Dealing With International Customers
My high school teacher spoke in the 1980s about how important international business was to America’s growth. As the 1990s rolled around, many of the news networks and trade publications spoke of emerging markets in Asia and South America. Commentators threw around phrases like “global markets” as if doing business overseas was something new.
For me, and for many aviation business professionals, doing business internationally is an everyday occurrence. Our industry has been one of international scope since the Wright brothers first started showcasing the Wright Flyer in France in 1908. American businesses have showcased their aerospace products worldwide ever since.
Our industry is unique, but what makes our aviation jobs so interesting is that much of the world buys aircraft and support supplies from the United States. Everything from airliners to general aviation aircraft is made in North America. This global focus on American-made aircraft has created an ongoing opportunity for general aviation provider, corporate aircraft maintenance providers and supporting parts providers for many years. If you take a look at areas of Florida, for example, many aviation maintenance operators such as Fort Lauderdale’s Banyan Air Service have built a business model that includes supporting many clients in not only Florida, but Central and South America as well. These relationships create great opportunities for these aviation businesses — but with these opportunities come significant risks and challenges as well.
The Risks of Overseas Commerce
Much of the information I am about to share comes from my personal experiences, from my time with Beechcraft product support (as an OEM provider) through my current work as an independent aircraft parts wholesale distributor.
There are some significant threats to your financial well-being that, if not heeded, could destroy any profit you have ever made with facilitating any aircraft part sale, component overhaul contract or maintenance agreement. First and foremost, never deal with an overseas client that cannot fax or e-mail you a purchase request using his or her own company letterhead. I have also learned that most overseas operators will have a Web site which facilitates using a company e-mail address. Almost every time we had caught a sales order coming through Chance Aviation that turned out to be fraudulent, the sender always used a generic Gmail e-mail account and the purchaser used a hand-written order on a piece of paper they faxed in.
Be diligent. Many years ago, we had a faxed order come through for some Boeing 737 brake pads that were made by ABS. The order was supposed to ship to Singapore, paid for with a credit card number that belonged to a lady who lived in Chicago. Fortunately, we caught this before the order left the U.S. Similarly, some crooks in Miami used stolen credit cards to facilitate $250,000 in aircraft parts purchases from several U.S. suppliers. By the time the fraud was detected, the crooks had closed up shop and shipped all of the stolen parts out of Miami via cargo ships. We determined that any new client overseas who wished to use their credit card must fax the front and back copy of their card to ensure that the card number was not stolen. The better solution is to simply require any overseas clients to pay for their order using a bank wire transfer. This reduces your exposure because the funds are in your hands before the order is released.
I understand that many DOMs will rely on their company CFO to handle financial transactions. The best thing you can do as a DOM or as a parts professional is to help your CFO do his or her job by making sure the parts never ship, or that the aircraft NEVER leaves the hangar until your company gets paid. The function of any aircraft maintenance provider or parts supplier is to provide the services the customer needs in a timely fashion. It is not your job to be a bank!
Communication Can Be Tricky
Several months ago, I had a customer in India who was bent out of shape over a situation he created. We had quoted a 90-day lead time on some parts he needed on special order. About 60 days after placing the order, my customer starting calling me at all hours of the day (and night) in a panic because his customer needed the parts sooner that what was promised. My customer sent me constant texts, Skype invitations and faxes, and called me constantly, thinking that somehow this would magically speed up the manufacturing process. After several polite e-mails and phone calls, I finally had enough. I communicated that we provided a competitive quote for a special order item and had given an honest lead time for their item. If they could not wait, we would simply cancel their order and return the payment. We returned their payment and much to my customers’ horror, another distributor quoted them a six-month lead time at a higher price. The next time this particular customer sent us a quote request, I simply instructed our staff to respond as a “no quote.” Simply put, nobody needs abusive clients.
Another client we had in Australia e-mailed me saying how much he appreciated all of the information we provided him along with a recent quote. When he placed an order, we followed up with a confirmation and with an eventual tracking number. It is important when you’re facilitating international customers to provide constant communication. Let them know what is going on and see what you can do to help their requirements.
