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2016 UTC Supplier
Conference
May 11, 2016
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
Note: All results and expectations in this presentation reflect continuing operations unless otherwise noted.
Cautionary Statement:
This presentation includes statements that constitute “forward-looking statements” under the securities laws. Forward-looking statements often contain words such as “believe,” “expect,”
“expectations,” “plans,” “strategy,” “project,” “prospects,” “estimate,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “confident” and similar terms. Forward-looking statements may
include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, share repurchases and other measures of financial performance
or potential future plans, strategies or transactions. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from
those expressed or implied in the forward-looking statements. Such risks, uncertainties and other factors include, without limitation: the effect of economic conditions in the industries and
markets in which we operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency
exchange rates, levels of end market demand in construction and in both the commercial and defense segments of the aerospace industry, levels of air travel, financial condition of
commercial airlines, changes in government procurement priorities and funding, the impact of weather conditions and natural disasters and the financial condition of our customers and
suppliers; challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services;
future levels of indebtedness and capital spending and research and development spending; future availability of credit and factors that may affect such availability, including credit market
conditions and our capital structure; delays and disruption in delivery of materials and services from suppliers; customer- and company-directed cost reduction efforts and restructuring
costs and savings and other consequences thereof; the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired
businesses into our existing businesses and realization of synergies and opportunities for growth and innovation; new business opportunities; our ability to realize the intended benefits of
organizational changes; the anticipated benefits of diversification and balance of operations across product lines, regions and industries; the timing and scope of future repurchases of our
common stock; the outcome of legal proceedings, investigations and other contingencies; pension plan assumptions and future contributions; the impact of the negotiation of collective
bargaining agreements and labor disputes; the effect of changes in political conditions in the U.S. and other countries in which we operate; and the effect of changes in tax,
environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which we operate. The forward-looking
statements speak only as of the date of this presentation and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in
the forward-looking statements is disclosed from time to time in our reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time, including, but not limited to,
the information included in UTC's Forms 10-K and 10-Q under the headings “Business,” “Risk Factors,” “Management's Discussion and Analysis of Financial Condition and Results of
Operations” and “Legal Proceedings” and in the notes to the financial statements included in UTC's Forms 10-K and 10-Q.
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
WELCOME
Peter F. Longo, UTC Senior Vice President Operations
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
POSITIONED FOR GROWTH
Powerful mega-trends provide significant growth opportunities for UTC core business segments
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
2015 ANNUAL REPORT
Consolidated Statement of Operations
Net Sales
$56 Billion
Costs & Expenses
$48 Billion
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
AGENDA
Voice of the Customer
Industry Update
State of the Business
Don Mitacek
Jeffrey Sprague
Dave Gitlin & Bob Leduc
Sustainability
Supply Chain
Barry Eccleston
John Mandyck
UTC
│
UTC AEROSPACE SYSTEMS
Sarfraz Nawaz & Sam Abdelmalek
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS OVERVIEW
David Gitlin, President
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Industry-leading portfolio
Well-positioned on new platforms
Deep customer relationships
Strategies in place position us
for long-term growth
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Military
Driver
Comm OEM
Sales drivers
Large commercial
Bizjet / rotorcraft
Driver
RPMsRPMs
Comm AM
OEM
Mid single digit
New program EIS
New program EIS
Surplus availability
Surplus availability
Military
UTC AEROSPACE SYSTEMS
Trend
Driver
Military OEM platforms
ISR
Defense spending
*Adjusted for restructuring and other significant items. See appendix for reconciliation.
│
Trend
Fuel prices
/ airline
profitability
Fuel prices
/ airline
profitability
2015 sales: $14.3B*
UTC
Mid to Trend
high
single digit
Regional
Commercial
Military
Commercial
aftermarket
Trend
CAGR 2016E – 2020E
│
PRATT & WHITNEY
│ OTIS │
Low single digit
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
New program introduction
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
PROGRAM
EXECUTION
Program
execution
A350-1000
B777X
737MAX
MRJ
UTC
│
C919
G500/600
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
A330neo
787-10
MC-21
CSeries
KC-390
│ OTIS │
KC-46A
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Growth
UTC
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UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Growth
Continued focus on expanding aerospace systems offerings
UTC
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UTC AEROSPACE SYSTEMS
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PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
2020 financial outlook
(sales, $ billions)
2016E – 20E
CAGR
5-7%
T
//
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
How customers measure us
NEW WINS
CUSTOMER
FOCUS
OPERATOR
SUPPORT
RELIABILITY
TECHNOLOGY
INNOVATION
LOWEST COST
DELIVERY
BEST QUALITY
We must be flawless or we’re “red.”
UTC
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UTC AEROSPACE SYSTEMS
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PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Performance matters
Supplier On-Time Delivery
Supplier Escapes
T
UTC
│
UTC AEROSPACE SYSTEMS
T
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Supplier gold progress
9
20
9
Underperforming
suppliers lose 10% of
UTAS’s business/year.
884
8
941
728
565
T
Gold suppliers win 14%
508
250
434
incremental UTAS
business/year.
264
2014
UNDERPERFORMING
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
464
167
247
2015
2016 YTD
PROGRESSING
│ OTIS │
PERFORMING
110
2016 P
GOLD
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Key takeaways
1.
We’re industry leading.
2.
We will outgrow a growing market.
3.
70% of our cost is supply chain.
4.
We can only perform if you perform.
5.
Gold performance leads to new business.
