Raquel Rivera, who runs Pratt & Whitney’s assembly plants, wanted to know what was going wrong with production of the company’s new flagship jet engine, and at an emotional meeting in late March at Pratt’s sprawling factory in Middletown, Conn., the mechanics on the first shift let her have it.
We’ve hired more workers – why haven’t you bought enough tools for everyone yet? they demanded. The production line layout and assembly instructions don’t make sense, they said. And we’ve told you this before and no one’s done anything.
The blistering criticisms came at a pivotal moment for Pratt & Whitney, a $16.5 billion unit of the industrial conglomerate United Technologies. Production of its innovative geared turbofan engine had ground to a halt for four weeks in February as the company grappled with a faulty seal, the latest in a series of reliability problems that had slowed shipments to key customer Airbus, which in turn had fallen badly behind pace on delivering its top-selling A320neo to airlines.
Coming out of that halt, Pratt faced a tall task, under the threat of penalties from Airbus: It needed to deliver 75 geared turbofan engines in May, including about a dozen retrofits of ones taken back from customers to replace the knife edge seal. The company had completed a grand total of 44 in the first quarter.
The production surge turned into a test of President Bob Leduc’s efforts to transform the company’s culture, borrowing management concepts from the U.S. Army.
In the past, said Rivera, the orders would have come from the top down, from the engineers. “This time our mechanics actually came up with the process we needed to deliver that volume,” she said. “They’re the ones who build the engines every day. They know best how to produce those engines.”
In a grueling month in which mechanics and engineers worked almost around the clock, Pratt hit the goal, improving its production processes along the way. Whether the geared turbofan program is now out of the woods is another question.
Pratt engines ruled the skies in the 1960s and ‘70s, but in the '80s the company began a slow fade to third in the passenger jet market behind General Electric and Rolls-Royce. By the late 2000s, GE was delivering more than 1,000 jet engines per year; Pratt, fewer than 200. The company’s strength in the military market partly cushioned the decline. However, in 1988 it had begun to develop the technology that would eventually get it back in the game.
In conventional jet engines, the spinning parts – the air fan at the front, the compressor behind it and the combustion-driven turbine that powers them – are attached to a central shaft so that they all turn at the same speed. The innovation at the heart of the geared turbofan is a gearbox that decouples the fan, enabling it to rotate at a slower, more efficient speed than the turbine. The slower speed allows for longer fan blades that can drive more air to generate thrust, producing a 16% improvement in fuel efficiency, according to the company, and a 75% reduction in noise.
After Bombardier agreed to be the launch customer with its C Series jets, which debuted in 2016, the engine won a place on four other aircraft, most importantly the A320neo, an update of the No. 2-selling airliner family of all time (neo stands for new engine option). A surge of orders from airlines has pushed Pratt’s geared turbofan backlog to more than 8,000 engines -- the company hasn’t been this busy since the 1960s. But ramping up to fulfill those orders has been a challenge.
United Technologies brought Leduc in to take on that challenge in February 2016, as the company was beginning production. Leduc, 62, was a familiar face – he’d spent 28 years at Pratt before serving executive stints at other UTC units, most recently leading the helicopter maker Sikorsky through its sale to Lockheed Martin in 2015, after which he retired. In his first meetings with top Pratt executives after returning, he said he sensed something was off – they were afraid to share bad news. “People were very reluctant to give you the full story about anything,” Leduc said. “I called it selective data release. Leave out some of the really bad facts and only give you the good facts.”
Dave Durbin, head of machinists union local 700 at the Middletown factory, said the view from the shop floor was similar: supervisors often didn’t want to hear about problems. The focus of management was “get the engine out at all costs,” he said. The takeaway for workers: “If they don’t care, why should I?”
Changing this dynamic has been one of Leduc’s priorities. He’s aiming to grow revenue from $16.5 billion last year to $25 billion around 2025. To make that happen, he believes Pratt needs more open, honest communication throughout the organization, and to speed decision-making.
“For me, there's only one way to do that,” said Leduc. “Every employee, you need to delegate down as far as you can possibly delegate down, and have them make the day-to-day decisions they need to make the business to run.”
Leduc believes he found a toolset to make that happen in Army management techniques taught by the Thayer Leader Development Group at West Point. He took a three-day course with his direct reports in February 2017 after hearing a speech by a Thayer instructor, and then decided to put all his 250 senior managers through the program. Middle management is going next.
While aerospace companies are typically very hierarchical, Leduc said he found, to his surprise, the army is less so than most think, in part out of a recognition that flexibility is key to handle what post-Cold War military theoreticians termed VUCA environments (the catchphrase stands for volatility, uncertainty, complexity and ambiguity). Rather than command and control, said Leduc, there’s a focus on clearly defining roles and responsibilities and encouraging and empowering people down the org chart to take independent action, without worrying about being blamed for failure, and to freely communicate to higher ups.
Richard D’Aveni, a professor of management at Dartmouth’s Tuck School Of Business and a contributor to Forbes.com, said the VUCA framework, while not among the most popular of analytical tools, can have value in “breaking the cement” in an organization, “to surface issues that no middle manager would bring up to his or her boss because he or she wants to look good and doesn't want to be shot as a messenger.”
