UTC OTIS UTC CLIMATE, CONTROLS & SECURITY PRATT & WHITNEY UTC AEROSPACE SYSTEMS
SPEECH

Di Perna Speaks at IMCP Roundtable

EAST HARTFORD, Conn., Friday, June 3, 2016

Danny Di Perna, senior vice president, Operations, Pratt & Whitney, spoke at a roundtable for members of the Investing in Manufacturing Communities Partnership on Friday. Attendees included representatives from the Obama administration and the Economic Development Administration.

Full Text Remarks, as Prepared for Delivery

Good afternoon. I'd like to welcome to Pratt & Whitney our governor Dannel Malloy; Commissioner Catherine Smith; Jason Miller, an advisor to President Obama on manufacturing matters; Jay Williams, U.S. Assistant Secretary of Commerce; a number of distinguished federal officials from the White House and the Economic Development Administration; and other invited guests as part of the group's day-long visit across our state to understand how industry, academia and the government is working together to support and strengthen manufacturing.

We are pleased to host all of you here today for this session to highlight how important the aerospace industry is to our company, to Connecticut and across the United States; how we're incorporating innovation and technology and lean improvements in the industry; and to outline Connecticut's efforts in regard to workforce, R&D, trade and investment, developing supplier networks, infrastructure and site development.

These efforts come at a critical time for us given the tremendous growth in the aerospace sector. Pratt & Whitney's story is part of a broader one that recognizes a U.S. aerospace manufacturing renaissance. The U.S. has become the renewed hotspot for manufacturing due to advanced and specialized manufacturing methods, engineering capabilities and an available pool of skilled labor.

The current aerospace growth is impressive, to say the least. Major market forecasts anticipate that between 2016 and 2034, air traffic will grow at 4.6 percent annually, requiring some 32,600 new passenger and dedicated freighter aircraft at a value of $4.9 trillion.

Innovation and product development that is a result of this growth occurs at the OEM level in the U.S. and flows out to suppliers. This sector exported $143.3 billion and imported $67.3 billion worth of goods in 2015 – the most favorable balance of trade in the manufacturing sector by far.

Pratt & Whitney is one of the driving forces for this market expansion. We have a backlog of more than 7,000 orders and commitments for our new PurePower® engine family, and we see production more than doubling over the next 3 to 5 years.

We are also seeing tremendous growth in our military business as we prepare to build more than 3,000 F135 engines for the F-35 Joint Strike Fighter and ramp up production of parts for F119 engine on the F-22 Raptor. These engines are the most advanced military power plants ever produced and are critical in projecting U.S. strength internationally.

We are steadily increasing large commercial and military engine production from about 650 in 2015 up to about 1,400 by the end of the decade. This represents the largest engine production ramp since the 1980s.

To accomplish this historic demand, Pratt & Whitney has committed significant capital to transform our global operations by investing in our global facilities, technology, training and tooling.

We are investing more than $1.3 billion worldwide to expand our network of manufacturing and assembly and test sites, allowing us to limit single points of failure on these critical programs.

The investment includes more than $400 million to modernize, transform and expand the company's East Hartford and Middletown, Connecticut, facilities. We are also investing in our other sites in U.S., Canada and overseas.

Pratt & Whitney also is hiring hundreds of new employees to support the production increase. Our U.S.-based manufacturing growth is possible because of a skilled labor pool; infrastructure; and quality, compliance and regulation practices that protect our intellectual property. We are hiring design engineers, manufacturing engineers, skilled machinists, engine mechanics and engine assemblers.

At the same time, our strategy is clear that we source for best value. We produce a number of high-technology products and are committed to maintaining that capability in the United States. Pratt & Whitney invests here because our employees and suppliers provide the best when it comes to technological advancements, engine production prowess and support.

To be successful, we need continued state and federal support to create a culture that rewards and develops our manufacturing supply chain to improve technology, quality, and compliance and regulatory practices.

Pratt & Whitney has invested in a comprehensive Supply Chain Readiness strategy to meet our customer commitments, and have signed more than 400 long-term agreements valued at more than $23 billion with key product suppliers, enabling them to invest in capital equipment and hire and train people.

In Connecticut, we have about 100 product suppliers and thousands of indirect suppliers, and we spent more than $400 million for key products from Connecticut companies in 2015.

This number will continue to grow as our production grows, and we anticipate our annual supplier spend in Connecticut will triple by 2020. That's critical to our success as more than 80 percent of our engine parts come from our supply base.