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
PRATT & WHITNEY OVERVIEW
Bob Leduc, President
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
PRATT & WHITNEY
Segments
Commercial Engines
Photo: Airbus
Overall Sales ~$14B
(2015)
Military Engines
Photo: Lockheed Martin
Total engine shipments ~3,200
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
Pratt & Whitney Canada
Photo: Gulfstream
Aftermarket Revenue ~$9.8B
2
2016-05-11_UTC_Top_Supplier
PRATT & WHITNEY
Accomplishments in Last 15 Months
Large Commercial Engines
Photo: Airbus
First A320neo deliveries to
IndiGo and Lufthansa
Pratt & Whitney Canada
Photo: Bombardier
Photo: Gulfstream
CSeries certified
Gulfstream G500 first flight
MRJ first flight
Dassault Falcon 8X
first flight
Photo: Dassault
E-Jets E2 roll out ceremony
Military Engines
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
KC-46A Tanker first
refueling flight
Photo: Lockheed Martin
F-35B
Initial Operational Capability
3
2016-05-11_UTC_Top_Supplier
PRATT & WHITNEY
Commercial Engines backlog
GTF Engine Orders
Recently Announced Customers
>7,000
2008
2009
2010
2011
2012
2013
2014
2015 2016E
YTD
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
4
2016-05-11_UTC_Top_Supplier
PRATT & WHITNEY
Military Engines backlog
F135 Production Contracts
F-35 Customers / Partners
(Number of engines per Low Rate Initial Production)
170
130
103
67
48
33
16
35
38
36
19
4
LRIP LRIP LRIP LRIP LRIP LRIP LRIP LRIP LRIP LRIP LRIP LRIP
1
2
3
4
5
6
7
8
9
10
11* 12*
* estimates
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
5
2016-05-11_UTC_Top_Supplier
PRATT & WHITNEY
2016 - 2020 Engine Shipments
Large Commercial / Military Engines
Pratt & Whitney Canada
(Number of engine deliveries)
Legacy ME
Legacy CE
Tanker
APU
Helicopter
Business jet
V2500
F135
GTF
Regional
General aviation
4000
2000
3000
1500
2000
500
1000
0
0
2016
2017
2018
2019
2020
2016
Total 2020 shipments 5,300
2017
2018
2019
2020
Total 2020 Aftermarket Revenue $11B
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
6
2016-05-11_UTC_Top_Supplier
PRATT & WHITNEY
The load is real
How do we succeed?
Together
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
7
2016-05-11_UTC_Top_Supplier
PRATT & WHITNEY
Responsibilities
Pratt & Whitney
Supplier
• Stabilize schedule
• Invest in capacity
• Communicate BOM changes well in advance
• Load commitments into portal
• Invest in capital
• Achieve at least 98% OTD
• Resources support
• Eliminate quality escapes
• Buffer stock
• Be personally engaged at the senior level
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
8
2016-05-11_UTC_Top_Supplier
PRATT & WHITNEY
Supplier Gold Progress
Gold
25%
19%
(% of spend in program)
20%
30%
50%
Performing
Progressing
25%
16%
28%
35%
45%
14%
15%
50%
Underperforming
34%
39%
15%
30%
10%
2013
2014
2015
2016 Goal
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
2020 Vision
9
2016-05-11_UTC_Top_Supplier
PRATT & WHITNEY
Supplier escapes – significant
(Monthly average)
2.7
2.3
Process control
1.5
2014
Drivers
FAI/ Inspections
2015
2016
Supplier SDO’s
13
10.4
Actions
UPPAP
9.3
Process certification
Contract and subtier management processes
2014
2015
2016
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
10
2016-05-11_UTC_Top_Supplier
WORLD CLASS GLOBAL SUPPLY BASE QUALITY
What does it look like?
Delivery > 98%
No Significant Escapes
UPPAP Execution
Process Certification Expertise
Subtier supplier score trend
63%
Subtier Management
69%
50%
2013
2014
2015
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
11
2016-05-11_UTC_Top_Supplier
PRATT & WHITNEY
Summary
Once in a lifetime opportunity for us all…
P&W PROPRIETARY
This document/page does not contain any export regulated technical data
12
2016-05-11_UTC_Top_Supplier
INDUSTRY OVERVIEW
Jeffrey Sprague, Vertical Research Partners
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
Running a Reliable,
Customer-Focused Airline
Don Mitacek – SVP
Delta Technical Operations
Delta Private Jets
Delta Global Services
Another Record Breaking Year
• Safety, Reliability, Customer Satisfaction, Financially
• How did we improve?
• How do we continue to improve?
• How do we work with our key partners?
Operations
Top of Industry Operational Performance
DOT Completion Factor*
DOT On-Time*
DOT Baggage**
Delta
99.69%
Alaska
86.8%
JetBlue
Alaska
99.59%
Delta
86.4%
Delta
1.81
2.08
Southwest
98.80%
Southwest
80.8%
United
United
98.79%
American
80.7%
Southwest
3.27
Jetblue
98.75%
United
Alaska
3.31
American
Jetblue
98.62%
97%
98%
99%
Delta #1
10 of 12 months
*Last twelve months through February 2016
**Last twelve months through January 2016
100%
79.6%
76.2%
65% 70% 75% 80% 85% 90%
Delta #1
4 of 12 months
3.06
American
3.92
1.5
2.0
2.5
3.0
3.5
Delta #1
2 of 12 months
4.0
4.5
Operations
System 100% CF Days
Core Reliability Performance
161
151 days better
System Performance
• Strong maintenance reliability
• 69% increase in number of mainline
100% CF days vs 2014
• 214 100% domestic mainline CF days
95
72
20
10
2011
2012
2013
2014
2015
Domestic 100% CF Days
214
197
• Delta significantly better than all other
network carriers combined
13
Full Year 2014
DL
42
YTD November 2015
American/US + United + Southwest
Operations
Core Reliability Performance
Maintenance Cancellations
3,134
92% better
TechOps Initiatives
1,244
• Expanded maintenance footprint
792
414
249
2014
2015
• Growing internal maintenance capabilities
• Serviceable levels
• Reliability projects
2011
2012
2013
100% Maintenance CF Days
• Leverage Cargo’s improved DASH performance
208 days better
• Predictive maintenance
169
117
TechOps 2015 Performance
• 40% reduction in cancellations vs 2014
• 7% improvement in maintenance delays vs 2014
236
28
2011
53
2012
2013
2014
2015
Customer Service
Flight Attendant Interaction
Customer Surveys
• Driving record performance
• Testing service concepts
2011
2012
2013
2014
2015
Domestic NPS
2011
2012
2013
2014
2015
It’s Not Luck
Process
Technology
Infrastructure
Execution
• TechOps – TOC
• Mobile
• Airports
• EIG
• Baggage
• Applications
• Bag systems
• MBOs / MPRs
• ATL kitchen
• RFID
• De-icing
• Data analytics
• Aircraft turns
• Wearables
• Flight simulations
• Reports / alerts
• Predictive
Maintenance
• TOC capacity
• Continuous
improvement
• Reliability
• Security
• Georgia Tech
Innovation Center
• Change management
Most Importantly - Our People
People
How Do We Know
• Servant Leadership
Survey Scores:
• Culture
• I understand how my daily work impacts Delta’s overall goals –
• Values
• How likely are you to refer a family member, friend, etc.. to Delta - 4.50
• Incentives
• I am proud to tell others I work for Delta 4.47
4.53
• I feel Delta creates the direction and sets the pace for the industry - 4.34
• Overall, I feel Delta is a great place to work 4.46
Partnering With Our Suppliers
Partnership
• Not all suppliers are created equally
• Price is not value
• Win/Win or go home…
• Objectives, goals and measurement
• Partnership is not an empty word
Running a Reliable,
Customer-Focused Airline
Thanks!
