Regenerating a regional industrial specialisation: launch of the
VUT-100 aircraft
Střední Morava, Czech Republic
SYNTHESIS
European Regional Development Fund (ERDF) support to the Czech firm EvektorAerotechnik has enabled the launch of an assembly line for the production of a new plane
series under the brand name VUT-100. The prototype of the plane was previously
developed by Evektor a.s, the twin company of Evektor-Aerotechnik, in co-operation with
Czech research institutes and with the support of the programme IMPULS managed by the
Czech Ministry of Trade and Industry. However, this national programme supports only
research and development (R&D) activities and thus additional funds were needed to
finance the commercialisation phase. In 2004, the launch of the ERDF Programme for
Industry and Enterprise filled a gap in national and regional policies for this type of
industrial development project.
The project will contribute directly to boosting the regional economy, through the creation
of approximately 45 new (mainly highly qualified) jobs. Moreover, it should also have
indirect impact on other companies, notably suppliers in the regional and national
aeronautics sectors, as the new plane's production creates demand for necessary
components. In particular, the project will contribute to a revitalisation of the long-standing
competences in the aeronautics sector in the Zlín region (where the company is located)
which suffered from the collapse of the former Soviet market where the airplane
production was mostly exported.
The project enabled the sourcing of the main technologies, equipment and machinery for
the assembly line of the aircraft and by June 2007 assembly of the first aircraft was
expected to start. The initial plan is for the company to assemble 20 planes per year. In the
future, a target production of 100 planes per year has been set, however, commercial
partners with deeper pockets will have to be found since full-scale aircraft production
demands considerable financial resources.
A dedicated project manager within the company oversaw the implementation of the
project, including monitoring and evaluation of progress. The launch of the production of a
new plane required intensive preparation and close co-operation between the production
and R&D departments due to necessary adjustments to the existing prototype arising from
market research.
The main innovative result of the project is the plane itself and the launch of its production;
it can be considered as an excellent technological product innovation in a highly
prestigious industry. Although funding is allocated to a sole beneficiary, EvektorAerotechnik, the project is an example of how mobilising specific regional knowledge and
skills, in the case of the Zlín region a long tradition in the aircraft industry, can generate
spill-overs which helps more peripheral regions to enhance their competitiveness.
One of the most important key success factors was a strong initial research-industry
partnership, which led to results that could be successfully used in the commercial sphere.
This has helped to boost the innovativeness and competitiveness of the beneficiary
enterprise as well as indirectly of the region. This partnership, which evolved through
previous co-operation in the development of the aircraft, is still used and maintained and
helps in the commercialisation of the plane.
Another success factor was the choice of the project management team, integrated within
the company structure, including people with long-standing experience in the field of
expertise of the project as well as with experience in project management. This was most
likely the key fact that enabled the design of a realistic project proposal that had a high
probability for success.
Furthermore, the project managers are aware of the fact that the plane production itself
does not ensure its success even though it might be a well-designed product with
established customer demand. In globally competitive markets, a key element is to know
how to sell your product. Therefore, a third success factor is the parallel launch of
marketing activities also supported by the ERDF.
A lesson from the project related to the launch of high-tech products is the need to foresee
collaboration with training institutions (technical and vocational schools) in order to tackle
shortages of specific engineering skills. The company is already cooperating with technical
schools in the region to attract young people to technical careers and with other companies
in the aircraft industry to achieve a greater critical mass of effort towards training.
Background information
Country: Czech Republic
Region: Střední Morava
Project title: Launch of the assembly-line production of the VUT-100 aircraft
Key words:
transfer of technology, technological and market innovation
Duration of project: March 2005 – June 2008
Funding:
total budget
ERDF contribution
national budget
Private contribution
ERDF Objective:
Objective 1
€617,703
€213,093
€71,030
€333,580
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1. PROJECT DESCRIPTION
The project aims to create the technological, product assembly line and commercial basis
for the launch of a brand new aircraft, the VUT-100 (COBRA) and its variants, on world
markets. The final target production is 100 planes per year, however due to limited funds
available to the project and also due to the short time period (about two years), the target
was the production of 20 planes per year by the end of the project. Although a sole
beneficiary Evektor-Aerotechnik implements the current project, it should help to revitalise
the previously strong aerospace industry in the Zlín region. It will also develop new hightech manufacturing and thus enhance the competitiveness of the region. Indeed, the
indirect beneficiaries will include suppliers of parts and equipment needed for the new
plane production, many of which are located locally.
