Pontifications: GTF faces steep learning curve on costs

Hamilton ATR

By Scott Hamilton

June 13, 2016, © Leeham Co.: The current cost to build the new Pratt & Whitney Geared Turbo Fan engine is $10m per engine.

Greg Hayes, CEO of United Technologies. Photo: Hartford Courant via Google images.

This has to come down by a factor of five, said Greg Hayes, the CEO of United Technologies, parent of PW.

This also illustrates the learning curve experienced by engine OEMs, a topic frequently discussed by the airframe OEMs but not so much by the engine manufacturers.

Hayes made the remarks at the UTC Media Day in Hartford (CT) last week. UTC is the parent of Pratt & Whitney, United Technologies Aerosystems (UTAS) and other non-aviation companies.

Cost Control

Hayes said that each GTF costs PW $10m to build today. “When we get all done, that has to be less than $2m per engine. It’s coming down that curve. It’s very expensive. When you think about it, we have about $650m in negative engine margin. That’s the cost in excess of what we get paid for those engines.

“By 2018, that number will be about $1bn. That’s with us coming down on this cost curve,” Hayes said. “So execution on the ramp, execution on cost is absolutely critical.”

Hayes said he is confident PW will achieve the cost controls because of the ACE operating system used by the company.

“That is our process certification system that allows us to continue to find ways to drive out costs, to drive out inefficiencies. When we have an issue, when we have a problem, we get to the root cause. That is the whole idea around ACE,” Hayes said.

He added that UTAS goes through a similar process. UTAS is a major supplier to all the airframe OEMs as well as the US Department of Defense on its high-profile US Air Force fighters.

He said UTC’s motto is trying to find ways to do more with less every day, a reference to cost-cutting efforts.

Geared Turbo Fan

Hayes said the GTF engine is meeting all of its key technical goals today, following teething issues.

“We have one customer who is particularly vocal,” Hayes said, a thinly veiled reference to Qatar Airways. “But the fact of the matter is, the engines are doing exactly what we said they will do.”

Hayes said that a major challenge is ramping up production from six aircraft in service today to having 50-plus by the end of the year. Over the next 15 years, Pratt will double the number of engines it has in service. It’s a huge ramp. It’s unprecedented.”

Innovation

Hayes said that one of his chief goals for the company is to pursue innovation and continue to invest.

UTC will spend nearly $4bn this year on research and development and innovation, he said. “We’re always looking to the future because what we have today is not going to be good enough five years from now and 10 years from now. We have to constantly, constantly invest.”

Hayes said the idea of a GTF has been around for 20 years. The innovation comes in to engineer “that thing” so it won’t fail in service and innovation in the manufacturing process.

Hayes said engineers and PhDs are continually figuring out problems and innovation, and when customers have a problem, “We don’t send the lawyers, we send the engineers.”

 

25 Comments on “Pontifications: GTF faces steep learning curve on costs

  1. Question Scott; I’m not in the financial end of things, so have no idea how this works. When an OEM (say BBD) is negotiating with an airline (say Delta) for an order – are risk sharing partners (say P&W) a part of the negotiations?

    After all, if each design-build supplier has a direct financial connection to the cost of each sale, do they get any/much involvement in the selling process? Or is it negotitated beforehand that each partner gets X% of each airframe sold?

    Also, to further muddy the waters – what if BBD were competing with a EMB 195E2 with P&W engines – does P&W have scope to nudge an airline toward a conclusion that suits them?

    Note to all – it doesn’t have to be P&W*, they’re only being used for discussion’s sake. I’m not insinuating anything!

    *could be Parker, Liebherr, Hamilton Sundstrand etc etc etc

    Cheers,

    Brendan

  2. So, about $5 milion per plane. That’s a fairly big chunk of the C series that BBD can’t do much about. I imagine it’s the same price as AB and Boeing are paying, despite it being a smaller plane. Same with the cockpit etc, etc. BBD will find almost impossible to ever complete on price, their only advantage is lower running costs if c series happens to be just the right size for your operation. Unless I’ve missed something.

    • “That’s a fairly big chunk of the C series that BBD can’t do much about.”