SUSTAINABILITY
John Mandyck, UTC Chief Sustainability Officer
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
PRATT & WHITNEY GLOBAL SUPPLY CHAIN
Sam Abdelmalek, Vice President, Global Supply Chain
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
EXCITING OPPORTUNITIES & CHALLENGES
2016F
2020P
Sales
$15B
$22B
Installed engines
>70K
>100K
Annual product spend
$4B
>$8B
Annual non-product spend
>$1.5B
>$2B
Supplier Gold & Performing
56%*
100%V
2x*
<1x
NGPF target cost ratio
*2016A
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
ACCOMPLISHMENTS – SUPPLY BASE
Investments
Production
Readiness
Hundreds of
millions in
supplier CAPEX
460 Production
readiness
assessments
BOOST
$23B in LTAs
100+ Suppliers
Events
>200 deals
completed since
Jan. 2014
500 parts on “Boost”
validation
Senior management
meetings
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
SUPPLIER GOLD – THANK YOU!
Belcan
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
P&W ACCOMPLISHMENTS
Supply Chain
evolution
Global
investments
Strategic Sourcing
Annual Review Boards
P&W Logistics
Center
15-20 reviews @ P&W,
40 reviews @ UTC
Go Live – July ‘15
Exceeding Targets –
April ‘16
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
OUR EXPECTATIONS
Supplier Gold
& UPPAP
Production Rate
Readiness & BOOST
Cost
LTAs
PW1100G-JM
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
P&W SUPPLIER GOLD PERFORMANCE
Pratt & Whitney Supplier Gold Progress
NGPF & F135 Production Readiness Supplier Risks
High
34
UTC
│
UTC AEROSPACE SYSTEMS
Medium
114
│
PRATT & WHITNEY
Low
63
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
BETTER ORGANIZED TO WORK WITH YOU
Regional Offices
Early Alert Risk
Management
Supplier
Development
Resources
Professional Support
Network
America: 31
Canada
Europe: 9
USA
Asia: 4
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
SYSTEM INVESTMENTS - 2016
Supplier Portal
UPPAP Management
Software
UTC
│
UTC AEROSPACE SYSTEMS
│
Supplier Network
Collaboration
Contract Lifecycle
Management (CLM)
Net Inspect
QN Collaboration Hub
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
MATERIAL MANAGEMENT
Executive Steering Committee
Dedicated project lead and co-lead
SI&OP
PFEP &
Buffering
Engineering
Changes
System
Evaluation
Value Stream
KPI
Value Stream
Organization
Change management and communication teams
SIOP/Capacity Planning
Plan Demand
UTC
│
Replenishment Strategies
Plan Supply
UTC AEROSPACE SYSTEMS
Supply Network Collaboration
Assure
Manage
Inventory
Delivery
│
PRATT & WHITNEY
│ OTIS │
Logistics
Move
Manage
Material
Freight
UTC CLIMATE, CONTROLS & SECURITY
MODULE CENTER EVOLUTION
Strategy and
Business Processes
Supplier Quality
Manager
A Commodity
management
B Commodity
management
C Commodity
management
D Commodity
management
UTC
│
Quality Manager
Supply Chain
Senior Manager
Account
management
Value Stream
Management
Account
management
Value Stream
Management
Account
management
Value Stream
Management
Account
management
Value Stream
Management
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
Material
Planning
Manager
Manufacturing
Engineering
Engineering
UTC CLIMATE, CONTROLS & SECURITY
SUPPLIER HEALTH ASSESSMENT (SHA)
A More Robust Program
Business Continuity
Process Certification
Sustainability
International Trade Compliance
Sales & Operations Planning
Sub-tier Management
Enabling sustainable performance
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
WORKING PROACTIVELY
Leading Performance Indicators
PFMEA
Dashboard
Quality
Built Ahead Tool
Capacity
XRM or Production Metrics
Supplier Code:
% on % UPPAP
UPPAP completed
Yield
Sunday
Saturday
(YYYY-MM-DD)
(YYYY-MM-DD)
Finish Goods
Work In Process/
Lead Time
Raw Material
Capacity Graphs trending
X≥
100%
X≥
100%
X≥
100%
Demonstrated Capacity (12 months) > MRP Requirements
100%
95%
≤ X<
100%
95%
≤ X<
100%
95%
>X
95%
>X
% of
green
(parts)
% of
yellow
(parts)
% of
green
(parts)
% of
yellow
(parts)
X≥
95%
>95%
85%
85%, < 95%
95%
≤ X<
85%
≥X
<85%
95%
>X
% of
green
(parts)
% of
yellow
(parts)
%
% of
green
(parts)
% of
yellow
(parts)
% of red
(parts)
%
% of red
(parts)
% of red
(parts)
Andon
Red
Promise
Dating
# of parts
# of parts
%
Demonstrated Capacity (12 months) = MRP Requirements
Demonstrated Capacity (12 months) < MRP Requirements
% of red
(parts)
Overall Rating
WEEK 1
WEEK 2
WEEK 3
WEEK 4
WEEK 5
WEEK 6
WEEK 7
WEEK 8
PW1100 Buffer Status
Capacity Planning
Dec. 31, 2015
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
March 31, 2016
UTC CLIMATE, CONTROLS & SECURITY
DEMAND/PROFILE GROWTH & CHANGES
Commercial Engines
NGPF Build Rate
NGPF Spares
Military Engines
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
PRODUCTION READINESS
Risk Mitigation
Critical actions:
Demand reconciliation
34 High Risk Suppliers (PRR)
Action item tracking
Finalize capacity & resources
Commitments/accountability
BOOST program
Drive EQNs Down
QN reduction
Sub-tier management
