An Oct. 27, 2023, announcement on the Van’s Aircraft website notes that the company is facing “serious cash flow issues” and has suspended business as usual for at least two weeks.
The announcement, which includes a short video from company founder Dick VanGrunsven, points to a number of factors that “must be addressed to ensure ongoing operations.”
In the video, VanGrunsven says that he and his wife have been bolstering the company since September 2023 and that can’t continue.
“To help us with the needed financial analysis, planning, and operational improvements, we’ve assembled a small team of experienced advisors to assist us. Starting today through mid-November, Van’s will be focused on assessing the internal changes necessary to address these issues. This means some of the typical day-to-day operations at Van’s will be affected while our team develops plans to correct the problem.”
“During this period, shipments will be delayed, kit orders will not be processed, and refunds will not be issued. We will be unable to conduct factory tours and demo flights.”
What Led To The Troubles?
“A combination of significant events over a relatively short period of time has increased costs, doubled normal inventory levels, slowed deliveries, and strained our cash flow to the breaking point,” company officials said in the announcement.
Pandemic Driven Costs
“As with many businesses, the pandemic placed a financial strain on our company due to a variety of required operational changes, supply chain issues, and shutdowns. Orders increased dramatically, requiring us to hire and train more staff. Wages increased, and shipping costs rose greater than five-fold. Stated simply: Without realizing it, we were selling kits below our cost.”
Primer-Affected Quick Build Costs
“At the same time, we learned that one of our overseas contractors had used an inferior primer, resulting in aluminum corrosion forming on a large number of quick build kits. This required us to scrap many kits, while further increasing production to replace affected kits. This alone represented a multi-million-dollar setback for us.”
Outsourced Parts Issues
“As we fell behind on shipping orders, we made the decision to outsource some aluminum parts manufacturing, which increased our manufacturing costs for those parts. The only timely option was to have some of our parts laser-cut rather than CNC-punched. We received reports from customers that they were observing small cracks at the edges of some holes on these parts. We researched the issue and engaged in extensive testing. The information we communicated to our customers about this issue changed as we discovered many of the parts met our design requirements. Although our testing proved that laser-cut parts are functionally equivalent to punched parts, the belief among many builders is that they are unsuitable for use. This has resulted in an unmanageable number of requests to replace laser-cut parts and cancel orders. More than 1,800 customers are currently affected by this issue, some of whom have received more than one kit.”
You can see the full announcement here, which also includes the answers to several common questions from the homebuilder community.