UTC OTIS UTC CLIMATE, CONTROLS & SECURITY PRATT & WHITNEY UTC AEROSPACE SYSTEMS
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Albertelli Speaks at Aerospace and Defense International Trade Summit

GROTON, Conn., Monday, September 22, 2014

Jill Albertelli, vice president, Supply Management, Pratt & Whitney, delivered the keynote address at the Aerospace and Defense International Trade Summit. The event brought together business leaders and government officials from Connecticut and New England as well as delegations from 10 countries.

Remarks, as prepared for delivery

Congressman Courtney, I was pleased to get your invitation to deliver the keynote address for this first-of-its-kind, very important summit. I am joining you as a representative of Pratt & Whitney, but also as a member of a global community of companies and organizations facing the unprecedented industry challenges of the 21st century.

This important forum has been organized to focus on opportunities for coming together in partnership for innovation and growth – not just to win business, but to address the issues that require completely new paradigms in manufacturing.

The 21st century global manufacturing environment is vastly different from what many knew in the last century. Geopolitical changes such as the rise of Asia, and the Asian market, advances in information technology, logistics and transportation have fundamentally transformed how manufacturers must do business if they want to compete and succeed today.

As a global manufacturing community, the aerospace industry is now looking at job creation and economic prosperity from the holistic perspective of an ecosystem.

This makes sense at a time characterized by issues such as global warming, the limited availability of natural resources and the requirements of emerging markets. Together we will need more collaborative skills, greater diversity and the ability to interact cross-culturally.

Here in Connecticut, for example, it wasn't all that long ago when Connecticut was a bustling manufacturing center. Raw materials came in one door of a plant and product was shipped out the other.

Manufacturing companies not only specified, but also performed internally, every step in their value chain up to, and often including, maintenance of the product in the field, with their own employees.

Back in the 1980s, when Pratt & Whitney was a hub of mass manufacturing in Connecticut, we were turning out more than 1,000 engines a year. We made 80 percent of the parts that went into those engines in-house and sourced about 20 percent.

Today, the company is looking at an imminent ramp-up, and we will once again be making more than 1,000 engines a year. These engines, by the way, are designed and engineered right here in Connecticut. I will talk more about how Pratt & Whitney is dealing with this ramp-up using a global strategy in a minute.

But first, a few fundamentals. If we are looking at another – a next generation – ramp-up, where are all the jobs? The fact is that many jobs simply vanished due to advances in manufacturing technology. Today, with advanced manufacturing technology that enables operations like closed cell manufacturing and 3D printing, it is possible and cost effective to accomplish, with one employee and a computer, what previously required a line of machinists.

Also, many jobs have migrated to the supply chain where the work is done most efficiently as investments are shared across a broader, often global, customer base.

Today Pratt & Whitney's formula is flipped. We source more than 80 percent of our parts to partners and the supply chain.

Pratt & Whitney now has more than 90 product suppliers in Connecticut and we spent more than $400M in 2013 – a number that will grow as we increase production. In total, we have more than 500 suppliers including engineering services, landscapers, security companies and others. Including services and product, Pratt & Whitney spent more than $660M in 2013.

With more than 40,000 aerospace jobs, half provided by Pratt & Whitney's parent company United Technologies Corp., and more than 90,000 indirect jobs like those in law firms, advertising and public relations agencies, landscapers, security companies and many others, Connecticut ranks number six in the nation for aerospace jobs. In short, Connecticut is still a major aerospace and defense state.

Earlier this year, UTC and Governor Dannel Malloy announced the Connecticut Aerospace Reinvestment Act. Through this Act, Pratt & Whitney has committed to keeping its global headquarters in East Hartford for the next 15 years. Pratt & Whitney will build a new world headquarters and engineering facility, and UTC will make renovations to the United Technologies Research Center. This secures the future of aerospace in Connecticut and creates certainty for suppliers.

But the shift of work to the supply chain has profound implications for the companies involved, and for the state. For an international prime contractor to succeed, its suppliers must be every bit as good as the company is. If they have every part for a jet engine except one -- and that one can be something as small and simple as a bolt -- they can't ship the engine.

Moreover, every part must meet our stringent quality specifications. To ensure this, we work closely with our suppliers. Our manufacturing experts, engineers and supply chain team also work closely with them to ensure suppliers can meet our rigid schedule and quality requirements. This in turn, makes the suppliers more competitive across their entire customer base and helps them succeed in the global marketplace.

A company like Pratt & Whitney that relies on its supply chain must also be sure there is a sufficient supply of trained and skilled workers, not just to fill its own factories, but for its suppliers' shops too. That's why Pratt & Whitney helps support higher education institutions like Goodwin College and the University of Hartford. In addition, it's why we collaborate with the University of Connecticut on leading edge technologies like additive manufacturing at the other end of the process -- the innovation side. Helping Pratt & Whitney and United Technologies Corp. succeed here, then, is a way to ensure that both broad range of businesses and educational institutions flourish in our state.