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
AFFORDABILITY AND VALUE
NGPF engines
VA/VE
LTAs
COPQ
Tech
Global
Footprint
PT6
F135
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
LONG TERM AGREEMENTS
Supplier Gold
Certification Benefits
One Company Governance
90+ day payment terms
Payment Terms
OTD performance guarantees
Quality Notification (QN) charges
Minimum buffer stock
UTC
│
UTC AEROSPACE SYSTEMS
│
90 days
75 days
No Performance
Guarantees / QN
Admin. Charges
Supplier Gold commitment
PRATT & WHITNEY
Buffer Stock
│ OTIS │
Supplier Selection
Benefits / Business
Opportunities
UTC CLIMATE, CONTROLS & SECURITY
TAKEAWAYS
P&W Commitments
Supplier Expectations
Investing in our people, systems &
processes
Supplier Gold certification with UPPAP
Invest in growth and production readiness
Steady journey toward a world-class
supply chain
Improved schedule stability
Continued collaboration with our supply
base
Promise date commits, buffer &
leading indicator management
Year-over-year productivity commitments
(V2 & SmartChoice)
One Company contract with UTC governance
Continued collaboration to drive world-class performance
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS SUPPLY CHAIN
Sarfraz Nawaz, Vice President
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Supply Chain profile
Product
$5.3B+
Non product
$1.6B+
Distributed
Products
Other
IT & Telecom
Other
Machining
Electronics
Energy
Plant
Consumables
Travel
Fabrications,
Composites &
Plastics
Temp Labor
Logistics
Engineered
Items
Casting,
Forging, Raw
Material
UTC
│
UTC AEROSPACE SYSTEMS
Facilities
Management
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Supply Chain profile
Organizational design
New Program
Introduction
Affordability initiatives
Input cost management
Sourcing
Procurement
execution
Quality &
Development
Delivery
assurance
Investment in technology
Process innovation
Strategic
Tactical
Leverage scale opportunity
Optimizing resources to achieve performance
Supplier Performance
Input based
scoring
UTC
│
Aircraft Systems
PRECISION MACHINE WORKS
NORANCO
FACC
NIKKISO
JONACO MACHINE
ALARD MACHINE
CTRM
NATIONAL MACHINE
MOOG
GUIZHOU LIYANG AERO
Power Control and Sensing
Supplier Name
PHOENIX MFG
ECE GROUP INTERTECHNIQUE
CHRISTOPHER TOOL
PARKER HANNIFIN
EATON
B/E AEROSPACE
PALL AEROPOWER
A M CASTLE
BRAZONICS
PRECISION MASTERS
Compliance
International Trade Compliance
Supplier Volume / Quality: Quality: Quality: Sourcing
Total
Gold
Spend
PPM
Escapes Delivery Strategy
Score
(1, 5, 10) (10, 8, 5, 1) (10,8,5,1) (10,8,5,1) (10,8,5,1) (10, 5,1)
8
10
0
8
10
10
46
10
10
10
0
5
10
45
5
10
0
10
10
10
45
5
10
0
10
10
10
45
10
8
10
0
5
10
43
8
8
10
0
5
10
41
5
10
0
5
10
10
40
8
10
10
0
5
5
38
0
10
0
10
8
10
38
5
8
0
5
10
10
38
10
10
10
10
10
10
10
10
10
10
10
10
10
10
8
10
8
10
8
5
10
0
5
0
10
5
5
5
0
8
0
8
0
8
0
0
0
0
5
0
5
10
8
8
8
5
10
8
8
8
10
5
10
5
5
10
5
5
5
5
REACh
45
43
43
41
41
40
38
38
36
36
Prioritized
by score
UTC AEROSPACE SYSTEMS
Conflict minerals
Targeting
underperformers
│
PRATT & WHITNEY
CPSR / Audits
Supplier sustainability
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Supply Chain performance
Supplier Development
Performance metrics
Supplier Gold
Playbook deployment
OTD
Gold / Performing spend
495
7%
726
608
6%
58%
33% 44%
2014
2015
2016
2014
Regions
2015
2016
# of Escapes
UTC
│
2015
2016
//
2020
47%
31%
NA-East
157 suppliers
Europe
206 suppliers
2014
Underperforming spend
NA-Midwest
126 suppliers
NA-West
186 suppliers
2013
100%
76%
Asia
51 Suppliers
UTC AEROSPACE SYSTEMS
21%
12%
50%
2014
│
2015
PRATT & WHITNEY
2016
│ OTIS │
2013
2014
2015
6%
2016
//
0%
2020
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Supply Chain key initiatives
Material management
Rate readiness
PFEP compliance
Forward stocking locations / 3PL
Elements
Criteria
PRS
4
6
Surveillance
12
6
SHA
5
Gold
Logistics design
Supplier portal control
Buffer stock
Dual production
Dedicated capacity
Zero Defect Plan
Assess and reduce
supplier risk
Low Risk
Medium Risk
High Risk
UPPAP
NPI
Transitions
Major changes
50% reduction in escapes and PPM
Complexity/criticality
Seamless transitions
Limit production risks
Zero significant escapes
Process Certification
Future planning
Drive QIP on key suppliers
Flawless EIS
Top supplier escape reduction
Systemic DIVE
Application on key programs ongoing, and growing
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Supply Chain investments
UTC
Spend Analytics
Contract Lifecycle Management
(CLM)
Demand & Material Management
Facilities / Technology
Supplier Portal / SAP
People & Processes
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS
Supply Chain takeaways
Performance
Commercial
Plan to Gold
LTA coverage
Rate readiness
Cost reduction
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC Customer Event
Barry Eccleston
President - Airbus Americas
Creating better
ways to fly
© AIRBUS all rights reserved. Confidential and proprietary document.