There’s been no shortage of issues with the geared turbofan. “Teething problems” often crop up with new engines once they’re finally in service, operating in a range of environments that can’t possibly all be tested for. In the geared turbofan’s case, the failure of seals and rotor bowing have forced retrofits and delays. (Recently introduced engines from competitors GE and Rolls-Royce have also had their fair share of issues.)
Other problems have cropped up on the shop floor. Designing an engine is one thing; producing at volume is another. An order of assembly that made sense for a prototype might not make sense on a production line where multiple workers are working on an engine simultaneously. Steps need to be choreographed to keep the line moving steadily and reduce the distance travelled by mechanics. The right tools and parts need to be on hand at the right time.
Steve Rogers, general manager of the Middletown factory, said they were struggling early in the year with assembly mistakes and safety issues. The worst: an engine cantilevered out of its fixture, fortunately away from the workers around it.
In late March, Rivera said that as she walked the shop floor doing a “back brief” on the company’s May surge plans – an Army technique of asking workers to state their understanding of the goal and methods – the feedback she got was that they weren’t happy.
She called a meeting on a Friday with the roughly 75 mechanics on the first shift, and then repeated it with the second shift. What was stopping them from doing their jobs? she asked. “It wasn’t a pretty meeting,” said Rivera, a 49-year-old who started out as an engineer at the Middletown factory in the '90s working with some of the mechanics she was now facing. “They were very upset and they communicated to us, you guys have to move quickly [to correct problems] if you want to get these engines out.”
The result: a list of 100 action items and a commitment from some of the most critical workers to join a “kaizen” team to rework the production process.
One of the biggest gripes: Defective heli coils (wire cylinders inserted in holes in lieu of tapping the holes with threading) were preventing mechanics from tightening down bolts in the initial stages of assembly, bogging down the production process. Instead of a flowing production line, engines were scattered around the shop floor, with mechanics going through the same steps on multiple ones at the same time and needing the same sets of tools, said engine center engineering manager Eric Ross.
“The spaghetti diagrams we draw showing how far the mechanics are walking, the numbers were growing and growing instead of shrinking, because they’re looking for tools, searching for this, searching for that,” said Ross.
The solution the mechanics came up with: dedicate a worker per shift to replacing bad heli coils, until Pratt could get the supplier to improve them, and take the initial two assembly steps out of the line – combining the front and back of the engine – so that if they ran into problems they could divert the engine to a hospital bay while pulling the next engine up.
The meetings “really broke down a lot of barriers,” said Rogers, 54. “It was the pivotal point in turning the corner and working together.”
Over the weekend after the meetings, Rivera and Rogers built a room on the shop floor and populated it with a “tiger team” of engineers pulled from their offices. Their mission: to be at the mechanics’ call to fix problems as quickly as possible.
In April, they ramped up the pace to 52 engines, tweaking processes along the way. Then came the May surge.
Thirty engineers were shifted to the production floor from testing and about half of the mechanics put in an extra 16 hours a week that month. “It was crazy,” said Durbin of the machinists union. “You’d come in at 3 in the morning, you’d see people working. The lights never went out.”
With very little hiring taking place from the ‘90s through the early 2000s, the assembly workforce at Middletown is dominated by a generation nearing retirement and recent hires in their 20s. The stakes were clear to everyone: “The old guys were telling the new guys, this is your future, we can’t mess this up,” said Durbin.
TV screens were put up around the shop floor tracking the numbers of engines completed in Middletown and Pratt’s West Palm Beach factory, which handled the retrofits, with cheers and high fives every time the count went up. “It wasn’t a grueling ‘go faster,’ ” from management, said Ross, it was, the workers saying, “alright, let’s go do this.”
Coming out of that month, several workers said there were positive feelings all around about the direction the company is going in.
“You get a huge sense of mutual respect between supervisors and mechanics,” said Ken Brinkman, a 27-year-old mechanic on the second shift. “They’re super-willing to listen to us and say, ‘let’s try this.‘ ”
Leduc says the returns on the Thayer program have been clear in terms of employee satisfaction and retention. Employees of supervisors who have gone through it score eight points higher than those of supervisors that have not in job satisfaction, while voluntary attrition has fallen to a 2% annual rate, from 7% in 2016.
The company can’t declare victory yet. It may not be done retrofitting all engines with design issues taken back from customers till 2020, and the problems over the past two years have led some A320neo buyers to choose the geared turbofan’s competitor, the Leap from CFM International, a joint venture of GE and France’s Safran. Pratt still holds about 43% of announced orders, according to FlightGlobal’s 2018 commercial engine report, with 1,600 buyers still uncommitted, but if the balance moves any further in CFM’s favor, it will further delay the day when Pratt will start turning a profit on the geared turbofan.
Engines are sold at a loss initially, with programs turning profitable when they start to need maintenance. Pratt says its negative margin on the line will be $1.2 billion this year. Management and investors in United Technologies are hoping this will be the peak for losses.
Jefferies analysts forecast that the geared turbofan program could start to turn a profit in 2023, when they expect 6,700 engines to be on wing.
Richard Aboulafia, an analyst at the Teal Group and contributor to Forbes.com, is relatively sanguine on Pratt’s troubles. “Have they lost market share due to the problems? Probably, but it’s a product that’ll improve as time goes on.” Given the steep ramp the company is undertaking, he said, “I’m not sure anyone would’ve done better.”