The VUT-100 COBRA was developed through a partnership between businesses,
universities and research institutes under a previous project sponsored by the Czech
Ministry of Trade and Industry. The development phase of the project was conducted by
Evektor a.s., the twin company of the manufacturing company Evektor-Aerotechnik, in cooperation with the Brno Technical University and the Aircraft Research and Test Institute
in Prague. In fact, for all the beneficiaries, it proved to be difficult to separate the current
ERDF project from the whole innovation cycle. For the participants, this project started
with the development of concept and construction of the prototype plane and will end
when successful production using the full plant capacity will be launched. Therefore, the
ERDF funded innovation project represents just one phase. Consequently, after the
completion of this ERDF project, the cycle of aircraft development and production will
proceed to its final stage, namely the assembly of about 100 planes per year enabling the
company to gain roughly a 10% share in the world market for this type of aircraft.
The main activities of the project include the purchase of the necessary technology,
machinery and equipment, to allow the construction of the assembly line on which the new
planes will be produced. The equipment needed was purchased through tenders pursuant to
the regulations of the programme. To operate the new assembly line, additional staff has to
be recruited. Hence, the project contributes to the creation of new highly qualified jobs.
The targets set in the ERDF project application were the following:
-
production of one new product – the VUT-100/COBRA aircraft as the key result of the
project;
continued co-operation with partners from a previous project aiming at development of
this plane, such as the university and/or research and development organisations ;
technology transfer will be used for the implementation and intellectual property
protection will be ensured through patent application and/or utility (industrial) model;
to create 45 new jobs within the implementation process.
By mid 2007, the production line had already been equipped and the first four planes for
customers are being assembled (and were expected be finished by the end of 2007).
Moreover, a new prototype developed by the twin company, Evektor, is being assembled
through the same line. It is expected that the production target of 20 planes per year will be
met by the end of the project. The end result of the project will include production of
aircraft series VUT 100-120i and VUT 100-131i, differentiated by the power of their
engines. Moreover, as planned, the project has led to the recruitment of the new staff
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needed for producting the plane (by the end of the project, 45 new jobs should be created
sustainably).
According to the company managers, EU support has sped up the whole process and
provided more certainty in an economic sense for the manufacturer, as well as allowing
more time to find needed strategic partners in order to reach the maximum capacity of
planned production in the future (100-150 planes per year). Moreover, the ERDF support
filled a gap in national support schemes, since the IMPULS programme previously used by
the beneficiary for development of the plane is aimed only at industrial research and
development activities and does not support the commercialisation phase.
2. POLITICAL AND STRATEGIC CONTEXTS
The Zlín Region, despite its important industrial and entrepreneurial tradition (Zlín is home
to Bata, the internationally known shoe manufacturer), is now one of the under performing
Czech regions clearly disadvantaged by its geographic position and by poor transportation
links. Nevertheless, the region has a long tradition of airplane production, which was
mostly exported to the former Soviet Union. After the collapse of this market, major Czech
producers (e.g. Let, Moravan) in the region closed down and the qualified workforce either
became jobless or found jobs where they could only partially make use of their
qualification and skills.
The twin companies Evektor and Evektor-Aerotechnik (Evektor – is responsible for
development of the aircraft while Evektor-Aerotechnik is charged with aircraft production
and as such is beneficiary of the ERDF project) were set up in order to develop and
produce ultra-light planes and to launch production of new larger and more
environmentally-friendly planes like VUT 100 (COBRA). They build on the region’s
tradition and make use of a locally available highly qualified work force.
