Tag: Rolls Royce

OM in the News: Airplane Supply Chains and the Rolls-Royce Constraint

Workers check a Rolls-Royce Trent 7000 engine on the assembly line of the Airbus factory in France.

A supplier that is quite literally an engine of aerospace supply chains is having trouble powering up, writes The Wall Street Journal (Nov. 1, 2018). Rolls-Royce is warning its aircraft-engine production will fall short this year, adding to the pressure plane makers face in delivering new jets to airlines on time. The British manufacturer blamed the setback on production problems with a new engine, the Trent 7000, used to power Airbus A330neo wide-bodies. It said it would ship 500 rather than 550 airliner engines.

Boeing and Airbus have struggled this year to get planes into customer hands because of production problems. Boeing has had 737 single-aisle planes lined up on the ramp at its Seattle production site awaiting engines. Delays to fuselages also hit production. For Airbus, the Rolls-Royce setback comes at a particularly difficult time. The company is already late with deliveries of its popular A320neo single-aisle planes. Both its engine suppliers, Pratt & Whitney and a joint venture of GE and Safran, fell behind this year on producing engines. The jet makers insist they are catching up, but one key customer says supply chains remain “tremendously constrained and under pressure.”

Airlines are increasingly frustrated by the situation. The CEO of British Airways said “these issues have gone on far too long already.” The airline’s Boeing 787 Dreamliners have been beset by repair problems on their Rolls-Royce engines. Norwegian Air Shuttle, which has had to rent alternative planes because of the same engine problem, this week said compensation payments from Rolls-Royce didn’t make up for the financial impact the struggling carrier has felt.

Classroom discussion questions:

  1. Why are engine suppliers unable to meet commitments?
  2. How many engine suppliers are there? Who are they?

 

OM in the News: 787 Dreamliners Facing More Rolls-Royce Engine Flaws

Rolls Royce engine of a Boeing 787 Dreamliner

Faulty Rolls-Royce engine blades are deteriorating faster than expected, prompting additional groundings of Boeing Co.’s 787 jetliners for early repairs, reports Businessweek (Sept. 27, 2018). The discovery affects about 120 Trent 1000 turbines,  8% of the global fleet, and has frustrated efforts to reduce the number of idled planes after a series of engine issues.

Rolls-Royce uncovered the part’s shorter life-span in December, when Air New Zealand Dreamliners suffered in-flight turbine damage on successive days. The flaws add to Rolls-Royce’s struggle with design faults to the engines, which have already prompted the company to record $1.5 billion in charges. The engine maker also faces a blow to its image because the faults involve the high-profile 787, Boeing’s most advanced model, leaving airlines rushing to find replacement aircraft for long-haul routes. Air New Zealand said it will cost the airline $26 million this year. With as many as five of its 13 Dreamliners grounded at any given time, the carrier has had to lease three aircraft to make up for the shortage.

The intermediate pressure turbine blades — which had already been flagged for replacement — aren’t lasting long enough to meet the previously set maintenance schedule. Engine makers like Rolls-Royce typically foot the bill — including for the leasing of replacement aircraft — when design or production issues delay deliveries or force airlines to idle jets that are already in service. The U.K. manufacturer has gone on a fence-mending campaign as customers for the engine — including British Airways, Virgin Atlantic, and Norwegian Air — have been forced to hire jets this summer as turbines go in for repairs.

Classroom discussion questions:

  1. Why are flights being grounded?
  2. What is the cost to Boeing? To customers? To Rolls-Royce?

OM in the News: Why Rolls Royce Does Its Production in High-Wage Countries

While many American and European manufacturers have transplanted production  to low-wage countries like China, Vietnam, Bangladesh, and Mexico in the past two decades, one company, Rolls-Royce PLC, has taken a contrarian course. The Wall Street Journal(Oct.21,2011) reports that the jet engine producer (it no longer makes cars–that went to BMW in 1998), has factories in England, the US, and Germany–and is about to open a new titanium jet-engine fan blade factory in Singapore, where wages dwarf those of the surrounding region. Why a billion dollar investment in Singapore?

Executives chose Singapore for 3 reasons: (1) a highly educated workforce, with the government picking up the tab for training 500 new hires–people  capable of dealing with the advanced processes of manufacturing to tolerances smaller than a human hair; (2) booming Asian demand for its engines, which power such jets as the jumbo A380; and (3) a link to new network of local suppliers. Rolls is willing to pay lavishly  for the talented employees that will confirm its bet that brains can match the brawn of lower-cost competitors. On the other hand, GE, Rolls’ biggest competitor, has research centers in Brazil, China, and India. “We want to be a participant in China, not just sell products there”, says a  GE spokesman.

Rolls-Royce joins a handful of companies, including Whirlpool and Caterpillar, that are bringing jobs back home. Most of these producers emphasize know-how and manufacturing efficiency over labor cost. They also avoid  a problem for major corporations in China and other developing countries regarding protection of copyright laws. Execs from GE, Microsoft, Kawasaki, and Siemens have all criticized China for costing them billions of dollars, due to ineffective intellectual property rights.

Discussion questions:

1. Why does Rolls take the stategy of manufacturing in high-cost countries?

2. How does Rolls train its hundreds of apprentices every year?