the mro experience
TRANSCRIPT
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The MRO Experience
Aircraft Builders Council, Inc.
2011 Annual ConferenceSeptember 18-20, 2011 • InterContinental Boston • Boston, Massachusetts
Randy ThomasDirector, Customer Business, Commercial and Planning
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Introduction
The MRO marketplace is dynamic consisting of a number of different sub-markets each with their own complexities
Aircraft
Engines
Components
Each of these can be broken into yet further markets
In TAESL’s case we are in a large fan MRO market with engine thrust greater than 40,000 lbs
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TAESL
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TAESL
Texas Aero Engine Services LLC “TAESL” is a 50/50 joint venture of American Airlines and Rolls-Royce
Operating out of a 450,000 square foot facility with test cell capabilities to test up to 130,000 lbs thrust
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TAESL
70 Customers15 CountriesMore than 2000 Engines
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TAESL
TAESL provides repair services for Rolls-Royce RB211-535E4 powering B757’s, and Trent 800 powering B777’s
1998
FAR Part 145 certification and began off-wing repair and maintenance on the Tay 650 and RB211-535E4B engines.
December 1999
TAESL received its first Trent 800 engine
Currently we have the capabilities of 180 engines a year
$600 - $700 million annual revenue stream
TAESL is the largest RB211 535E4 overhaul shop in the world
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MRO Market
In 2011, global MRO spend will be up 10.8% over 2010, to $46.9B
$46.9B industry will grow to $69.0B over 10-year forecast period
Engines remain the largest segment with the highest growth rate
Source: TEAMSAI©2011
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Engine MRO Market
Engine growth is expected to maintain a 4.2% CAGR through 2021
Eastern Europe leads the growth, followed by India and China
North America and Western Europe are expected to lose share as emerging regions’ share increases
Source: TEAMSAI©2011
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Large Engine MRO Market
Source: TEAMSAI©2011
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Large Engine MRO Market
Materials constitute the largest share of the engine MRO market value
Repairs and labor follow parts
MROs have very little input on OEM parts and Outside Repairs
Source: TEAMSAI©2011
Distribution of Costs
Repair, 25%
Labor, 17%Material, 58%
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Competing in the MRO Market
With 80% plus of the cost inputs similar across competitors competition focuses on more than cost
International shipping of an RB211 535E4 is not a factor
It is truly a world wide competitive market driven by:
Relationship
Quality
Cost
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Competing in the MRO Market
Large engines are expensive to own or lease
The Customers rely on the MRO to provide advice that can be trusted, provide a quality service and do so “relatively” quickly in order to hold the fewest required spares
Our approach is to partner with the Customer to balance long term gains with short term wins
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Technical Expertise
Comparing the benefits and
potential problems of check and
repair vs overhaul
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Check and Repair vs Overhaul
Technical risk
When workscoping the engine for a check and repair instead of an overhaul you need to be thinking “By not overhauling the engine what risk am I accepting?”
Issues to consider:
• Current life of engine• Required engine life / Profile of engine• Cost of check and repair against predicted engine life
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Check and Repair vs Overhaul
Commercial risk
Understanding the life cycle of the engine in order to see how different strategies will affect the life cycle cost plays a role in the decision
Spending a significant amount on a check and repair now may not give the life benefit required
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What can be done during a
shop visit?
The Swiss watch approach – “blue printing”
Replace with new
A better way?
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The Swiss watch approach
Matching components within the engine
Individual rework of each engine
Every engine is as good as it can be.
Low cost of new parts, old parts are reworked and then match
machined
Benefits
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Replace with new?
Performance and reliability components replaced with new
every overhaul
Mostly Hot end items
OEM recommended
Standardized workscope
Known life from components
Benefits
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Replace with new?
High Cost
Unused life
The Down side
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A Better Way?
Only use New material in areas that need it
Gets the most life and therefore the most value for money out of
all components
Does not affect reliability
Does not affect performance
Using new and serviceable used parts in a strategic way to
produce an engine that meets the mission requirements for
the most value for money
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A Better Way?
Needs a transparent culture and business model
To do this well the MRO needs both the experience of
engine/fleet performance and trust of the Customer that the
MRO has their best interest in mind
Access to serviceable used material
Early engine removal results if you get it wrong
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Business Risk and Quality
Management
The most important part of the
relationship is producing a safe
engine when we say it will be
done
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Event
No Business
Processes
Disaster Recovery
Contingency Planning
Risk
Avoidance
Workaround
Processes
Recovery
Strategies
Normal
Processes
Risk Mitigation Disaster
Declaration
Emergency
Response
Recovery of
IT Resources
Executive
Management
Team
Damage
Assessment
Team
IT Recovery
Team(s)
Business Unit
Recovery Team(s)
Administrative Support Team
Business Continuity
Crisis
Communications
Crisis Response Team
Red: Pre-Declaration
Blue: Post-Declaration
Program of
Insurance
Regulatory
Compliance
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Business Risk Management
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Quality Transformation Process
Reactive Structured Reactive Proactive Systematic World Class
Regulatory Compliance
Approach
Inspection of quality to
the OPM
All quality issues
assigned to QA
Audits conducted by
QA as an isolated
and independent
group
Boroscope reporting
process as means of
standardization
Consistent Customer
and FAA audit
performance
Meaningful QEMS
process
SB verification
process
Implementation of
SQ1, as means of
partnering with the
business
Implementation of TI
Customer validation
as a step towards
customization of
products
QA EI meetings to
solve QA issues
and to support our
partners
Human Factors
training
QRB process as a
Visual / Interactive
Quality/Safety tool
Incorporation
Of MEDA
process
Implementation of
automated NCR
process as new
integral procedures
Partnering with Risk,
Safety and QA
Completion of 5 S
process in QA visual,
includes revamping of
QA area
Customer focused
Risk Sharing
Benchmarking to
ensure world class
operation
Kitting verification as
a means to maintain
quality with minimum
deviation
Quality driven by
Processes and
Procedures
SAP implementaion
along with supporting
procedures (AS 9110)
Baldrige Criteria to
measure our
business
Data driven
decisions
StraightenSweep
SortStandardize
Sustain
Employee
Safety
SAFETY & QUALITY KPI Charts
“Ben Hurt” Safety Report “Wise Owl” Training Report
“SCONQ Report” Measures Cost “Inspector Badget” Audit Performance