Printed headline: Overcoming Capacity Constraints
Like many engine shops across the world, capacity is tight at MTU Maintenance. The MRO division of Germany’s MTU Aero Engines, which operates a network of facilities across Europe, North America and the Asia-Pacific region, saw shop visits reach an all-time high in 2017 of 1,000.
The workload shows no sign of slowing in 2018 either, with other services factored in. “There are also 800 on-site service jobs where technicians fly out around the world. So adding all this together, this is the biggest chunk of business we’ve ever done,” says Holger Sindemann, the company’s executive vice president for MRO operations. He forecasts 5-10% more shop visits this year.
While he says MTU is handling the workload, capacity is expected to become even tighter over the next five years. Sindemann takes the view that the engine segment has not hit a peak but is more in a state of development and going in an upward trajectory. “Shop visits on the [IAE] V2500 and the CFM56 will peak in the next 2-5 years—which will naturally be a big undertaking—while also during this period, the CFM Leap and geared turbofan engines will start ramping up. These effects add up and will lead to a growing market,” he says.
German Engine Shops To Grow
Not surprisingly, MTU Maintenance is looking to add capacity across its network to meet repair demand for the engines in its portfolio. In Hanover, where the company services 11 medium- and large-size engine types, including the V2500, CFM56-7 and GE90, it added the first of the Pratt & Whitney PW1000G family around two years ago with the PW1100G. MTU Maintenance plans to add two buildings to provide additional space at a facility where it reached its 8,000th shop visit last year.
At MTU’s Berlin site, around 160 mi. east of Hanover, the focus is on smaller turbojet and turboprop engines. Capacity also is tight in Berlin where, like Hanover, there are plans to expand. Overall, GE
Aviation’s CF34 accounts for 50% of the Berlin site’s output. “The whole industry seems to be busy with this engine,” says Andre Sinanian, president and CEO at MTU Maintenance Berlin-Brandenburg. “Older engines are flying longer due to lower fuel prices, and we’ve seen the CF34-8 and -10 pick up in terms of shop visits.”
This scenario sometimes leads to challenges in areas such as material availability. “Once in a while, a part suddenly becomes available because of not-seen scrap rates, and as [CF34s] come into full overhaul, we suddenly see damages we haven’t seen, so there’s no repair available,” Sinanian says. “This makes GE’s life a little bit more difficult in terms of ramping up new-parts manufacturing for spare components.”
A major investment—to the tune of €30 million ($35 million)—is the building of a logistics center at the Berlin site, expected to be completed by the middle of 2019. “We considered the size of the company and decided to build a new logistics hall, which will also enable us to add an additional 35% onto production capacity,” Sinanian explains. “Once logistics has been moved, we plan to redesign the shop floor with greater efficiencies implemented,” with the reshaped shop floor expected by 2020.
Technology investments also will play a key role in driving efficiencies in the new logistics hall. “The logistics will be fully automated, and we’ll also redesign our SAP system, which will also help drive some efficiencies,” Sinanian notes. An inevitable result of the Berlin site’s growth will be additions to its staff, he says, continuing the pattern of the past two years, which has seen 20% growth in MTU’s Berlin workforce, two-thirds of whom are mechanics. “By the end of 2018, we’ll have 800 staff in Berlin,” he adds.
MTU Maintenance has long been characterized by its relationships with the major OEMs, counting Pratt & Whitney and GE Aviation as partners on engine programs. The partnership route also has extended to other MROs, with activity outside of MTU’s Germany base. In November 2017, the company announced a 50-50 joint venture with Lufthansa Technik, which is expected to be EME Aero, a Jasionka, Poland-based shop specializing in repairs and overhauls on PW1000G family variants including the PW1500 and PW1900. Expected to begin operation in 2020, this venture is forecast to cover more than 400 shop visits annually. The decision to form EME Aero in Poland did not bring new territory for the company. Its MTU Aero Engines parent group has operated component manufacturer MTU Aero Engines Polska since 2009.
Its MTU Maintenance Zhuhai JV, a 50-50 split with China Southern Airlines, specializes in V2500 and CFM56 engines and will see further production capacity of around 50%. MTU’s operation in Canada, which introduced V2500 repair capabilities in late 2017—adding to existing services for the CF6-50, -50C2 and -56-3 engines—started operating a new test cell to cater to V2500s earlier this year.
Yet with MTU’s hands full for engine repairs and with construction projects underway or soon to begin, Sindemann still does not rule out adding further engine types. One could be the Leap, the new-generation narrowbody rival to the PW1000G family whose -1A and -1B variants have been in service for the past two years.
While planning for the Leap is in the early development stage, Sindemann says it is inevitable MTU will have to service the engine independently and not as an OEM partner. The scenario will bring both pros and cons, he says: “It’s kind of a trade. While you have to follow OEM rules, they will guarantee a certain amount of engines. On the Leap, we would have to directly compete against the OEM.”