Research and development on the concept of the VUT 100 plane began at the end of the
1990s at the Technical University in Brno thanks to the enthusiasm of several academics.
However, it is important to stress that the professor who led the team had 30 years working
experience in industry. This is unusual in the context of the Czech Republic and proved to
be one of key factors enabling such fruitful cooperation and leading to a prototype of the
VUT 100 (COBRA) aircraft. The Evektor Company, as a partner for this project, was
chosen principally due to personal knowledge, yet at the same time, the Evektor- was also
the only company capable of taking part in such challenging project due to previously
mentioned economic problems of other aircraft industry companies. The original
development of the VUT 100 was financed through the national programme, IMPULS.
Evektor-Aerotechnik followed up this development phase (the prototype of the plane was
finished in 2004) and applied to the ERDF Operational Programme for Industry and
Enterprise (OPIE) to support the commercialisation of the aircraft prototype. One of the
aims of this programme is to enable commercialisation of R&D results in the form of new
products, technologies and/or services with higher technical and utility value. The potential
beneficiaries of this programme are private companies actively developing highly
innovative products and/or solutions through the implementation of R&D results.
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Both the regional and national authorities have expressed their support for the aircraft
development and commercialisation. Indeed, senior politicians publicly supported the
initiative as illustrated by the participation, at the invitation of regional authorities, of the
Czech Republic’s president in a ceremony connected with the first flight of the VUT 100
(COBRA) prototype. This underlines that that regional authorities are not only supportive
of the tradition of aircraft industry in the region of Zlín but are especially proud of recent
achievements and aware that such support is an important element in the marketing of the
new product.
Moreover, an important characteristic of the support schemes in the Czech Republic is that
they are designed individually by various ministries and are often poorly coordinated.
Thus, there are several programmes which focus on the research and development phase of
the whole innovation cycle but until recently there have not been adequate programmes
supporting the subsequent phases needed for the successful commercialisation of R&D
results. This however, should be the key part of support schemes as only when R&D
results are implemented is the innovation cycle complete. In the case of this project, the
ERDF support has filled this gap in the innovation support system.
3. IMPLEMENTATION
3.1. Project design and planning
The idea to apply for public support via the ERDF project came from the EvektorAerotechnik company. The company (and its twin company Evektor) had already taken
part in several state support programmes through which they had created many personal
contacts to various State institutions and developed a very good knowledge of funding
possibilities. Indeed, it could be said that the ERDF programme came just in time to
support the commercialisation of the plane prototype, which was completed in 2004.
The project was selected for the ERDF support based on a number of criteria, most
importantly the perfect fit of the project application with the programme aims and
objectives. Firstly, the support requested for the commercialisation of the prototype was a
result of a broad partnership with university and other research organisations (strong
industry-research/university links). Secondly, the aircraft industry itself was considered as
a prestigious industrial branch producing high-tech products with high value added. The
project evaluators also appreciated that the project would help to restore the long tradition
of the regional aircraft industry. Moreover, a positive element in the project application
was the clearly definited project team and its past experience; allied to a high quality
feasibility study.
The application itself was designed in co-operation with CzechInvest, the Managing
Authority for the ERDF Operational Programme. This was important as the business sector
found the procedures of the programme rather cumbersome with the result that even a very
good project could be rejected due to formal shortcomings.
The main risks considered in the ERDF project were of an economic character, as aircraft
production is financially highly demanding. This type of risk was reduced by regular
financial and marketing analysis and also by advance sales of the aircraft. Moreover, the
company also applied for a project in another ERDF sub-programme supporting marketing
activities, to support a successful aircraft sales campaign. Indeed, on the basis of market
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research, the aircraft has been modified several times, for example, in order to provide
more space in the aircraft cabin for pilot and passengers. Such changes induced by
marketing analyses should help to enhance the future sales of the aircraft but were a
challenge testing the technical flexibility of both the aircraft but also of the company itself.
