How to Build a Job Engine (TIME Magazine)
How to Build a Job Engine
By Bill Saporito Thursday, May 19, 2011
Read more: //www.time.com/time/business/article/0,8599,2072437,00.html#ixzz1N56uJIyk
Katherine Knapp Carney can barely contain her enthusiasm about her new job. A talkative, attractive 20-something dressed in a just-long-enough navy blue skirt and matching jacket, she would not be out of place in a management-consultancy firm or the account side of an ad agency. Instead, Knapp Carney is into heavy metal, a mechanical engineer at Pratt & Whitney. She designs jet engines. Pratt & Whitney, which had sales last year of $12.9 billion, is the biggest division of United Technologies Corp. (2010 sales: $54.3 billion), which makes all kinds of stuff, like Sikorsky helicopters, Otis elevators and Carrier air conditioners.
Since last June, Knapp Carney has been working on Pratt's new baby, a not-so-little engine that could called the PurePower PW1000G. "The excitement at Pratt & Whitney is actually palpable right now over this engine," she says. "Everybody is talking about it. We're in the game." (See pictures of new jobs for a new economy.)
The game is commercial aviation, and Pratt has been a laggard for years despite a strong presence in military engines. Within the company, the PurePower engine goes by the initials GTF, which stand for geared turbo fan. It's a leapfrog technology that promises a 16% better fuel burn and carbon emissions and a 50% reduction in noise. Knapp Carney works on a section of it called a bearing compartment. (See "What it Took to Create a Job for One Bright Engineer")
In a way, it's taken Pratt 20 years to create Knapp Carney's job and the hundreds, even thousands of others that will follow as the company moves from designing to manufacturing and distributing its new engine. That's how long it has taken Pratt to nail down the GTF technology and find a customer for it. The company's lean, green engine is the product of megatrends that have also been building for years: concerns about carbon emissions, fuel prices and noise control at the world's increasingly busy airports, many of which are in booming emerging markets with burgeoning new airlines like IndiGo, based in India, that are now Pratt customers. In late 2007 the Canadian aircraftmaker Bombardier provided lift, agreeing to be the launch customer for the engine with its new CSeries aircraft. Pratt also won orders for the Mitsubishi Regional Jet and from a new Russian airframemaker, Irkut.
Then, last November, Knapp Carney got a call from her boss: the company had gotten a huge order from three Airbus customers, including Lufthansa. Pratt had gone 3 for 3 in winning orders over rivals GE and Rolls-Royce for more than 600 PW1000G engines for the A320neo, an overhauled version of one of Airbus' mainstay planes. Pratt was back in business in commercial aviation. "When the A320 kicked off, there was a slot for me, and I was able to be a part of it. So I look at it that I really lucked out to be able to get on this program." (See TIME's special report on entrepreneurial heroes.)
Hanging on to high-end manufacturing jobs in the U.S. like these has little to do with luck. Pratt & Whitney isn't a story of cyclical job growth's trampolining off an economic rebound. The higher you go up the value chain and that's where American manufacturing, with its expensive labor and operating costs, has to go the bigger the risks, the more difficult the path to success. Pratt & Whitney president David Hess admits that the PurePower engine is very much a bet-the-company proposition. Pratt had been losing market share in the commercial-engine sector for years because it had nothing new to offer in the segment of the market for single-aisle airplanes.
A successful engine program will generate jobs throughout the supply chain for decades. The aftermarket aspect of jet engines their postsale maintenance, repair and operation is even bigger than the original-equipment segment. Says Hess: "If we strictly do the math for the number of engines that we will be delivering for those airplanes and add in some estimates for what the aftermarket will look like, the number comes out to about double what Pratt & Whitney is today."
That's a huge gain for Pratt and for the nation. And it's good news for Barack Obama. The President has made the creation of high-end manufacturing jobs particularly export-oriented, green jobs like these a political focus, appointing GE CEO Jeff Immelt to spearhead such efforts. Now, amid a lackluster economic rebound, American manufacturing, for the first time in decades, has seen an unlikely updraft. After losing 6 million jobs from 1999 to 2009, the manufacturing sector has been one of the few stars of the sluggish recovery. Nearly 1 in 6 jobs that have been created since the beginning of 2010 has been in manufacturing. (See "A Surprising Jobs Recovery: American Manufacturing Is Back.")
