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."
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.
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."
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.
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.