Aerospace Components Manufacturers, Inc.

P.O. Box 736, 1090 Elm Street, Rocky Hill, CT 06067 (860) 513-3205 FAX (860) 529-5001

www.aerospacecomponents.org E-mail: alsamuel@acm-ct.org

The ACM Update & Calendar (& previous issues) are also available on the website in the About ACM menu

Business Development

● The Business Development Team met on January 16th with a ‘full-house’ of attendance at this first meeting of the year. Bruce Fiedorowicz welcomed members and chaired the meeting. Bruce introduced as guests, East Hartford based Jay Seo, Procurement Manager and Mike Lipka, Quality Manager of Hanwha Techwin (formerly, Samsung Techwin). Jay presented an overview of the parent Korean conglomerate, Hanwha Group, established in 1952 and now, Korea’s 8th largest company in terms of assets. Hanwha Group boasts sales of $55 billion and has over 56,000 employees. Hanwha Techwin is Korea’s exclusive manufacturer of aero engine components as well as having an overhaul and repair capability for the OEM’s. Established in 1977, Techwin had sales of $2.5 billion in CY2015 with a goal to achieve $10 billion by CY2025. Their portfolio is a mix of both commercial and military engines (fixed and rotary wing power, missile propulsion), with LTA’s and RSP programs with each of the engine OEM’s. Hanwha Techwin is a major RSP partner with P&W on the GTF program. Their goal, according to Jay, is to become the #1 global engine component manufacturer and a leading RSP partner. Jay stated their need to buy an increasing quantity components from both OEM approved suppliers as well as Hanwha Techwin approved sources; this is a potential opportunity for ACM member firms. For additional information, Jay Seo may be contacted at: Bruce Fiedorowicz reported Johann Bodensteiner, Procurement Manager at Arconic Fastening Systems & Rings (Rochester, NY) had contacted the ACM and is looking to expand partnerships with new suppliers who have the capability and capacity to machine rings in the 20” to 50” plus size-range. The material are nickel-based alloys, titanium, and stainless steel with the expectation of a quick turn-a- round time. Forgings would be issued in batch sizes. Arconic prefers sources who can service all primes. For additional information, contact Mr. Bodensteiner at: johann.bodensteiner@arconic.com. David Falconer, Head of International Purchasing at Rolls-Royce Americas also contacted the ACM to inform of their need to expand their North American supply base and are looking to the Connecticut

The World’s Aerospace Alley! ®

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region for potential suppliers who can produce complex parts and assemblies. Rolls needs AS9100 approved sources who have capacity and are price competitive. Mr. Falconer indicated a willingness to send audit teams to ACM member companies who can fulfill these requirements. Specific needs are for Ducts and Gimbals as well as complex fabrications. ACM members may reach out to David at: David.Falconer@Rolls-Royce.com. Melissa Grosso, Senior International Trade Specialist with the U.S. Commercial Service (Middletown) addressed the members to inform them of an upcoming B2B Webinar sponsored by Embraer of Brazil. The event will be held Thursday February 1st at 11am, is free, however registration is required. Embraer is also looking to expand their component supplier base with emphasis on fasteners and raw material suppliers of aluminum, steel, forgings and tubes. Melissa also advised of an upcoming Export Week event taking place the week of March 19-23; specifics on content and locations will be forthcoming. Upcoming Industry Meetings include:

-AHS (American Helicopter Society) Dinner, January 30th in Middleton, MA -Singapore Airshow, Singapore, February 5-9th -Pacific Northwest Aerospace Alliance Commercial Aerospace Conference, Seattle, February 12-15th -Sikorsky Blackhawk Conference, March 7-8 -US Dept. of Commerce, Export Week, March 19-23 -Aerospace & Defense Supplier Summit, Seattle, March 26-28th -International Aerospace Week, Montreal, April 16-20th -Farnborough International Airshow, Farnborough, UK, July 16-22nd

Members conducted a roundtable discussion of current issues in the industry; as these conversations are always candid, details are omitted. General comments included:

-The IGT (gas turbine) market has had significant negative impact in requirements; one member indicated double-digit reductions in volume. -Many of ACM members are expanding facilities and investing in new equipment to meet the demand on the commercial side, some reporting double-digit increases in growth. -P&W Geared Turbofan Program highlights:

- >8,000 engines ordered - >500K flight hours - 135 aircraft in the fleet, operating on two aircraft platforms - 21 operators - Over 160K flights to date - Greater than 22M passengers carried

Allen Samuel reviewed the results from the December 2017 ACM Business Survey; he indicated the data from 74 companies with the disclaimer of the ‘non-scientific nature’ of year-to-year comparisons due to different companies responding. Having said this, the year-to-year trends appear to be logical. The following summarizes the survey:

• Total Sales volume of ACM firms: ~$3 billion (+14.2% change from CY2017 to CY2018) -Sales to major OEM’s (% of Total): UTC: 28% GE: 18% R-R: 20% -Commercial Aerospace: >50% (+0.50%); Military Aerospace >32% (+4.7%); Ground Turbine: 5% (-18%)

• Inter-member sales: >$100 million (+34% YoY)

• Domestic Sales: 89%

• Employment: ~9,000 employees; Average Employment per Company = 119; Median = 81.

Please see the summary charts on Pages 3-4!

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December 2017 Business & Employment Survey

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● The next meeting of the Business Development Team will take place on Tuesday, March 13th at 8:00am at The Lyceum (227 Lawrence Street) in Hartford. The following is the 2018 schedule for Business Development Team meetings, all at The Lyceum: Tuesday, April 17th Tuesday, June 12th

Tuesday, August 21st Tuesday, September 18th Tuesday, October 16th Tuesday, December 11th

Pratt & Whitney Meets 2017 GTF Delivery Target By: Chris Kjelgaard January 24, 2018

United Technologies subsidiary Pratt & Whitney delivered 374 PW1000G-family geared turbofan (GTF) engines last year, “right in the middle of our target range,” UTC CEO Greg Hayes told financial analysts during the company’s 2017 earnings call Wednesday.

In achieving 9% organic sales growth for the year, P&W led all of UTC’s major businesses in sales growth in 2017. P&W “had a huge quarter, a great 2017, and growth will accelerate this year,” said Hayes. "GTF production will almost double in 2018 and it will go up again in 2019.” P&W posted a $1.46 billion operating profit for 2017 on revenues of $16.16 billion, and UTC forecasts that the engine-maker’s sales will grow “in the low teens” percentage-wise this year as the GTF production rate continues to climb.

Hayes said P&W has addressed reliability deficiencies in the GTF, having designed and certified permanent fixes for the number-three bearing oil seal and the inner and outer combustor lining in each PW1000G engine. Premature deterioration of those parts caused oil system chip-detector warnings in many GTF engines in 2017, requiring a number of airlines—particularly the initial two Indian operators of A320neos—to ground a sizable number of aircraft on an emergency basis until Pratt repaired or replaced the engines.

However, now “the number of AOGs is less than a handful, and we’ve got more [spare engines] than we need” to service any remaining AOGs, said Hayes. Having decided in the third quarter to divert into PW1100G and PW1500G spares pools a sizable—but undisclosed—number of GTF engines originally intended for installation on new aircraft, P&W had on hand more than 40 spares at the end of the year. “We’ll make more this year, but not at the same ratio,” said Hayes.

“Every GTF engine out the door today has got the two big fixes in it. The challenge in 2018 is that we have to do a number of overhauls,” he added, referring to the need to install the redesigned parts involved in the two permanent fixes in on-wing engines. GTF engines now achieve an average dispatch reliability of 99.88% and airline operators are praising the engines’ fuel-efficiency, he said.

Hayes pointed to the choice by Delta Air Lines of PW1100Gs to power the 100 A320neos it ordered last month as a reflection of operator satisfaction with and the reputation of the GTF. “They wouldn’t have selected it if they didn’t think it was the right engine,” he said in reference to Delta, which he called “a very sophisticated customer.”