Output of autos and steel and machine tools is ramping back up in response to increased corporate and consumer spending. A weak dollar and rising labor costs in markets like China have helped too. Every week, it seems, there's an announcement from companies like Otis Elevator and Caterpillar about adding positions. GM recently announced a $2 billion investment in plants, and Ford has added or restored 5,500 jobs to meet increased demand. Volkswagen is opening a new plant in Chattanooga, Tenn., that will employ 2,000 people. "There's got to be a long-term recognition that these types of jobs are important to the U.S. economy, and I think we have to change culturally in recognizing the value of these long-term investments," argues Paul Adams, Pratt's senior v.p. of engineering.
Of course, the size of the U.S. manufacturing industry will never be what it was decades ago, nor should it be. The trick will be to keep the parts of it that are most lucrative high-end engineering positions that spawn other positions at home rather than see them follow low-skill jobs to emerging powerhouses like China. When Knapp Carney got her new job, she was one of only six people in her department. Now there are more than 100. Sales orders for all four versions of the GTF engine, which each have an estimated price of $12 million, have prompted Pratt to add nearly 500 engineers at its East Hartford, Conn., headquarters. "We haven't done this in some time," says Sue Gilbert, director of human resources. "It's easy to forget how difficult hiring people is and getting them onboarded and effective in their job." Every business in the area, from real estate to dentists to pizzerias, could benefit.
Looking for Guerrilla Funding
The path to Knapp Carney's new job follows the circuitous path taken by the GTF technology. It involves tough choices made by Pratt and difficult decisions made around the world by other large companies facing their own problems. For example, to keep the GTF going through the 1990s and 2000s, its proponents resorted to guerrilla funding, coming up with clever ways to grab R&D money to keep the concept afloat. It was a smart move. Companies that invest in R&D in a downturn when others are cutting tend to grab market share and keep it. Before Pratt had a single customer for the GTF, Hess and his two predecessors had blown $1.5 billion in R&D money. Five years ago, north of the border, another aviation company faced a strategic crossroads that would influence Knapp Carney's career. Bombardier, the Canadian airframemaker, had created the market for regional jets, the 50-to-100-seat aircraft that replaced those hated, noisy turboprops on secondary routes. (Pittsburgh to Indianapolis you know what I'm talking about.) Bombardier wanted to move up in class to the 100-to-150-seat market ruled by Boeing's 737 and Airbus' A319/A320. Why? By Bombardier's calculations, that segment would grow to 6,800 jets by 2019 as air travel within emerging markets multiplied with income growth.
see "10 Ways Your Job Will Change."
More important, it was a can't-miss opportunity, and Bombardier's goal was nothing short of a 50% market share. But to get there, it had to create an entirely new jet, powered by a more efficient engine. Choosing that engine had consequences. "The engine is really a monumental decision," says Bombardier's Robert Dewar, vice president of the CSeries. "Because if you get it wrong, you can't recover from it."
Pratt had come to the same conclusion. "Both Bombardier and Pratt had a focused objective: create an innovative product that lowered operating costs," says Bob Saia, vice president of Pratt's Next Generation Product Family division. A typical new or remodeled engine offered 5% to 7% in fuel benefits and comparable noise reduction. Pratt guessed that double-digit improvements in these categories would be needed to make any real noise in the marketplace and overcome resistance to a new technology. (See how to know when the economy is turning up.)
Not since the arrival of the Boeing 747 in 1970 had there been serious innovation in jet engines. They were loud, and they burned a lot of fuel. The geared turbo engine changed that by putting three innovations together in a new way. The first is the gearbox. It's lightweight, about 300 lb. (140 kg), and could fit in the trunk of your car, but it generates 30,000 horsepower. All jet-engine design has trade-offs among weight, drag, parts and power. "Now I have a lighter engine, so I can put a bigger fan on it," says Alan Epstein, the company's technology chief. A bigger fan, because it moves more air, can run slower. That reduces noise. It also means the engine needs fewer parts to power the turbine. And the engine housing, called the nacelle, doesn't need as much dampening, so it can be made with lighter-weight composite materials.