Another key imperative of the 21st Century manufacturing environment is doing the right work in the right place. In a state like Connecticut, this means work at the front end of the innovation process -- inventing, designing and engineering new products like Pratt & Whitney's new engines that are transforming commercial and military aviation today. That's why the company has been hiring many new engineers here. In fact, as an example of this innovation, the company has secured more than 700 patents since 2012 with more than 340 last year alone.

Today Pratt & Whitney continues to be a leader because we remain focused on the long view to ensure that our products, which have life cycles that are measured in decades, not years, have the highest quality throughout their long years of service.

Pratt & Whitney is getting ready for its impending ramp-up by transforming its global operations. We are ahead of the curve, and preparing for this volume by transforming our global operations.

Our next generation engine programs are giving us the opportunity to increase assembly and machining capacity globally, invest in smart technologies, introduce new capabilities and improve our processes and flow in our factories to be leaner – all of this leads to a competitive advantage, not just for Pratt & Whitney but also for our state.

We're focused on producing the more advanced, proprietary technologies internally and we source parts that our suppliers and partners are experts in producing. We have a robust engine global supply chain with 400 key partners and suppliers in dozens of countries, and we're actively seeking suppliers who can deliver high-quality parts, while meeting our cost targets.

Pratt & Whitney is investing heavily in its global manufacturing network. We have invested more than $1 billion in our manufacturing sites worldwide including Connecticut, Florida, Poland, Maine and Singapore.

We are also bringing on suppliers who can deliver high-quality parts. Our no single point of failure strategy balances the need for capacity, capability, affordability and reliability.

Pratt & Whitney has a presence in each of the countries represented here today: Australia, Canada, France, Germany, Israel, Italy, Austria, UK, Netherlands, Belgium and Spain. In fact, our engines power customers in nearly every country in the world.

Pratt & Whitney has a comprehensive Supply Chain Readiness strategy to meet its customer commitments. In addition to our 400 key partners and suppliers, we're actively seeking suppliers on who can deliver high-quality parts, while meeting our cost targets.

We are increasing our spend in North America, and in most cases even tripling it, in Europe, Asia, the Middle East and Southeast Asia to bring our presence closest to our markets all over the world.

We have signed more than $10 billion in long-term agreements with around 100 key product suppliers, and we are signing agreements on a weekly basis. The agreements are helping to solidify the company's manufacturing network as it prepares for an increase in commercial and military engine production.

We are taking a balanced approach to the global supply chain landscape, entering into agreements for powders, extrusions, forging, machining and finished integrally bladed rotor based on the locations of manufacturing capability, a strong skill base and special-processes expertise.

Our goal is no single point of failure: We are dual sourcing parts for all future programs, which is critical to risk mitigation and program success.

Also, we have implemented a delivery and quality assurance review process, which provides immediate delivery improvement plans for top under-performing suppliers.

As I mentioned earlier, Pratt & Whitney uses innovative technology and advanced manufacturing methods to provide the best value to our customers. We are a 3D printing leader and have used this technique for a number of years, which reduces production time - from design, to prototyping, to finished product.

This approach has enabled us to make more than 100,000 additive manufactured prototypes (including tooling and development engine hardware) over the past 25 years, resulting in up to 15 months in lead time savings, compared to conventional manufacturing processes; and up to 50 percent weight reduction in a part has been realized.

The PurePower engine family will be the first product produced using 3D printing powder bed additive manufacturing. Through our robust engine testing process, 3D parts we introduce into the PurePower engine family will have the highest level of integrity and will create real value for our customers.

We have flight-tested, and are in the process of certifying, some of the unique components for our PurePower engine family by building up parts from powders rather than cutting metal. Some of the additively-manufactured parts for PurePower engine include fuel bypass manifolds, mounts, fittings, brackets, oil nozzles, airfoils and fuel swirlers.

This application is very exciting and just one example of how we are exploring additive manufacturing and other innovations.

These and other innovations are helping Pratt & Whitney solve the kind of problems that characterize the 21st century.

As we prepare for an increase in engine production, we must approach the prosperity from the holistic perspective of an ecosystem. One of the main 21st century concerns for our industry is sustainability.

At Pratt & Whitney, sustainability means integrating environmental and social issues into the business model as part of our commitment to customers, employees and the communities where we live and work.

Pratt & Whitney has launched aggressive 2025 sustainability goals that touch every element of our business. Our global sustainability goals focus on waste, energy, water, safety and wellness, materials, suppliers and products. The company's sustainability improvements to date demonstrate a record of leadership, achievement and commitment.

We are enlisting our suppliers to participate in our efforts to follow a code of conduct that includes resource conservation, ethics, labor guidelines and safe workplace requirements.

Pratt & Whitney has invested almost $60 million in more than 800 environmental projects since 2006 and demonstrates its leadership in global sustainability through its innovative products and services.

Our sustainability leadership also includes LEED-certified green facilities globally, and every new facility we develop, as well as existing facilities as they are renovated, must be LEED certified.

Addressing these issues for future generations on a planet that is getting smaller by the day is quite simply the right thing for Pratt & Whitney – for the industry -- to do.

I look forward to working with many of you as we move ahead into an exciting future for aerospace and defense.