3.2. Management, monitoring and evaluation system
The management, monitoring and evaluation systems are based in the company’s internal
structures. The original ERDF project manager was chosen based on his broad project
management experience in the aircraft industry accumulated over many years. The
management structure was slightly adapted after approximately one year as the original
project manager was appointed to the position of director of the entire company. A new
project manager was chosen from within the company.
There is not a specific project team just for the ERDF funded project, rather the company
employees are responsible for the project activities according to their specialisation in the
company management system itself and hence each person is responsible for various
projects at the same time (the ERDF funded project and other company projects).
The project monitoring is done through regular “production meetings” of the management
team (they take place according to project’s needs, at least once a week, and there are
usually 3-10 members of the project team participating). Each project team member offers
information about the project’s progress. The project manager is a member of top
management of the company to whom he reports once a week about the project’s progress
and also coordinates with all other projects and activities. This enables close co-operation
with the rest of the company and their specialists (e.g. in case of adaptations needed,
technology supplier selection etc.) that, up until now, has contributed to smooth progress in
the project delivery.
Project evaluation is also fully embedded within the company’s existing structures and is
part of its standard regular analyses and evaluations – they are done continuously via
customary meetings of the project team and higher company management as the project
progresses. Moreover, regular reports are elaborated according to the programme
requirements, this notably concerns data on monitoring indicators.
The targets of the project are clearly quantified, as this is obligatory for the programme
application. They include the number of new innovative products (i.e. the plane), the
number of new jobs created (45), intellectual property protection use and financial data
such as company value added, annual turnover and work productivity.
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3.3. Governance: partnership and leadership
Although Evektor and Evektor-Aerotechnik cooperated in the aircraft development phase
with other partners, in this project Evektor-Aerotechnik is the only direct beneficiary as the
commercialisation phase is mainly a manufacturing concern. Accordingly, no new
partnerships were developed during the project. However, the previous, in the Czech
Republic still quite unique, university-industry partnership is maintained as EvektorAerotechnik still uses services of academic partners on an ad hoc basis (e.g. the services of
Brno Technical University needed to finish the certification of the plane). Indeed, the
successful completion of the previous collaboration led the partners to co-operate on other
projects.
Indirectly, the project may stimulate new partnerships in the field of training, as the
assembly-line production of the new aircraft will increase demand for highly qualified
workforce in the region. The company has already identified a skills deficit in the regional
labour market and thus has decided to co-operate more closely with local vocational
training schools. Moreover, the company actively attempts to attract more pupils to
engineering schools through participation in awareness raising activities, for example, it
takes part in activities at elementary schools aimed at parents and their children as potential
future students of engineering schools (e.g. open day for prospective students). Finally, the
company also offers practice/field experience for students and is also considering offering
scholarships to individual students.
3.4. Innovative elements and novel approaches to implementation
The innovation project co-funded by the ERDF is a relatively small project with only one
partner-beneficiary so there are no specific new approaches used in the design or
management of this project. The more traditional nature of the project is largely
determined by the eligibility conditions of the programme, which supports implementation
of business plans in the field of commercialisation of R&D results, but the beneficiaries
should be only a single private company.
However, an element that is partially innovative is the approach to product
commercialisation. As aircraft production is extremely financially demanding, the
company is selling planes in advance so that it can guarantee a potential market. This
might have also helped in the ERDF project selection process since the company was able
to prove that there was a significant demand for their product and that, not discounting
economic risks, the product launched was sustainable. Moreover, they have adopted a
specific sales method whereby the planes are sold directly by sales representatives of
Evektor rather than through local dealers.
3.5. Key implementation obstacles and problem-solving practices
Due to the high quality project application and the past experience of the company
management (who, for instance, had succeeded in another project aimed at saving a line of
plane production that had gone almost bankrupt), there was no significant divergence from
the original project plan.