      The C Series uses a different version of the GTF (PW1500G). This version has been manufactured for a longer period of time and in a different location. So the learning curve would have to be different, and I expect the PW1500G to be slightly ahead of the curve at this time. The larger variants of the GTF are manufactured in the United States while the smaller variants are manufactured in Canada. In fact the P&W factory that manufactures the PW1500G for the CSeries is located practically next door to the C Series assembly plant at Mirabel airport in Québec, Canada. After the the PW1500G has been assembled inside the P&W plant it is shipped next door to the BBD plant for final assembly. It is only once inside the C Series assembly building, where P&W has a dedicated facility, that the engine is completed. After some accessories have been mounted onto the engine, like for example the thrust reversers and nose cowl, the engine is attached to its pylon inside the P&W facility before delivery to the C Series FAL.

      • What is the reason you think it would be “slightly ahead of the curve”? (whatever the curve was anticipated to be for the PW1500G)

        • The PW1500G production was started long before the other variants, and way before EIS of the aircraft. With the accumulated delays on the C Series programme they had plenty of time to hone their skills before producing at increasingly higher rates. Anyway, what I had in mind specifically when I wrote my initial post was that the article concerned mainly the larger variants of the GTF family, which should find themselves at a different place on the learning curve because of what I have explained above. I was actually tracking the two in relation to an imaginary learning curve in order to compare them to one another. And if my reasoning was right the C Series engine should cost less to manufacture at the present stage than the larger variants. One factor not to neglect in this equation is the lower value of the Canadian dollar. Another one is that they started much earlier in Mirabel. In short, the PW1500G should cost less to produce at the moment than any other PW1000G variant.

          • Clearly the PW1500G has had more time post certification than other variants and if this means more have been produced (I haven’t seen figures but I actually strongly suspect the reverse is true) then yes, it may cost less than the other variants at this time. But I still see no evidence/reason to suspect it is ahead of the (PW1500G) curve. Or behind, or on.

          • What I had in mind in my first post was that the PW1500G was ahead of the larger variants on the learning curve, not ahead of the curve per say. That being said the C Series is itself ahead of where it is supposed to be at this time on the learning curve and that is why the projected output has been raised recently. And because of the reasons previously explained I would not be surprised if the PW1500G was also ahead of where it is supposed to be on the learning curve. But I have no proof of that. Anyway, at this stage it should normally be slightly ahead of the other PW1000G variants on the learning curve.

        • 1- The Passport engine is manufactured in Kansas, not in Montréal, and by General Electric, not Pratt & Witney.

          2- The loans totalling 1 billion for P&WC were part of a national R&D programme that offers loans to high-tech companies that want to invest in R&D in return for royalties to the government. P&WC decided to terminate its participation because they realized that the government was making too much money with its own products. The more successful a given product was the more money the government was making on royalties. So much so that P&WC discovered it was actually loosing money over the long term. So much for your incessant reminder of “taxpayers money”. It’s actually very good money.

  3. I think Boeing playing around with a 737-10X / bigger engine is a signal the smaller LEAP-B isn’t the lighter sweet spot engine for the next 15 years.

    http://www.boeingblogs.com/randy/archives/2011/11/the_sweet_spot_1.html

    Unsurprising for anyone with basic engines knowledge. They want to offer a bigger GTF (probably PW), regardless of what Boeing preached so far.

    If a -10X comes with a bigger engine it will be on the 737-8 and -9 too, because customers want so & have choices. Good old days are over.

    GE/Safran probably won’t sit on their hands letting it happen.

    • I think you are jumping a gear gun here.

      There is no reason to retrofit the new gear to the 737-8/9.

      No longer gear, no longer engine and the integration of that engine would cost a lot as its not a straight swap in.

      While I don’t disagree that choice is a factor in some, for the most part the CFM consortium has delivered a good engine., cost is competitive and a lot of operators bough 737s with that fact.

      Its likely close enough they can get by, next program (if they get off the dime) no.

      Notice no one is talking open rotor anymore?

      • “There is no reason to retrofit the new gear to the 737-8/9. ”

        It’s the other way around. Boeing won’t do a costly new gear / inner wing modification for just one subtype. They never did before.

        Given a new gear/ inner wing/ bigger engine for the 737(-10x), it would be an economic error to not put it in the huge 180-200 seat segment (that’s under threat in the first place). You need ROI for the investment.

        Thing is, they need to communicate the development slowly, to avoid people think they got it wrong earlier on. Better make it a cost-conscious, well phased evolution…

        • On a practical side I disagree.

          To change all the fuselage cost a lot of money, to do one is bad enough.

          You still have P-8 and Wedgetail and BBJ coming down the line that you would not want or need converted.

          Add in the much heavier Airbus Leap (A?) and why would you put that additional weight penal or engine where its not needed?