Each of these innovations alone would reduce fuel burn by about 2%. Combine them, though, and the improvements multiply. It's not incremental; it's monumental a 16% leap in fuel efficiency, which translates into a $400-per-hour savings on most jets operating today.
Knapp Carney owns a piece of that magic gear: the bearings compartments, which keep the gear shafts in perfect alignment. "I have significant responsibility for a certain set of hardware, and we take the cradle-to-grave philosophy of owning hardware, from the design concept up to physical metal on the floor," she says. The upshot is that jobs keep getting created as the project moves from concept to design to manufacture to maintenance, all requiring constant redesign and revision. "We get basically the baseline schedule and budget," Knapp Carney says. "Then we said, 'What resources do we need? How many designers do we need? How many analysts do we need for the different pieces of hardware?' " (See pictures from an aviation trade event.)
Knapp Carney has already ordered millions of dollars' worth of bearings, and she's about to place orders for castings from Selmet in Oregon. There will be hundreds of suppliers for the engine, ranging from United Technologies' Hamilton Sundstrand division to Sweden's Volvo. Manufacturing isn't a zero-sum game: when one country does well at it, it doesn't mean that others must suffer. There are some 15,000 to 20,000 parts to a jet engine, and given the mission keeping an airplane filled with humans in the air it has to operate nearly perfectly during its life span of 30 years.
For employees, the growing market for the new engine means opportunities will keep expanding too. Knapp Carney says she could spend her entire career working on the A320 engine if she chooses. "You can climb as high as you want. You can take on as much work as you want and get exposed to great opportunities at Pratt," she says. "But you can also find your happy place." Knapp Carney is going to be equipped for just about anything. She has an engineering degree from George Washington University and a master's from Rensselaer Polytechnic Institute and is working on an M.B.A. at Pittsburgh's Carnegie Mellon University.
Exotic New England
The job growth at Pratt won't extend evenly to all employees. Pratt began in East Hartford, which, like a lot of other New England mill towns, developed vast resources in metal and machining beginning in the 19th century. The 21st century has not been kind to such places, requiring Pratt and other industrial survivors to make hard decisions. Pratt has spent $1 billion restructuring, moving some of the work away from its high-cost unionized manufacturing plants in the Northeast to Georgia and overseas to Singapore, Turkey and China. But in many cases, that's allowed it to replace low-end labor with higher-end engineering jobs. "The fact that we've moved some of the manufacturing to lower-cost areas has actually enabled us to make bigger investments in R&D and win new programs and grow the company," says Hess. "It's really counterintuitive."
In New England, Pratt has retained a cadre of the most exquisitely talented and experienced shop hands. In its Middletown assembly plant, they make the exotic turbine blades a bimetallic blend of titanium and aluminum that are critical to the GTF. It can take two decades for a worker to acquire the skills needed, which is why some of them earn more than $100,000 in a good year and why those jobs don't move abroad as easily as lower-skilled work. When TIME visited, a group of employees were gathered around a partially assembled engine doing close-up work like orthopedic surgeons around a damaged knee. "You mistorque a bolt, it sets you back months," says Graham Webb, who runs the PurePower program. (See "The Workforce: Where Will the New Jobs Come From?")
As the PurePower engines move into production the first ones will be delivered to Bombardier in 2013 the manufacturing work will spread out. Pratt just opened a plant north of Montreal for its Canadian customer. It is also developing engineering capacity in Poland and India.
But moving trucks are on their way to East Hartford, bearing the belongings of new hires: 140 engineering grads will arrive in June. Newbies as well as experienced engineers will keep arriving for months. It's all made possible because of decisions made years ago, because of risks taken and rewarded.
The benefits of getting a long-cycle business like jet engines right are enormous for the country, the company, the community and the employee. They will pay off for talented people like Knapp Carney. She's been traveling for her job lately, sitting on planes and staring at the engines attached to the wings and thinking that one day she'll see her work hanging there like a piece of industrial art. That's why she got into engineering, she says. "It's jet engines. You don't get more exciting than that."
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