Commercial-engine aftermarket sales—which climbed 11% in 2017—provided another big boost for P&W revenues last year. “The aftermarket in the V2500 is entering the sweet spot,” said UTC chief financial officer Akhil Johri, who expects P&W to see another 10% growth in V2500 shop visits this year and more than 1,000 large-engine shop visits overall in 2018. “It’s a long time since Pratt & Whitney has been there and it is only going to grow,” he added, as the V2500 production rate continues to remain high and PW1000G engines begin to contribute to the company’s MRO and other aftermarket activities. The V2500 is manufactured by the International Aero Engines partnership, which includes P&W, Japanese Aero Engine, and MTU Aero Engines. SOURCE: AINonline

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2017 surpasses aerospace, defense deal record by $5 billion By: Daniel Cebul January 25, 2018

WASHINGTON ― The global aerospace and defense industry experienced a record year in 2017 due to the large number of mergers and acquisitions, according to a report by PwC*. The value of deals from last year totals more than $72 billion, surpassing the previous $67 billion record set in 2015, the report said.

United Technologies Corporation’s acquisition of Rockwell Collins in September for $30 billion is the second-largest transaction in industry history. There were three other “Megadeals” ($5 billion-plus) in 2017: Northrop Grumman’s $9 billion acquisition of Orbital ATK; Safran’s $8 billion acquisition of Zodiac Aerospace; and Thales’ $5 billion acquisition of Gemalto. While the total number of deals in 2017 was the same in 2016 ― 454 in total ― the average deal size increased 69% from 2016 levels, averaging $411 million in 2017, PwC said.

The report attributes strong activity in the defense industry to geopolitical tensions, a growing emphasis on missile defense in light of an emerging N. Korean threat and the Trump administration’s push for increased defense budgets. Other catalysts include plans by contractors to invest in emerging technologies that will play a crucial role in the Defense Dept’s Third Offset Strategy, which includes autonomy, artificial intelligence, robotics and cyber.

Regional trends remained consistent with previous years’ activity, with North America remaining the most active acquirer, with the U.S. accounting for 32% of targets. The U.K. and Eurozone as well as the Asia and Oceania zones were the next most active regions, despite Europe’s contribution as an acquirer dropping 20% for the year. The report attributes this drop to the region’s “more diplomatic stance to a changing geopolitical landscape.”

Looking forward to 2018, the report predicts recent tax reform could impact deal values and volume as “increased liquidity becomes available to fund inorganic growth agendas.” SOURCE: DefenseNews

*PwC = Price Waterhouse and Coopers

Pratt geared turbofan engines to power Brazilian aircraft BY: Patricia Daddona January 29, 2018

East Hartford aerospace manufacturer Pratt & Whitney said Monday its geared turbofan (GTF) engines have been delivered to Brazilian aerospace conglomerate Embraer for use in Widerøe Airlines in Scandinavia. Final assembly and installation of the engines will be at Embraer facilities in São José dos Campos, São Paulo, Brazil, the two companies said.

"The GTF is the ideal engine to power Embraer's new E2 aircraft," said Graham Webb, vice president of commercial engine programs at Pratt & Whitney.

Since entering into service in early 2016, the GTF engine is reducing fuel burn by 16%, reducing nitrogen oxide emissions by 50% and lowering the noise footprint by 75 percent, Pratt said. SOURCE: HartfordBusiness.com

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Aircraft Gearbox Market worth $4.53 Billion by 2022 January 22, 2018