Use Tab 'Insert - Header & Footer' for Presentation Title - Siglum - Reference
Month 20XX
2016
We are part of Airbus Group
138,000+
$932.1billion
$66billion
Total workforce
Order book
Annual revenue
2014 statistics
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2016
Airbus is a global aircraft manufacturer
55,000
$72billion 10yrs
400
Employees
Annual revenue*
Operators
Backlog
Data to end 2015
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2016
The most global aerospace player – close to our customers worldwide
The numbers
11 Production sites
4 Assembly line locations
5 Training centres
4 Engineering centres
3 Customer support centres
10 Materials & logistics centres*
*Satair Group
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2016
Airbus Commercial in the US
• Catalyst for $15.8 billion in annual aircraft related expenditure in the USA
• Supporting over 262,000 jobs
• Suppliers in over 38 states
• Airbus Commercial, 6 primary sites with over 2000 employees.
Airbus Engineering Center
Mobile, Alabama
Airbus Training Center
Miami, Florida
Headquarters
Herndon, Virginia
Airbus Engineering Center
Wichita, Kansas
Airbus Spares Center
Ashburn, Virginia
A strong and growing physical and economic presence in the USA
• April, 2016 – Airbus Mobile delivers first American assembled A320
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2016
Airbus expands in the US with an A320 family Final Assembly Line
2013
Start of construction
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2015
Start of aircraft assembly
2016
First delivery
2018
40 to 50 deliveries
2016
Our aircraft are a familiar sight around the world
Presence
-
An Airbus takes off
or lands every
2
seconds
16,300+ 60
9,600+
25,000+
Aircraft sold
Delivered
Daily flights
Produced monthly
Data to end March 2016
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2016
Meet the Airbus family from 100 to 500+ seats
The Airbus Family
A320 Family
A330 Family
A350 XWB
A380
The market leader
The right aircraft, right now
The Xtra that makes a difference
Own the sky
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
Airbus corporate presentation
2016
The A320 Family is the world’s best selling aircraft
A320
-
Superior comfort, lowest
cost and highest reliability
A320neo - 20% lower fuel
burn
12,400+
6,900+
310+
Orders
Deliveries
Operators
Data to March 2016
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2016
Airbus sourcing principle: enhanced responsibilities
A300/320
Airbus
Platform
(50% of an aircraft
Assembly
Large-scale
cost)
Integration
Value-added Parts
and Assemblies
Make-to-print Parts
and Assemblies
Raw Materials
Many direct partners
No real role for
“integrators”
Build to print for parts
and sub-assemblies
Page 41
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
A380
Airbus (40% of
an aircraft cost)
Fewer, but still many
direct partners
Limited role for
“integrators”
A350
Airbus (20% of an
aircraft cost)
TIER 1
RSP
Fewer large partners sharing the
risk, strategy and opportunities
Extensive integrator role
Global extended enterprise
Each tier has more opportunity
Airbus corporate presentation
2016
Globalize & consolidate the supply chain
• STIMULATE the competition within the
supply base
• FEWER and BIGGER suppliers with
ENHANCED responsibility
• L4L (Local for Local) will remain, key support
for a Final Assembly Line
• EARLY INVOLVEMENT of major
suppliers in joint development teams
including R&T
• GLOBAL SOURCING* challenges for
both Airbus and its suppliers
*Global sourcing: international sourcing = Non-EU countries
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
Airbus corporate presentation
What are we looking for in potential suppliers
Quality accreditations, AS9100, NADCAP
Already working for an Airbus Group Business
Unit or other aerospace OEM’s
Customer recognition, GOLD, 5 STAR,
supplier of the year, etc.
Strong in commercial work
Financially stable and ability to invest,
Experienced Management and functional
structure
Strong manufacturing engineering
Innovative products and companies
Vertical integration
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2016
Airbus corporate presentation
2016
Airbus/Supplier joint efforts to meet customer demand
RAMP-UP
Ensure sufficient capacity. A350 and Single Aisle
ON-TIME
DELIVERY
Reach and sustain excellent performance
QUALITY
Make it right the first time
COST
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
Be creative and propose solutions for cost optimisation
Airbus corporate presentation
Questions?
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2016
Airbus corporate presentation
2015 Year End Results
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
2016
Airbus corporate presentation
2016
The most modern, efficient & comprehensive range of widebody aircraft available today
A330
-
The world’s most
popular mid-size
aircraft
1,600+ 1,240+
110+
Orders
Operators
In service
A330neo - 14% lower
fuel burn, more seats,
more range
Data to March 2016
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
Airbus corporate presentation
2016
A350 XWB – the Xtra that makes a difference
770+
41
Orders
Customers
25%
Lower operating cost
Xtra space for unrivalled
passenger comfort
Xtra innovative
technologies for
optimised airline efficiency
Data to March 2016
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
Airbus corporate presentation
2016
A380 – a solution to increased demand for air transport
A380
-
Most profitable, most
comfortable way to transport
more people
A take-off or landing every
3 minutes
315+
180+
18
Orders
Deliveries
Customers
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
Data to September 2015
Airbus corporate presentation
2016
Airbus Group North America + Airbus Group Mexico
•Airbus Group ~ 50
•Airbus Americas ~ 1300
•Airbus Defense & Space ~ 900
~50 Locations
~5450 Employees
/ Contractors
~3250 USA
~1800 Canada
~ 400 Mexico
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
•(Divestments in progress) ~ -600
•Airbus Helicopters ~ 1000
•Vector Aerospace ~ 1100
•STELIA Aerospace ~ 450
•Navtech ~ 250
•Airbus Group Mexico ~ 400
Airbus corporate presentation
2016
Procurement Organisation - worldwide coverage
Sourcing Office
Sourcing Office
North America
Central &
Operational
Teams
Sourcing Office
China and
East Asia
India and
Middle East
More than 2,700 Procurement employees representing
37 nationalities located worldwide,
looking after more than 7,700 Suppliers (excluding Airbus Military).
