Fleet Airworthiness Steering Committee

by **9089P** » Sat Apr 10, 2010 3:53 am

Hi Ben,

As I understand it, you are incorrect as to the costs being covered by the ads. I have been told that $4 out of every $5 of our dues dollars (euros) goes to publishing the mag. Not good.

Thanks, Don

by **Kristin Winter** » Sat Apr 10, 2010 5:34 am

According to my numbers guru, even with the advertising, we are pay about 75% of our dues for the magazine. Without the advertising, we would be in the red.

ICS is currently in the publishing business. Even the New York Times has said publically that it is having trouble making money in the publishing business because of the internet.

ICS is at its pinnacle. The problem is, that leaves no where to go but down. Younger members are the future. Younger members want the type support. There are many ways to address that, but ICS is either going to adapt, or it is not. We don't have to change everything, completely, immediately. We do have to put ICS on the path to providing the type support that the fleet needs.

by **Hank Spellman** » Sat Apr 10, 2010 7:03 am

Although I am not treasurer of ICS, I am a member of the finance committee. As such, I regularly see the Society's financial statements. So, rather than speculate (which I know is much more fun than dealing with the facts), let's look at the real numbers.

The following data are preliminary totals for 2009. They are subject to change, but they should be close enough for the present purpose. Also, I have rounded all amounts to thousands which is close enough for this discussion.

Total income was the Society was $304,000, composed of Dues of $151,000, Flyer Advertising of $104,000, and a bunch of Other things not of concern here of $49,000.

Costs of producing the Flyer, not including the other fees paid to Village Press for various management services, totaled $185,000. The breakdown of this total includes Editing of $32,000, Design and Printing of $112,000, Postage of $21,000, Advertising Commissions of $13,000, and Other (miscellaneous) of $6,000. (The detail amounts do not add up to the total amount because of rounding error.)

So, if we divide Dues ($151,000) by Total Flyer Costs ($185,000) we get 0.816. In other words, dues only cover about 80% of the cost of producing the Flyer.

While this is true, it is also very misleading in that it has not considered the advertising revenue of $104,000 brought in by the Flyer.

If one simply subtracts the ad revenue from the production costs, the above calculation becomes $151,000/($185,000-$104,000) = 151/81 = 1.864. In other words, dues cover the net production costs almost 1.9 times. Put another way, 53.6% of the dues go the producing the Flyer (1/1.864=.536). Note that this does not account for the $49,000 of other income the Society received. That amount also contributes to paying the bills of the Society and takes some of the pressure off dues increases. Should that not also be considered? How?

If a change in of the Flyer format were considered, the effect on the production cost is worth consideration. The cost of editing $32,000) would probably remain. The cost of design and printing ($112,000) would change. The design portion would probably remain constant, but the printing would go to zero unless the option were made for those who wanted printed copies to still get them. Unfortunately, I do not have any information as to the breakdown between those two items. It is worth noting that in printing, a large cost is associated with job setup. In other words, the first copy is very expensive. The second and successive copies cost only the paper, ink, and a tiny bit of labor. Half the number of copies costs a lot more than half the price of all the copies.

Of course, none of the above has considered what other changes might occur if publishing of the Flyer ceased or changed to another format. Would the ad revenue drop? Would membership drop? I don't know, and I know of no one who does. But we all have opinions (as well as noses).

You may disagree with this analysis. But please use the basic data above until better information comes along.

Hank
Henry A. Spellman

by **David Lawrence - N8378P** » Sat Apr 10, 2010 7:28 am

I have deleted any personal comments from this thread due to some members going back and editing their posts to change what they said...after the fact.

by **Ben Ayalon** » Sat Apr 10, 2010 9:20 am

by **Chris Kuyoth** » Sun Apr 11, 2010 1:40 am

by **David Lawrence - N8378P** » Sun Apr 11, 2010 9:03 am

by **Jody Brausch** » Mon Apr 12, 2010 1:03 am

David,

I fully appreciate your perspective on this subject, and I agree that facts trump emotional pleas and speculation. However, I believe that "type support" requires at least two major components: real, hands on experience with the breed, and a reliable supply of critical parts.