However, at the beginning, during the preparation of the ERDF project and before its
acceptance by the programme authorities, several intellectual property issues had to be
resolved. First, the project’s beneficiary is the Evektor-Aerotechnik company that,
however, did not own the rights to the prototype, held by Evektor. Although the two
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companies are interconnected, this transfer of property rights had to be resolved through a
special contract.
Other obstacles and challenges to the production of the plane are of a more continuous
nature and these are mostly due to legislative changes in relevant directives and regulations
that have to be observed and also by changes in customers´ preferences and wishes. A
detailed marketing study for example showed that the plane had to be adapted to the North
American market in order to guarantee better comfort for pilot and passengers. This was
handled as being part and parcel of the regular business for a new product development.
A major constraint for future production is a growing demand for highly qualified workers
who are in short supply, not only in the region but also in the country. As the aircraft
industry lost production capacity and almost collapsed due to radically changed political
and economic conditions connected with the transition to a market economy, the aircraft
industry lost attractiveness as a place of employment. This, together with other factors, led
to a sharp decline in students´ interest in technical fields related to aircraft industry.
However, currently, the aircraft industry is again growing and consequently demand for
skilled workers. In order to cope with a shortage of skills and workers the company started
to co-operate with technical schools in order to attract more pupils to study such subjects.
Managers from the company participate in schools’ open days to promote this industry to
children and their parents; they offer practice for students; and are currently considering
scholarship support of selected students in order to attract perspective future “employees”.
Other obstacles are related to the rules of the programme. First, the ERDF programme
rules did not allow co-financing of new premises for production but only new technology
purchase and property protection (patents, utility models). However, in general, a new
production line usually requires new or extended premises. As they are not co-financed by
the programme, it increases financial pressure on the private, often smaller, companies.
Although such premises might be eligible for co-financing by, for example, the regional
administration through its own programmes, this is rarely the case in the Czech Republic
as financial resources of the regional governments are predominately focused on tackling
infrastructure deficits.
Second, the programme requires specific tenders for the purchase of technology that have
to include at least three equal offers (i.e. offers of comparable technologies and/or
equipment). However, the aircraft industry is relatively specialised and in there are not
always three suppliers for some types of equipment. In such a case, the beneficiary had to
consult with the Managing Authority, Czechinvest, which, after a detailed examination of
the case, approved non-standard conditions for certain tenders.
4. INNOVATION RESULTS
The key innovative result of the project is the launch of the assembly line production of the
new plane VUT 100 (COBRA) which represents a research and development based
technological innovation. Hence, the ERDF project provided direct support for the
completion of the innovation cycle in a private company in the form of a direct grant for
the purchase of necessary technologies and machinery.
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The plane itself can be considered an excellent innovation in a very prestigious industry. It
was designed and optimised with respect to the best possible aerodynamic characteristics
and also reaching the lowest possible operating costs for the customers (e.g. maintenance
and inspection costs).
5. SUSTAINABILITY AND TRANSFERABILITY
5.1. Sustainability
In mid 2007, the project was still at a mid-point, as it was only due for completion in June
2008. Hence, it would be premature to assess its sustainability. However, EvektorAerotechnik foresees the introduction of an assembly-line production of approximately
100-150 planes per year in the near future. A detailed market analysis as well as advance
sales have helped to prove the existence of a market and customers for the aircraft.
In this respect, an important aspect of sustainability is the fact that the ERDF project
functioned to bridge the gap in existing national business support programmes, namely an
absence of support schemes for commercialisation of newly developed high-tech products.
In other words, this project helped to shift the innovation cycle into its final stage, to
assembly line production with a strong potential to become economically viable.
5.2. Transferability
As aircraft production and development of a new plane is a rather unique or very specific
activity, it is hard to talk about broad transferability of the innovative results (since, the
innovative result is the plane itself) to other regions.
What might be transferable into different contexts are implementation practices, not just of
the innovation project funded by the ERDF, but rather of the whole plane development
process. It was characterised by intensive industry-university links during the development
of this new aircraft. In this particular case, such links were fostered by the specific
professional career of one of the academics. He previously worked for the aircraft industry
where he gained a 'production culture'. Later, when he moved to the Technical University,
he introduced this experience there and encouraged his colleagues to cooperate with
industry and demanded directly applicable results from their projects (prototypes, patents
or other forms of concrete results and not just publications).