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
Airbus corporate presentation
2016
Airbus Group North America Procurement Contact Information
Process to follow:
•
•
•
You must obtain a Request For Information (RFI)
document by sending an email to:
NAsupplier@airbus.com
Answer all the questions on the RFI document.
Prepare your company presentation.
•
Title your email response:
•
“Goods & Services RFI response” for all nonflying goods and services.
•
“Flying Parts RFI response” for all products that
will actually be installed or used on an aircraft.
• Return the RFI document and company presentation
via email to:
NAsupplier@airbus.com
Airbus North Americas Headquarter: 2550 Wasser Terrace, Suite 9100 ,Herndon, VA 20171 USA
02.2015
© AIRBUS S.A.S. All rights reserved.
Confidential and proprietary document.
© AIRBUS (Airbus S.A.S., Airbus Operations S.A.S., Airbus Operations GmbH, Airbus Operations LDT, Airbus
Opeartions SL, Airbus China LTD, Airbus (Tianjin) Final Assembly Company LTD, Airbus (Tianjin) Delivery
Centre LTD). All rights reserved. Confidential and proprietary document. This document and all information
contained herein is the sole property of AIRBUS. No intellectual property rights are granted by the delivery of
this document or the disclosure of its content. This document shall not be reproduced or disclosed to a third
party without the express written consent of AIRBUS S.A.S. This document and its content shall not be used
for any purpose other than that for which it is supplied. The statements made herein do not constitute an offer.
They are based on the mentioned assumptions and are expressed in good faith. Where the supporting
grounds for these statements are not shown, AIRBUS S.A.S. will be pleased to explain the basis thereof.
AIRBUS, its logo, A300, A310, A318, A319, A320, A321, A330, A340, A350, A380, A400M are registered
trademarks.
© AIRBUS all rights reserved. Confidential and proprietary document.
Airbus corporate presentation
2016
CLOSING REMARKS
Peter F. Longo, UTC Senior Vice President Operations
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
THANK YOU TO OUR GOLD SUPPLIERS
Belvidere, IL
Peterborough, Ontario
Manchester, CT
Kulim, Kedah, Malaysia
Rzeszow, Poland
Quebec & Ontario,
Canada
New York, NY
Colmar, PA
Ronkonkoma, NY
Windsor, CT
Tillsonburg, Canada
Southgate, MI
NJ, USA
Lancashire, UK
Cairo, Egypt
Aurora, CO
Goleta, CA
Evansville, IN
Independence, KS
Macomb, MI
Kalisz, Poland
Belo Horizonte City, Brazil
Manchester, CT
Madison, AL
Corinth, TX
Chihuahua, Mexico
Longueuil, QC
Kent, WA
Hoogerheide,
Netherlands
Hyderabad, India
St. Hubert, Quebec
Dunedin, FL
Auburn, MA
Framingham, MA
Jeffersonville, IN
UTC
Huntsville & Berryville, AR
Joplin, MO & Tulsa, OK
Mississauga, ON
Changzhou, China
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
Biłgoraj, Poland
Santa Fe Springs, CA
UTC CLIMATE, CONTROLS & SECURITY
THANK YOU TO OUR GOLD SUPPLIERS
Akashi, Japan
North America
Lincolnshire, IL
Windsor, CT
Kure, Japan
Miramar, FL
Quebec, Canada
Guangzhou, China
Atlanta, GA &
St. Laurent, Quebec
Mumbai, India
New York, NY
Verdi, NV
Glastonbury, CT
Hemmingford, Quebec,
Canada
Birmingham U.K.
East Windsor, CT
Rockwood, TN
Munich, Germany
Trumbull, CT
Mankato, Minnesota
Non Consulting Services
Jiangsu, China
Columbus, MS
Belcan
Windsor, CT
Laval, Quebec
East Hartford, CT &
Palm Beach Gardens, FL
Zamudio, Spain
Randolph, NJ
Boca Raton, FL
East Hartford, CT
Deer Park, NY
Mumbai, India
Cranbury, NJ
Kozy, Poland
UTC
Farnborough, Hampshire
│
UTC AEROSPACE SYSTEMS
Quebec, Canada
Stanley, UK
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
PREPARE FOR THE RAMP
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
SUPPLIER CODE OF CONDUCT
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
NON-PRODUCT BREAKOUT
Non-Product Executive Team
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
NON PRODUCT
Agenda
Welcome / Opening Remarks
Key takeaways from morning session
State of the businesses
Introduction to Non Product
Supply chain at UTC
Priorities
Investments
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
NON PRODUCT
Working together we are committed to…
Our people.
Operational excellence.
Delivering on our value proposition.
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
NON PRODUCT
Comments, questions and key take-aways from
morning session…
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
SHAREHOLDER VALUE CREATION
Focused portfolio of global franchises
Structural cost reduction
Innovation for growth
Strong performance culture
Disciplined capital allocation
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
OTIS 2020 OUTLOOK
($ billions)
Key Strategies
New equipment growth
Accelerate innovation
Service transformation
Operations excellence
See appendix for reported sales and operating profit (afx)
*Adjusted for restructuring and other significant items. See appendix for reconciliation.