With respect to the real, hands on experience with the Comanche series, people like Zach, Hans, and many others, have demonstrated an extremely high level of competence with the inner workings of the Comanche line. Their collective knowledge is invaluable to ICS members.

The second part of the equation, as you have suggested, requires critical parts be available, which, of course, requires the necessary economic incentives be in place for any would-be manufacturer to consider building them in the the first place. Webco, Comanche Gear, LoPresti, Knots 2U, and others, all do a fine job of providing many of the parts that are required to "keep 'em flyin", but many of the critical components that are in such short supply, require the requisite certification, which, of course, requires a maize of paperwork and proper legal documentation, not to mention the actual certification itself. In my opinion, this is the real issue.

So what can ICS do to remedy this important issue? I don't believe that publishing the Comanche Flyer, or not publishing the Comanche Flyer has much to do with it. Rather, I would like to see ICS members contribute, on an annual basis, to a reserve. As the reserve grows, it would be made available to prospective critical component manufacturers to help them defray the cost of certifying important parts. The manufacturer would simply apply for a grant , and members would vote on the urgency of the manufacture of the component in question. This would not solve all of the component part availability issues immediately, but over time, many of the parts problems could be solved.

ICS has the knowledge base to support these fantastic airplanes, what we need now are a reliable supply of critical parts. Anyone in for 30 bucks a year? Do I hear 40?

by **Chris Kuyoth** » Mon Apr 12, 2010 4:17 pm

Dave,

It helps me to understand your perspective on increased type support. Thank you for the taking the time to outline your position clearly. I believe that you, I and most who advocate a significant increase in type support, are on the same page.

I see implementation of increased type support as a two step process - first communicate and establish the legitamacy of the need and second lay out a plan to fulfill the need. You and I are beyond the first step and are ready to move on to the plan. Unfortunately, there are many out there that are still struggling with phase I.

The most significant hurdle facing improved type support within ICS, no matter what form is takes, is obtaining approval from the membership. There are many, perhaps a majority, that do not take an active role in the maintenance of their aircraft. They may not fully comprehend the significance of the part shortages that the fleet faces because they (or their mechanic) have not had to replace an endangered component. Many others are not concerned with the availablity of parts long term because they are near the end of their flying/ownership days.

I believe that most of the "gum beating" that you are refering to is aimed at converting those who do not see things the way you do. And yes, a separate organization may ultimately be the final solution, but how much easier would it be if we could retrain the focus of the current organization?

Chris

by **Scott Ducey** » Fri Apr 16, 2010 2:13 pm

There are a lot of numbers that are being thrown around here. As a person that has spent the last few months looking at ICS finances / financial statements, I can provide some color on things. Many will tell you that "the magazine pays for itself", the truth is, it doesn't. The total revenue that ICS brought in last year was about $303K. This consists of member dues (151K) and advertising income fromt the Flyer (104K). Other misc items contribute to these amounts. The cost of the magazine is$184,681. This represents 60% of all the revenue that comes in. 60 cents of every dollar is going to Village Press for the magazine. Village Press also does administrative work too. This amounted to about $35K. This is another 10% going to village press. Therefore, of everything we take in, 70 cents of every dollar goes to VP.

If we isolate the magazine - advertising income generated is about $104K. Costs associated with the Flyer is $184K. Therefore, having the magazine cost ICS $80K. The magazine DOES NOT pay for itself.

So all of this begs the question - does it make sense that in this electronic age to continue to produce a glossy magazine, which in the end does not help our aging fleet? Most of the magazine are human interest stories, a message from the President, and oddly enough a reprint of what we already see on the forum. I think our model needs to be revisited. We are an orphaned fleet, we have technical issues that arise, the technical gurus are aging. Do we want to bet the ranch that someone will always step forward as a volunteer to solve our problems?

Some will say there would be a mass exodus of members if we eliminated the magazine. Others would say if we eliminated the magazine, even with a material percentage of members defecting from ICS, we would still be in good financial shape. (I put a presentation for the board that demonstrated this). Regardless on which side of the fence you sit, it is quite clear with an aging fleet, and aging members, the number will not sustain the magazine forever. This issue will have to be re-thought at some point. As a former accountant, and former financial analyst - I think this issue should be addressed now, not later. All of this is my opinion, based on my analysis of the numbers.

