

I get that it's an Experimental aircraft, and you're never going to have the traceability and QA of certified parts. But it sure seems like Van's wasn't taking any look at all at what they were getting from their suppliers until it was way too late.

The laser cut parts especially. It seems like it was only highlighted as an issue once the customers started opening up their kits and finding issues. That's stuff that Van's should have caught.
 
kmacht said:
The product thrived at the current price point. Between the loss of reputation and the increase in kit costs Vans may survive in some capacity but will likely never be as big as they once were. Think about all the orders they are losing out on right now because of the situation they put themselves in. Those orders were the future of the company. At some point they will enter a downward spiral due far fewer new orders coming in. The question is if they will be able to scale back and downsize quick enough to catch the downward spiral before it gets completely out of control and they are no longer able to recover.
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I think what will hurt them more than the price increase is the new deposit terms. For example the new price on a full rv14 kit is $61,500 with a $21,500 deposit. I cant fathom paying that much and still having to wait 1-2 years to get it. Maybe that lead time will decrease to 4-6 months eventually but even people who put 5k down for their kit are seeing the ramification of spending money so far ahead of taking delivery.
 
Grum.Man said:
I think what will hurt them more than the price increase is the new deposit terms. For example the new price on a full rv14 kit is $61,500 with a $21,500 deposit. I cant fathom paying that much and still having to wait 1-2 years to get it. Maybe that lead time will decrease to 4-6 months eventually but even people who put 5k down for their kit are seeing the ramification of spending money so far ahead of taking delivery.
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*shrugs* Let 'em.
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Clip4 said:
If the founder is the credit it line, there is no reason to declare Chapter 11.
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Not true at all. The founder is retired and likely wants some protection for the money he is fronting the business. Chapter 11 puts him at the top of the creditor list if things go sideways. Second, chapter 11 allows them to break all the existing contracts they have with the builders as well as their vendors. If they had a way to recover financially without breaking those contracts and being sued for breech of contract they would have done so already.
 
kmacht said:
Not true at all. The founder is retired and likely wants some protection for the money he is fronting the business. Chapter 11 puts him at the top of the creditor list if things go sideways. Second, chapter 11 allows them to break all the existing contracts they have with the builders as well as their vendors. If they had a way to recover financially without breaking those contracts and being sued for breech of contract they would have done so already.
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Breaking contracts = screwing over their current creditors and suppliers, and maybe some of the customers. Anyone who would knowing start a kit from a chapter 11 company is nuts.
 
Clip4 said:
Breaking contracts = screwing over their current creditors and suppliers, and maybe some of the customers. Anyone who would knowing start a kit from a chapter 11 company is nuts.
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Arguably, anyone who would build an airplane from a kit is nuts. It's a matter of degree, not kind. There are so many marginally insane decisions you have to make between your first inkling of building a kit plane and your first flight that the kit supplier's bankruptcy court record seems like a whisper on a scream.
 
Clip4 said:
Breaking contracts = screwing over their current creditors and suppliers, and maybe some of the customers.
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If I were a builder I'd far prefer they restructure the contracts (break them and set new prices), than just file for liquidation and disappear entirely. Neither is a good outcome and both show the company sucks at managing their business, but a "we're gone forever" is a lot worse than reorg.
 
ArrowFlyer86 said:
If I were a builder I'd far prefer they restructure the contracts (break them and set new prices), than just file for liquidation and disappear entirely. Neither is a good outcome and both show the company sucks at managing their business, but a "we're gone forever" is a lot worse than reorg.
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Bankruptcy is in the Constitution. It's part of the deal when you enter into contracts/credit arrangements in this country.
 
ArrowFlyer86 said:
If I were a builder I'd far prefer they restructure the contracts (break them and set new prices), than just file for liquidation and disappear entirely. Neither is a good outcome and both show the company sucks at managing their business, but a "we're gone forever" is a lot worse than reorg.
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The risk is that those contracts get restructured, builders pay a bunch more money to stay in the line for a kit and then the company still goes under or is bought out and those new contracts are now worthless. I'm not building an RV but I wouldn't give the company any more money until my kit is complete and ready to ship. The scenario Van's is going through is one of the.major reasons I built a sonex. The A model plans included every detail needed to build every part. If the company went under I could still finish my build.
 
Clip4 said:
Breaking contracts = screwing over their current creditors and suppliers, and maybe some of the customers. Anyone who would knowing start a kit from a chapter 11 company is nuts.
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That's why managing the money is so important in business... for the creditors and the debtors. The most vulnerable are those who had faith that Van's was a well run company and had enough faith to commit their money to the deposits. In a truly just situation, they would be at the top of the list to recoup money ahead of the other creditors, unfortunately they will probably be last. The investors knew, or should have known what they were getting themselves into. The vendors, when the orders starting stacking up, should have set a limit to how much credit they were willing to grant.

I still don't understand why Van's used the engine deposits in its operations, those should have gone to the engine companies or to an escrow.
 
Lindberg said:
Bankruptcy is in the Constitution. It's part of the deal when you enter into contracts/credit arrangements in this country.
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True.

Though I think nearly all agreements made in good faith, with the exception of niche groups like distressed debt investors, enter into contractual agreements with the understanding that the company they're doing business with is not going to declare bankruptcy and toss their agreement in the garbage and write a new one.
 
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