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
OTIS GROWTH
Growth Strategy
• Expand sales coverage
• Enhance product offering
Continued urbanization
• Align incentives for profitable growth
China Transformation
• Strengthen core brands
• Leverage scale
Source: Internal estimates
• Customer segment focus
Infrastructure development
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
CLIMATE, CONTROLS & SECURITY 2020 OUTLOOK
($ billions)
Key Strategies
Organic growth
Innovation
Cash generation
Cost leadership
M&A actions
*Adjusted for restructuring and other significant items. See appendix for reconciliation. See appendix for sales
and operating profit at actual FX (afx)
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
CLIMATE, CONTROLS & SECURITY GROWTH
Consultative selling
Strategic accounts
Integrated solutions
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
PRATT & WHITNEY 2020 OUTLOOK
($ billions)
Key Strategies
Successful service entries
Industrial plan execution
Manufacturing cost reduction
E&D stabilization
Aftermarket growth
*Adjusted for restructuring and other significant items.
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
PRATT & WHITNEY GROWTH
Large Commercial Engines
Photo: Airbus
Pratt & Whitney Canada
Photo: Bombardier
First A320neo deliveries to
IndiGo and Lufthansa
C Series certified
E-Jets E2 roll out ceremony
MRJ first flight
Photo: Gulfstream
Gulfstream G500 first flight
Photo: Dassault
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
Military Engines
Dassault Falcon 8X first flight
│ OTIS │
KC-46A Tanker first refueling flight
Photo: Lockheed Martin
F-35B Initial Operational Capability
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS 2020 OUTLOOK
($ billions)
Key Strategies
Industry-leading portfolio
Positioning on new platforms
Deep customer relationships
Drive continued cost reduction
*Adjusted for restructuring and other significant items. See appendix for reconciliation.
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC AEROSPACE SYSTEMS GROWTH
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
UTC SUPPLY CHAIN
ELEVATORS &
ESCALATORS
HEATING, COOLING,
REFRIGERATION
FIRE SAFETY & SECURITY
AIRCRAFT ENGINES
AUXILLARY POWER UNITS
AEROSPACE SYSTEMS
64K+ employees
53K+ employees
33K+ employees
42K+ employees
20+ Manufacturing sites
45+ manufacturing sites
50+ manufacturing sites
90+ manufacturing sites
9 ERP systems
25 ERP systems
1 ERP system
2 ERP systems
~21K suppliers
~45K suppliers
~5K suppliers
~20K suppliers
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
NON PRODUCT
Scope
Total Non Product Spend
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
Total SMARTChoice Spend
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
NON PRODUCT
One Company Global Engagement
Develop
Strategy
Review &
Align
Implement
Assess &
Improve
Commodity councils
Review Board
Project execution
Executive reviews
Regional councils
Supply Management
Council
Supply base optimization
Performance reviews
Initiatives pipeline
Policy deployment
Supplier relationship
sponsors
Compliance & policy
Annual KPIs
Strategic supplier
account executives
One Company strategy
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
│ OTIS │
UTC CLIMATE, CONTROLS & SECURITY
NON PRODUCT
Priorities
Supply Chain Performance
SMARTChoice Spend
Working together beyond
quality & delivery
Spend as a % of sales
Cost control targets for
each category and
budget
Refreshed Supplier Gold
Program for non product
One Company Coverage
Compliance
Stop Light Performance Chart - Division Level
UTC
Division Level
October 2014
SMARTChoice Spend
SMARTChoice spend under
one-company contract
Program expansion into new
commodities
UTC
│
UTC AEROSPACE SYSTEMS
│
PRATT & WHITNEY
BU Level
Domestic
7 Day Advanced Purchase
Division
CCS
Corporate
Otis
Pratt & Whitney
Sikorsky
UTAS
UTRC
Total
Sep
74%
79%
73%
52%
65%
71%
67%
68%
Oct
76%
81%
75%
55%
62%
71%
67%
69%
PYTD
76%
81%
66%
59%
60%
69%
69%
67%
YTD
76%
81%
73%
56%
66%
69%
66%
68%
Sep
64%
74%
60%
46%
45%
45%
48%
50%
Goals
85%
85%
85%
85%
85%
Below Avg Performance
Avg Performance w/in 5% of Goal
│ OTIS │
Dept Level
Sorting options:
International
14 Day Advanced Purchase
Lowest Logical Airfare Compliance (w/in
$100)
Oct
66%
73%
47%
47%
49%
46%
65%
50%
PYTD
60%
72%
56%
42%
43%
45%
61%
47%
YTD
62%
72%
51%
44%
56%
45%
58%
50%
Sep
83%
86%
98%
97%
91%
80%
80%
87%
Oct
84%
88%
95%
92%
90%
80%
87%
86%
PYTD
86%
87%
97%
99%
89%
83%
84%
88%
YTD
85%
87%
97%
97%
91%
81%
85%
87%
85%
85%
85%
88%
88%
88%
88%
Above Avg Performance
N/A - No Travel in Current Month
Best in class compliance
metrics in all SMARTChoice
spend categories
New visibility focusing on
compliance and consumption
UTC CLIMATE, CONTROLS & SECURITY
NON PRODUCT
Investment
P2P for commercial
CLM implementation
Spend data visibility project
VMS/MSP implementation
SAP go live at UTAS
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NON PRODUCT
Summary & closing comments
Ready, set… grow!