At the end of 2009, ICS only made $20K. My point in all of this - whether you believe in better tech support or like things the way they are, does it make sense to continue to dedicate most of our resources towards a magazine. Given that we have an aging fleet, we are orphaned by Piper, and a shrinking top line - does it make sense for ICS to continue in the future as it has in the past?

I have taken the liberty of attaching my presentation that I made at the Board meeting. Drop me an email if you have any questions.

Best Regards,

Scott Ducey

by **N3322G** » Fri Apr 16, 2010 4:43 pm

Scott,

Thanks for sharing this very clear, factual presentation. I appreciate the work product you have created.

If this were someone's personal budget, they'd need to be making some changes. Reminds me of the first time husband and I sat down to do a financial plan. While emotionally it was easy to stay attached to the status quo, changes needed to be made. Looks like, we, the members of ICS also need to change - we may be reluctant, but change is needed.

by **David Lawrence - N8378P** » Sun Apr 18, 2010 4:18 am

I have deleted any personal comments from this thread due to some members going back and editing their posts to change what they said...after the fact.

by **Scott Ducey** » Sun Apr 18, 2010 12:09 pm

Good morning David. I am not sure if you read this entire post, but a detailed plan with specifics was indeed put together and presented to the board. A copy of my presentation, which largely focused on the numbers, is attached to this thread. For what it is worth, rather than dictating a single plan, a variety of options was presented to the board which you can review in the document. I like to think I did a pretty good job at presenting all the scenarios that you mention in your post, but you can be the judge of that. I am not going to re-hash everything here, but in simple terms if you want paid tech support there are two options: (1) you can raise rates, or (2) you could cut costs. Both scenario's run the risk of loosing members. I put together an exhibit of what we call in Finance stress testing each. If you look at the exhibit, I constructed a scenario to evaluate what the impact would be IF members left in droves. While we would not want to loose a single member to our society, economically we have the resources to take a fairly significant hit to our numbers and still would be in the black.

Again, we thought it would be best to give the Board a variety of choices, rather than one idea, as we wanted them to choose something that they find palatable. We were even open to other ideas that we could go back and work on. Again, I do not want to re-hash everything, but the Board likes things the way they are at present. I will say that at the end of the meeting it was proposed that we put together an "airworthiness committee" to circle back to the Board with additional ideas, however I do not think it is a good idea at all. It was quite clear from the tenor of the meeting that regardless of what is recommended, nothing meaningful is going to be effectuated. Accordingly I have let both my tribe chief and Dave Fitzgerald know that I am no longer going to be actively involved in ICS. I can not continue to dedicate a large amount of my personal time to an endeavor which I do not buy into. I still plan on being a member, but no longer wish to contribute a great deal of my personal time for the same.

I do understand the Boards reluctance to implement our plan. It is a departure from the historical approach ICS has used. While I get that part, as an accountant/finance guy that looks at numbers all day, I do not believe that ICS can afford to continue on this path.

I say all this, because it sounded like you were under the impression that no tangible work has been done on this issue. I have spent the past several months working on a proposal with Kristin. While I have done a lot of work, Kristin has done much more.

I hope this clears things up. If you have any question, feel free to drop me an email or call me.

Thanks David.

Best Regards,

Scott

by **Scott Ducey** » Sun Apr 18, 2010 3:47 pm

I would like to make one last point with all of this. I admire anyone that is going to spend countless hours volunteering - be it for ICS, Cessna or Bonanza. Just because the board disagrees with me, I still consider all those on the board and many others at ICS great people and very dedicated. I do not have any hard feelings just because people disagree with me. I have no intention of migrating onto another forum and doing the 'bash ICS' thing.

Life is too short, and my time too precious to waste.

Scott

by **David Lawrence - N8378P** » Sun Apr 18, 2010 4:29 pm

I have deleted any personal comments from this thread due to some members going back and editing their posts to change what they said...after the fact.