          • No need to do costly changes to inner wing for new landing gear.

            An extendable undercarriage leg is all thats required, this would fit in the space available.

          • That’s what engineers do, is figure out a way.

            If its not reliable or doable then you go to the next step.

            I would not put it past them given the directive.

            As this all comes from management its not like you can do it on your own so we simply do not know if the dogs of innovation have had a chance to work their magic.

          • There were more than minor changes for 737Max nosewheel

            “The nose-wheel landing gear is 8 in. longer than the 737’s and prompted Boeing to move the front bulkhead of the nose undercarriage bay—the “doghouse”—and an associated inspection hatch forward about 8 in. The leg extension also means that an aerodynamic fairing is required to accommodate the bulge of the nose wheel. “We’re trying to minimize this, and we’re still trying to make it smaller,”- Aviation week

            As has been mentioned 737 has a ‘keel’ beam running fore and aft, but as the 737 is a double bubble it also has a ‘crease beam’ which too runs fore to aft on LH and RH sides. This arrangement may restrict what can be done in rear wheel bays

      • Open rotor definitely is being developed under EU funded programmes. (Absolute) noise issues have been sorted, apparently, with only type/tone to be tested in flight. Safety fears also appear unfounded after the likelihood of fuselage penetration was, IIRC, found to be at least as low as with a turbofan.

        • I had not seen any of that.

          I continue to be skeptical for a couple of reasons.

          As there is not easy standard interface, each mfg would have their own and a unique setup means a single engine options.

          Also when all is said and done the structural weight penalty seems to argue against them. You can express that in terms of loss of efficiency or more fuel burn but you do have to get an installed apple to an installed orange to see how they really compare.

          And you have to see what the cost of the technology to do all of it and if it really offsets .

          We do live with turbo props and those can fling a blade into a fuselage.

          How that all plays out is also an aspect of how many blades sets (two, i.e. counter rotating) quantifies (huge numbers ) and so on.

          Last good data I saw was lots of good ideas and the best option in the 5-8 years time frame is GTF.

  4. Something that has come up is the LEAP is heavier by about 3-4 passengers worth than the GTF.

    That will have some affect in selection as in effect, it makes the GTF another small percentage efficient than the LEAP.

    Add in the future improvement and they may be able to get better margin on the engine (assumes other issue do not crop up)

    Reading in depth on the cool down, it appears the longer it sits (up to a point) the worse the distortion gets, so the worst area is in the 1 hour time frame of sitting.

    That in turn is what is driving the issue as that gets into the turn around time.

    On the other hand its not much, worst is max and software can adjust down etc. While not desirable its not a real show stopper (seems like a cudgel to get better deals out of P&W).

  5. Scott:

    Would the cool down time and re-start issue be part of the spec?

    The wording is odd in that P&W is saying its meeting specs 100% and that would only be true if that was not a spec performance item guaranteed.

    and my feeling is that its part of the price of selling things to Al Bakar, be prepared to get reamed or don’t sell to him.

    • It a common technique in some parts of the world, having a signed agreement is just the start of negotiations. It can work both ways of course, manufacturers can and do alter specs before delivery , or the delivery date is a moving target.

      Considering all that, what on earth possessed them to have Qatar as the EIS customer.

  6. And a personal note, and maybe rule violation, let me know and I will self impose assessed penalty:

    Uresh Sheth has been laid off from his real job (All Things 787 is his passion but not paid)

    He is looking for work and I have suggested Flight Global hire him to replace Jon Ostower whose position was never filled (and needs to be)

    It appears he would prefer to go on into the Aviation World and not finances and anyone who has ideas for him can contact him on his blog.

  7. And how long does this guy last at Boeing?

    https://www.flightglobal.com/news/articles/new-boeing-executive-calls-for-bold-judgment-calls-426292/

    I could not agree more, production is a disciplined based function and rigorous standards are correct for that.

    New ideas are not and the door should be wide open for those.

    Yes those then get a rigorous appraisal, but based on the concept not, well we never did that before, or lets hit that pesky nail sticking up with the biggest hammer we got.

    Most management is completely uncomfortable with out of the box type thinkers.

    What is needed is to move the group into the Skunk Works type operation.

    Once something is proposed and has a good basics, then you have to fight the proposal on that basis, not what you thought it should have been.

    Its nuanced but I have seen that work badly (horrible proposal by people that are grossly ingo0ran) or very well done when the thinking was off the charts but supported by good engineering and science)

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