60 Minutes with Mark McDonald, CEO, Thrush Aircraft
As the summer of 2020 wound down, we caught up with Mark McDonald, CEO of Thrush Aircraft, a bright spot in a challenging year for aviation and the entire global economy. Mark and his partners took on the biggest risk of their careers acquiring Thrush out of bankruptcy in the fall of 2019, ramping back up in earnest just as the COVID pandemic began to spread around the world.
CS: With regard to the acquisition last fall, what was the vision at the time? Can you describe the opportunity you saw?
MM: In August 2019, my partners and I got a call from Thrush’s owner. An acquisition that had been in the works had fallen through. I traveled to Albany the next week and didn’t leave until Christmas.
At first, we weren’t considering Thrush as an acquisition opportunity. We also realized that bankruptcy was the only option for the business. When the owner made the decision to file for reorganization, we created a company to fund operations through the process with the objective of keeping Thrush alive. We assumed a position first as “debtor in possession” and then as “stalking horse” for the company’s assets. As we got to know the staff, the aircraft, and the community, we began to see the company’s potential. At the end of the bankruptcy process, all the other bidders dropped out, and we closed on an asset purchase, taking full control of the organization.
Again, it became clear to us that Thrush’s problems were not the result of the staff, the product, or the market for the aircraft. While the Thrush target market is relatively small, it is essentially a duopoly. We believe the aircraft is superior to its primary competitor, and with less than 25% of the market today, we see a significant opportunity for profitable growth.
We ramped up from 48 staff in November 2019 to 135 by August 1 of this year, and we are continuing to execute our growth plan.
CS: How is it going in this unprecedented environment? How have you had to adjust?
MM: The employees have been great. Three of our staff got sick early. They recovered and quickly returned to work, as have those that contracted the virus more recently.
There have been some supply chain issues, and some of the staff have understandably been a bit fearful. We’ve implemented all the CDC guidelines and have been fully supportive of staff staying home and/or working from home. Overall, I would say the pandemic has not hurt us. Our challenge recently has been difficulty hiring new team members quickly enough to meet increasing demand.
CS: How do you keep the operation running smoothly during a pandemic? The facility, the people, production process, sales, delivery, etc.?
MM: In the beginning (last fall), we executed against a short-term strategy. We announced our plans for the company at the NAAA show and began work to stabilize the organization, get the supply chain and the staff back in place, generate orders, etc. We had to prove to everyone we were real.
Today, we are executing against a year-one plan. We are stabilizing all aspects of the business after two years of stress and drama. We are working to keep our staff involved, informed, and motivated, detailing plans to continue hiring and laying out our marketing and sales strategies, production plans, policy changes, and the introduction of a new bonus program. Our staff is happy and motivated.
At the heart of our vision for the business today is an 11-point culture statement. The first point is that we will make and keep commitments.
CS: How is Thrush similar to your other ventures, past and present? How is it different?
MM: This is my first experience with a bankruptcy. There are two other partners involved. Only one of us has had any bankruptcy experience.
I have led several turnarounds, which this clearly is, with the bankruptcy layer added to the mix. It is very much like a startup; I have led a few of those as well. It is important to pay attention to pace through this process. Leading through this type of chaos has to be handled carefully. The focus is different.
I have run businesses as small as $10M and as large as $4.5B. This is a small company. You have to adjust style and approach based on the size of the infrastructure, the capacity of the organization to absorb change, operational and team capabilities, etc.
CS: Can you share any of your plans for the business over the next three, five, 10 years?
MM: I can’t share too much with you of course, but I can say that we intend to grow rapidly in 2020 and 2021 and then grow at a measured pace in 2022 and beyond. We are currently engaged in an operational excellence campaign and have plans for product development over the next three years.
During the bankruptcy, the company sold just one aircraft. Our goal for 2020 is to deliver 30 aircraft and grow again significantly in 2021. The most aircraft Thrush has ever produced in a single year was just over 50. Half the market for the segments we serve would be about 80 aircraft per year. We believe we can get there.
Before we decided to purchase the company, we thought quite a bit about not only playing offense but also what kind of defense we might need to consider as well. We quickly realized that the size of the global market for our class of aircraft is simply too small for another significant competitor to emerge. The economics just aren’t there. The firefighting market might eventually adopt large UAV technology, but again, the cost to enter the space successfully might be prohibitive.
CS: Anything else on your mind? Any subject?
MM: As business partners, we joke a bit between ourselves that this venture is not for the faint of heart, especially when you don’t have money to burn. This is the largest investment any of the three of us has ever made. The stakes are very high personally and professionally.
At the same time, we are encouraged. When we arrived, the business was in disarray. The staff had no idea how to work together. Today, they work together as a team at a very high level, and the business is profitable. We are excited, energized, and determined to succeed.