Thus, this project is an example of the necessity of bridging the gap between the different
cultures within academia and industry in order to generate the needed results and
innovations. While the way this gap was bridged in this particular project is highly
specific, measures supporting mobility between industry and academia might help to
promote similar outcomes in other regions.
A positive element of the project implementation proved to be the fact that the ERDF
project was fully integrated within the existing internal structure of the EvektorAerotechnik and Evektor companies. This enabled relatively easy management of the
project. This is important since during the construction of an assembly line for planes very
intensive communication between different firms and departments is needed. The ERDF
funded project is just one of several which are proceeding in parallel within the EvektorAerotechnik and Evektor companies. By application of this model of management, the
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ERDF project fits very well within the internal structure of the firm, making it transparent
and easy to understand for all involved.
As the project is concerned with a direct innovation, the results are hardly transferable into
other regions or contexts; they are unique (based on regional tradition of aircraft
production). However, in a more general vein, this experience of the revitalisation of
formerly strong industries can, at least in some cases, offer significant inspiration;
particularly where the project concept is based on the understanding that all key regional
actors having specific know-how. Such projects also gain political support rather easily.
6. CONCLUSIONS: MAIN SUCCESS FACTORS
At the time of writing the case study in mid-2007, the project was still far from completion
so the conclusions drawn should be considered as tentative. As already mentioned, one of
the most important key success factors was a strong initial research-industry
partnership, which led to results that could be successfully used in the commercial sphere.
This has helped to boost the innovativeness and competitiveness of the beneficiary
enterprise as well as indirectly of the region. This partnership, which evolved through
previous co-operation in the development of the aircraft, is still used and maintained and
helps in the commercialisation of the plane.
A number of factors contributed to the selection of the project for ERDF support. Firstly,
the project was well rooted in the industrial traditions of the Zlín region, specifically
the previously prestigious aircraft industry. Secondly, the selection committee considered
the project application as being of very good quality, mainly due to the fact that it was
evidence based and already documented by previous projects. The beneficiary had a
proven track-record of co-operation with various partners in the R&D phase as well as
being able to prove the existence of a market for their product so that the sustainability and
follow-up of the project was ensured.
Another success factor was the choice of the project management team, integrated
within the company structure, as there are people with long-standing experience in the
particular field of the project as well as with experience in project management. This was
most likely the key fact that enabled the design of a realistic project proposal that had a
high probability for success.
Furthermore, the project managers are aware of the fact that the plane production itself
does not ensure its success even though it might be a well-designed product with
established customer demand. In globally competitive markets, a key element is to know
how to sell your product. Therefore, a third success factor is the parallel launch of
marketing activities also supported by the ERDF.
A lesson from the project related to the launch of new technologically advanced products is
the need to foresee collaboration with training institutions (technical and vocational
schools) in order to tackle shortages of specific engineering skills. The company is already
cooperating with some technical schools in the region to attract young people to technical
careers and is also cooperating with other companies in aircraft industries to achieve a
greater critical mass of effort towards training.
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PROJECT CONTACT DETAILS
Contact person
Name:
Position:
Organisation:
Miroslav Martinek
Project director
Evektor-Aerotechnik s.r.o.
Address:
Letecká p. 1384
686 04 Kunovice
Czech Republic
Telephone:
Fax:
+420 572 537 328
+420 572 537 900
Email:
Project’s website:
mmartinek@evektor.cz
www.evektor.cz
The information contained in this case study is up to date as of: October 2007
This case study has been prepared by Jiří Blažek and Pavla Žížalová in the framework of a study carried out
by Technopolis Group on behalf of the European Commission. The contents and views expressed in this case
study are those of the author(s) and do not necessarily reflect the opinions or policies of the European
Commission.
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