As we look to the future, our supply chain will be more important than ever to enable the business growth we have in front of us. We're continually and actively seeking suppliers who can deliver high-quality parts, while meeting our cost and schedule targets.

The growth is not just good news for United Technologies employees and shareholders, it is also good news for our suppliers in Connecticut and, ultimately, for U.S. manufacturing.

One way to expand capacity is to improve the performance of U.S. suppliers. We're helping to do that by rolling out our ACE Quality System across the supplier base and through the UTC Supplier Gold program.

Our Gold suppliers average 98.5 percent on-time delivery, versus 72 percent for Underperforming suppliers. For defective parts per million (a measure of quality), Gold suppliers only average 53, while Underperforming suppliers average nearly 45,000 defective parts per million.

As you can see, we are working to ensure the most competitive and technically advanced suppliers throughout Connecticut and New England have an opportunity to be part of our growth story.

Connecticut has a strong and experienced workforce in manufacturing, especially in the aerospace sector. We also have training programs in place that continue to hone these skills, including ones with Goodwin, Asnuntuck and Manchester community colleges.

We have partnered with local community colleges and universities to create centers of excellence and helped develop programs to ensure our suppliers have trained resources available to develop their workforces, and we have contributed more than $10 million over the last five years to support these educational programs.

Under the Connecticut Aerospace Reinvestment Act, our parent company, United Technologies, is investing up to $500 million to upgrade and expands its aerospace, development and research facilities across the state over the next five year. A part of this investment will be a new 425,000-square-foot Pratt & Whitney World Headquarters and Engineering building that will attract global engineering talent and be a collaboration hub for our facilities around the world.

But we need continued support and resources injected by the state and federal levels to support these efforts. This will ensure that not only the State of Connecticut but all states across the US remain globally competitive.

We need your to continue to promote existing programs such as Centers of Excellence, research labs and Commerce Department field services to make them more visible to the supply chain.

We need enhanced field capabilities to assist suppliers with quality, cost and delivery processes through the Commerce Department, Small Business Administration and other field agencies and help in qualifying suppliers in adjacent industries to build a broader customer base that includes aerospace.

We need redirected and redeployed assets from Centers of Excellence to assist suppliers with business development, as well as a reduced bureaucratic burden on small suppliers.

Finally, our state, our suppliers and schools need help in continuing to develop the talent to meet the demands of 21st-century manufacturing by fostering and supporting programs that advance needed skills at the community college through university levels.

When done right, it's been proven that industry, government and academia partnerships can rapidly move technologies forward, and much is being done.

The Investing in Manufacturing Communities Partnership, or IMCP, strengthens manufacturing capabilities by supporting states with long-term economic development strategies and strong manufacturing industries.

I'm pleased by what we can accomplish together. We have a few examples of some of the projects we have worked together shown around this shop area. One IMCP project involves Pratt & Whitney and the United Technologies Research Center, as well as the University of Connecticut, the Connecticut Center for Advanced Technology (or CCAT) and several state machining suppliers to develop, demonstrate and implement machining process simulation capabilities for the goal of increasing machining process development speed and efficiency.

Machining is a complicated manufacturing process. As components become more geometrically complex and with new hard-to-machine materials, machining becomes even more challenging.

An estimated $8.2 million in annual savings have been identified by Connecticut-based machining companies for the project, with enhanced machining efficiency expected to increase the competitiveness of state-based suppliers to support, local, regional, national and international customers.

Each participant in each of the innovation projects plays a vital role in their project's success. It points to the belief that, by working together, partners in manufacturing technology can solve problems, reduce costs and grow the industry.

As a member of the state's Manufacturing Innovation Fund's Advisory Board and I can see that the inititives to support the growth, innovation and progress of Connecticut's advanced manufacturing sector are working!

Programs like IMCP and the Manufacturing Innovation Fund are outstanding examples of what we can accomplish by working together. But it is only the beginning.

It is now my pleasure to introduce Mun Choi, provost for Academic Affairs at the University of Connecticut. Mun and I serve as co-chairs of the IMCP's Research and Innovation Initiative. Pratt & Whitney has a long history of investing in and partnering with UConn because of the engineering value they give us. We have established a Center of Excellence there in the field of aviation propulsion systems, endowed a chair at the School of Engineering and fund the Bridge program, which awards annual scholarships to promising engineering students.

Mun is here today to expand upon the partnerships between UConn, other academia and industry. Please join me in welcoming, Mun Choi.