This Whole PMA Thing
Most aircraft maintenance professionals in North America and Europe have been extensively exposed to FAA PMA parts. We have learned over the years that the quality and cost effectiveness of PMA parts often exceeds many of the OEM parts in existence today. Unfortunately, many potential customers in regions such as Asia do not understand or fully grasp this concept. Some regions, such as India, practically ban the use of PMA parts. What is so ironic is that several large turbine manufacturers are making major PMA components in India, which are in turn sold abroad for a handsome profit. They allow the manufacture of these parts, but they won’t use them. Why? Fortunately, a business acquaintance who is from India and who works in the U.S. aerospace industry was able to give me a perspective that I could not obtain from my Indian customers.
Some Asian regions place a high value on using the absolute best product. This is why luxury brands such as Buick, Lexus and BMW do so well in China. There is a perception that PMA parts are inferior because they are seen as cheap, imported knock offs. They do not understand that PMA parts are simply an alternative way to certify parts for legal use, alongside OEM and TSO. To highlight a point, a recent Indian customer grounded a Bell Helicopter for days because a filter they received from Bell had the OEM number and the PMA number stamped on it. It came from the OEM that way, but they didn’t care. They believed this must be an inferior product.
Shipping Within the Confines of the Law
Many folks have been turned away from supporting overseas customers due to a fear of breaking import-export laws. Although a healthy respect for these laws is important, navigating these laws is much easier thanks to trade network tools that logistics companies such as FedEx, UPS and DHL have instituted.
There are two important things to keep in mind when processing export orders. First is to vet your customer, making sure that they are not on one of many government-maintained bad-boy lists. These lists, commonly referred to as “denied persons” or “denied entity” lists, are comprised of names and address of persons and/or organizations that are known criminals. The lists contain people from all over the world.
If you’re dealing with a new client overseas, check them out first. Secondly, the dollar amount of your order determines what paperwork will be required for documentation. Anything exceeding $1,500 requires an ITN number from the federal government. I used to have to apply for an ITN number and wait for an e-mailed approval. Most shipping providers now have this function built in to their software, which enables you to use UPS World Ship or FedEx Ship Manager to process your international packages all in one shot. This process has simplifed things.
A college friend of mine now works with FedEx. She told me that most major shipping carriers also run the data on international outbound shipments through the denied persons list on a daily basis. Do your homework and use common sense. If your customer asks for FAA 8130-3 tags, you will normally be required to provide the end user information to your manufacturer. This is a good additional way to vet your customers. Should you find you’re dealing with a broker and he or she mentions the end user is the Iranian Air Force, call a time out. The U.S. Department of Commerce has a site that talks about export compliance. If you export items, or are interested in getting started, I highly recommend you visit www.BIS.doc.govto help you navigate away from situations like this.
The Risk Can Be Worth It
I have developed friendships with some overseas clients over the years, and have even be able to grow my business in the area of exporting because we have developed a system that works for us. It’s fascinating to meet with new clients at international trade shows, those who wanted to meet me because they heard how well we treated a friend (who was our client) in Brazil. Many people simply want good and reliable service.
One day I was trading e-mails with a Beech 1900 customer in Kathmandu, Nepal, over an AOG part. His e-mailed response was delayed because, as he told me, he had to go to the store in Kathmandu to find some hardware supplies to fix his broken door at home. I was at Lowe’s hardware store trying to find a new doorknob lockset while waiting for his response. When I read his e-mail, I told him I was at the hardware store doing exactly the same thing. When we chatted on Skype a few days later, talking about the traffic jams we both encountered while dropping off our kids on our way to work, we both realized that our lives are really the same.
There are aviation maintenance professionals all over the globe. They try to provide for their families while putting in long hours every day to keep their aircraft flying. That’s a community worth supporting.
Norman Chance is president and CEO of Chance Aviation, an international aircraft parts distributor headquartered in Indianapolis. He has a degree in aircraft maintenance from Vincennes University and a degree in aeronautics from Embry-Riddle University. He holds an FAA A&P certificate.