Thank you for attending
Logistics for remainder of the day
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Innovation Creating the New World
Dr. J. Michael McQuade
Senior Vice President, Science & Technology
Moving the world forward
Transporting the world’s population every 4 days
Providing priceless assets with humidity control solutions
Equipping 80% of world’s aircraft
with critical components & systems
Powering freedom around the world
Our Legacy of Innovation
Legacy
Willis
Carrier
Elisha
Graves Otis
Fred
Rentschler
Thomas
Hamilton
Fred
Rohr
UTC Innovation
PurePower PW 1000G Engine
16% fuel reduction
50% emission reductions / 75% noise reduction
$1.5 million saved per aircraft per year
UTC Innovation
Airbus A400M
Largest all-composite propeller
in production
UTC Innovation
NaturaLINE™ Container Refrigeration
First in the world to use CO2 as a refrigerant
Reduces carbon dioxide emissions by 35%
UTC Innovation
Gen 2 Elevator
57 Otis Elevators installed
in the Burj Khalifa
Urbanization
Urban Population Growth
Urban Population: 5B by 2030
(millions of people)
5,000
Rest of
World
4,000
22%
3,000
2,000
India
1,000
0
5
12%
billion
12%
2000 2005 2010 2015E 2020E 2025E 2030E
Latin
America
China
20%
19%
15%
Africa
Rest of
Asia
Commercial Aerospace Growth
Revenue Passenger Miles
Aircraft Deliveries: 37K by 2030
(trillions)
Rest of
World
Latin
America
10
8
Middle
East
6
8%
8%
7%
37
37%
Asia
thousand
4
North
America
2
0
1980
1990
2000
2010
2020E
2030E
20%
20%
Europe
Future of Food
World Population Growth
CO2 Emissions Due to Food Wastage
(millions of people)
3.5 Gt CO2 equivalent
8 000
6 000
4 000
If food waste were a country, it
would be the 3rd top emitter
2 000
30% food wasted
0
2000 2005 2010 2015E 2020E 2025E 2030E
Innovation …Our innovation is mission critical
Innovative consumer economy
Critical infrastructure
UTC Innovation
Advanced manufacturing
Big data
Define new frontiers...
Co-develop new technologies...
Next Gen
centrifugal
Solve tough problems...
Serve as hub for technical interchange...
Leverage global network of innovation...
GTF
lubrication
UTC Innovation
Additive Manufacturing
Examples
Cold
spray
Selection of
AM process
Selection of
materials
Laser
powder
melting
Electron beam
wire melting
Modification of
design
CAD/CAM part
discretization
AM of
customized design
WAAM
Wire Arc
Additive
Mfg.
UTC Innovation
Our Future
Willis
Carrier
Elisha
Graves Otis
Thomas
Hamilton
Fred
Rentschler
Fred
Rohr
Future Innovator
Future Innovator
PRODUCT SUSTAINABILITY AND INNOVATION
William Sisson, Sr. Director, Sustainability
UTRC
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SUSTAINABILITY AT UTC
Sustainability at UTC means
we can do good for the
planet while doing good for
our customers,
shareholders, employees,
and communities.
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SUSTAINABLE PRODUCTS
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HOW UTC INNOVATES AND DEVELOPS
ACE* is our Operating System
*Achieving Competitive Excellence
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PRODUCT SUSTAINABILITY GOALS 2020
Rigorous Implementation
Engineering Methods and “Standard
Work”
Integrated into ACE Passport
Tailored to Business Needs
100% Implemented by 2020
(DfS and LCA)
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Change the Culture
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KEY DfS ATTRIBUTES
Adapt to UTC’s Product Diversity
Design for Sustainability (DfS)
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LIFE CYCLE ANALYSIS
“Cradle to cradle”
assessments
Identifies DfS Attribute
Priorities
Customer/Market
Requirements (e.g. EPD
certifications)
Tailored to BU/Customer
Requirements
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SUPPLIER IMPACT
Maps into Supply Chain Goals
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UTC 2020 SUSTAINABILITY GOALS
UTC Supplier Gold Timeline
Supplier commitment over time
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MOC’S AND REACH
Chemical Regs Evolving Simultaneously
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EU REACh
Registration, Evaluation, Authorization, and Restriction of Chemicals
EU law banning use of certain substances inside the EU on sunset dates
“Safe use documents” required for shipping articles into EU over 0.1% SVHC content
Affects all commercial / military / industrial programs
Substances of Very High Concern
168 substances requiring “safe use” docs*
UTC designed hardware
31
Supplier-designed hardware
137
In process manufacturing
"Safe use" document only
Will be banned from use in EU
Overhaul and repair
Tooling
*Increased from 16 SVHCs in 2008; will continue to grow
REACh Is Not Industry or Product Specific
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HOW DOES IT WORK?
1. Any ARTICLE with >0.1% SVHC
RECEIVED in EU from anywhere
must include a SAFE USE
DOCUMENT
168
substances
2. ANY SUBSTANCE PAST its
SUNSET DATE cannot be used in EU
sites (BANNED)
The ONLY exception is the application
for and granting of an
AUTHORIZATION to extend the
SUNSET DATE
31
substances
SVHC: Substance of Very High Concern
Hexavalent Chrome Banned Starting Sept 2017
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90
BUSINESS IMPACTS
Financial Penalties
Supply Chain Disruptions
Obsolescence of Substances
High Implementation Costs
Compliance
Development and Validation of New Substances
REACh Threatens Business Continuity
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MITIGATION PLANS
Across UTC BU’s
Senior Executive Oversight
Regulation Monitoring and Lobbying
Map all SVHC uses and associated Manufacturing Landscape
BOM/Spec/Repair Reviews
Supplier Surveys
Partner with Industry to submit Authorizations
Develop and Validate Alternate Substances
Implement IT Sustainability Tools
REACh Requires Full Supply Chain Understanding
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SUPPLIER HELP NEEDED
Active Engagement and Responsiveness
Understand the regulation and supply chain impacts
Comply with regulation
Respond to supplier surveys/information needs
For Design Authority Suppliers:
Ensure products have Authorization coverage
Substantiate new formulations in your products
We Must Work Together To Succeed
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QUESTIONS?
William Sisson – UTC/UTRC Sr. Director,
Sustainability and REACH
sissonwm@utrc.utc.com
Catarina Rodrigues – UTC Supplier Dev.
Mark Bittar – P&W US
mark.bittar@pw.utc.com
Reach.Compliance@pw.utc.com
Michele Lewis – UTAS
Catarina.Rodrigues@utc.com
European Chemicals Agency (ECHA)
Michele.lewis@hs.utc.com
Helio Tinone – Otis/CCS
http://echa.europa.eu/
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Helio.Tinone@otis.com
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Source Exif Data:
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