According to the new market research report, now available on ASDReports, "Aircraft Gearbox Market by Application and Region - Global Forecast to 2022", the aircraft gearbox market is projected to grow from $3.38 billion in 2017 to $4.53 billion by 2022, at a CAGR (compound annual growth rate) of 6.01% from 2017 to 2022. Increasing demand for aircraft and present supremacy of Pure-Power Geared Turbofan (GTF) Engines are the major factors driving the aircraft gearbox market. Based on application, the engine segment of the aircraft gearbox market is estimated to grow at a higher rate during the forecast period. These engines require a huge amount of thrust during takeoff and landing. Engine gearboxes help these aircraft engines achieve high thrust, which drives the aircraft to move forward. Turbofan engines are increasingly used in commercial aviation and military aviation applications. Hence, the demand for turbofan engines is likely to increase with the growing demand for commercial air travel globally and rising defense budgets of prominent economies. Based on gearbox type, the accessory gearbox segment of the aircraft gearbox market is projected to grow at the highest CAGR during the forecast period. The growth of this segment can be attributed to the increasing demand for new aircraft from the airlines. Accessory gearboxes are used in every kind of medium and large aircraft, hence, with growing demand for commercial air travel globally and rising defense budgets of prominent economies, the demand for AGB is likely to increase. Based on fit, the linefit segment of the aircraft gearbox market is projected to grow at a higher CAGR than the retrofit segment during the forecast period. The anticipated higher growth rate of the linefit segment is due to the increase in aircraft orders as well as deliveries, economic growth across regions, and an increase in passenger traffic. Based on aircraft type, the civil aircraft segment is estimated to witness a higher growth rate during the forecast period. The civil aircraft segment has been witnessing significant growth in the past few years due to increasing air traffic and rise in the disposable income of middle-class populations across the globe. Increased demand for new aircraft around the world is also fueling the growth of the civil aircraft segment. Among regions, the aircraft gearbox market in Asia Pacific is projected to grow at the highest CAGR during the forecast period. The aviation industry is growing at a significant pace, due to increasing air passenger traffic and improving economic conditions in the region. The growth in air passenger traffic has resulted in increased demand for new lightweight and fuel-efficient aircraft from the region, which is expected to fuel the demand for aircraft gearbox during the forecast period. Major companies profiled in the aircraft gearbox market report are Liebherr (Switzerland), United Technologies (US), Aero Gearbox International (France), Northstar Aerospace (US), Safran (France), and others. SOURCE: ASDReports – Market Research

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Progressive Manufacturing ● We need your input for meeting topics for upcoming Progressive Manufacturing Team meetings; ideas can span traditional Kaizen, Technology and/or Quality. We look forward to hearing from you; please contact Team Leader Eric Schneider (Birken Mfg) at eschneider@birken.net or the ACM Office at alsamuel@acm-ct.org. The schedule for the upcoming meetings of the Progressive Manufacturing Team will be forwarded to ACM members in a subsequent email notice.

Workforce Development ● As ACM completed its recent survey of business and employment (see above) it was clear our industry is in its best business position in many years with firms reporting their need to increase their workforce in 2018. Our greatest challenge is finding and training new employees to staff our expanding business and provide continuity into the future.

ACM together has the answers; focused best practices bring clarity and understanding to this daunting issue. It also provides solutions.

The WorkForce Development Team will present a special informational meeting on Tuesday, February 6th at 8:00am at Habco Industries, Glastonbury that is directed toward the leadership of ACM member firms.

“How to Cut the Red-Tape in State Supported Training Dollars”, will specifically address the Apprenticeship Program, Incumbent Worker Training,

and how to effectively deal with Universities and Community Colleges. Representatives from the Connecticut Department of Labor and Connecticut State University & Community Colleges will present a step by step navigation of the process. Several ACM members will present their own experiences with “cutting through the red tape.” There will be an open forum to discuss these topics. This is a leadership issue requiring your company’s decision-makers to attend; actively participate to help mold your business future. Please plan to participate; your RSVP to the ACM Office is requested.

Purchasing

● The next Purchasing Team meeting will be announced via email to the members.

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News from ACM Members

Please forward significant company news and announcements to Allen Samuel at

alsamuel@acm-ct.org for posting on the ACM website and publication in the UPDATE

An agreement has been reached for Element Materials Technology to acquire Metals Testing Company in 2018. The transition is targeted to be completed within 180 days. The beginning of that transition is January 16, 2018.

The addition of MTC will complement existing Element NDT facilities in California, Houston, Monterrey, Mexico and Sheffield, UK.

How Does This Effect MTC Business?

The effort will focus on a smooth transition from MTC to Element. Nothing will affect day-to-day operations. For example:

• Purchase Orders should continue to be placed with Metals Testing Company.

• MTC Personnel will continue to work at our South Windsor facility.

• All existing approvals will continue as being for MTC.

• The company is still run by Bob Delisle.

• Vendor relations will continue with MTC.

As milestones are reached during the transition period, they will be communicated accordingly. Stay tuned to our website http://mtc62.com/element-acquisition-of-mtc/ for such up to date details.