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