Shane Eddy

Thanks for being with us today.

Yeah, I guess, you know, Ernie, I would start by saying that as we sit here today, we're on track with our ramp and we're very well positioned to meet our customer commitments not only now but well into the future. You know, we talked about the fact that we had our industrial ramp at a level of maturity where we delivered on our stated commitment last year to deliver between 350 and 400 GTF motors, and I mentioned earlier today we delivered 374, which was right in the middle of the range. And I would tell you that we've got the capacity, the infrastructure, and the people in place to make sure that we meet our delivery commitments this year, and that means that we're going to double our output this year. A lot has gone into it. You know, billions of dollars have been invested to not only invent the geared turbofan family of products but also to industrialize for it. Hundreds of millions of dollars have gone into sites in Georgia where we manufacture components for the motors, into our sites in Connecticut, North Berwick, Maine, Lansing, Michigan, West Palm Beach, Florida, into the sites at Pratt & Whitney Canada, and into our sites in Poland. And all of that investment has positioned us to be on track and progressing up the ramp. In addition to that, our supplier spend is growing. We'll do $4 billion on direct products with suppliers this year, and that's going to grow to $8 billion by 2020. I think the key there is that we have awarded over $30 billion in long-term agreements, and those long-term agreements position our suppliers, really partners on the program, to make the capital investments and plan for the capital investments and the hiring that allows them to track up the ramp with us. One of the areas that was talked about significantly a couple of years ago was the hybrid aluminum fan. I can talk about that one as an example. We now have three factories: two of our factories in Lansing, Michigan, and a factory owned by IHI, two factories owned by IHI in Japan, that are producing the hybrid aluminum fans. I would say in terms of capital and equipment, we're fully capitalized to produce the hybrid aluminum fan at that rate, and we'll be matching our hiring and training plans for employees coming on board to the ramp. In other areas, I would touch on the isothermal forging capacity. These are the forgings that go into making the disks and rotors in the high-pressure turbine and high-pressure compressor for the motor. We have investment that is going in today. We have four of these presses that make these forgings at our facility in Columbus, Georgia that are online and operating today. The fifth press is going in, will be commissioned late in 2019, and it'll be producing at full rate in 2021. So we have that type of investment going on in parallel as well. And overall, I would say just very well positioned. Our plans have been developed and executed over a number of years in conjunction with the development of the product itself to meet our commitments for customers.

Yeah, we talk about it in terms of advanced manufacturing. Advanced processes that we're bringing online, in some cases related to the new material that's gone into the new motors, the tighter tolerances in the new motors, and in some cases for producibility and productivity. We talk about automation, and we've got automation going in in both the part manufacturing areas as well as, for the first time, in our assembly areas. We're bringing on semi-automated cells to do the stacking of our core modules. And then, of course, we talked about digital. And I think really digital is very exciting. We're sitting here at the UTC Digital Accelerator today. Digital is very exciting because we believe that digital will enable us to drive a step change in productivity in our factories, much like the GTF motors deliver a step change of performance for our customers. It's early days for us in terms of our connected factory journey. We have a Minimum Viable Product running in three of our factories where we've connected 70 machines. We really plan on exercising that pilot fully, and then we'll be replicating and deploying that pilot across all 31 factories. Connecting the machines gives us real-time situational data on what's going on with the equipment. Smart technology allows us to track the material while it's flowing through the factory. We put those things together, we really have truly integrated scheduling and planning that's adaptive to any micro or macro disruption that might happen in the value stream. We're also piloting the technology that will allow us to connect with suppliers. We talk about the fact that traditionally we will get commits from suppliers that stretch out for about a three-month period, but we're also today tracking their on-time starts. And we've got a supplier with a lead time that's nine months. Knowing that they've started on time, that they've got the working process in the volumes you need, you're actually troubleshooting for issues that you might otherwise have had nine months down the road. So at the end of the day, we want the whole value stream connected, and we certainly want that data to be coming in digitally and connected in a way that we can use machine learning to work on identifying problems much earlier before they occur, so that we can make course corrections in our manufacturing and deliver on time.

Yeah, I think you make a good point that there will be an evolution here. There are things that we know today that we didn't know five years ago, and there'll certainly be new things coming in the future. But our initial 10 factories, and this would involve roughly 2,500 machines, we look to have connected by the end of 2019. And then I would say around 2021 timeframe, we would love to have all 31 factories connected, in parallel developing the solution that'll let us integrate data that we're collecting from our suppliers today, hopefully rate from their systems coming into our systems in a way that lets us avoid employees doing non-value-added work, let them work on the things that actually need to be done that add value, or make sure that we're troubleshooting for problems in the future. And ultimately, we just want to make sure that we have the right part in the right quantity at the right place in the value stream at the right time to deliver on our commitments to customers.

Yeah, that's a really interesting question. I would start by saying that they've changed considerably over the last 20 years. The factories of today are not the factories of 20 years ago. We've got bright, clean, dynamic environments in our factories with a lot of high technology in the factory. The automation and the digitization creates intelligent cells where we're really using closed-loop machining, material is being handled robotically, inspections being done in an automated fashion right within the cell. So really, at the end of the day, your skill sets are evolving from, let's say, a machinist who used to set up the machine and monitor the machine while it was running the program, to a more broadly trained technician who's really looking at making sure that that entire cell is up and operating at capacity, anticipating through digital feedback from the equipment when we're going to have to do scheduled maintenance so that we can schedule around that, and then really just troubleshooting any issues that pop up on the cell rather than watching it at the piece part level.

Listen, you know, I always say that we're standing on the shoulders of the team that came before us. A lot of planning and really a lot of investment has been made for years to ensure that we were able to take full advantage of the opportunity that the GTF presents, and continue delivering the highest quality products on time to our customers. Thanks for being with us today.