Chris Kjelgaard

United Technologies Aerospace Systems (UTAS) and Rockwell Collins, with which UTAS expects to merge in the third quarter, signed new supplier deals late last week with Boeing under the airframe manufacturer’s Partnering for Success (PFS) 2.0 supplier cost-cutting initiative.

 


Announcing on March 16 at parent company United Technologies’ Annual Analysts and Portfolio Managers Meeting that UTAS and Rockwell Collins had signed new Boeing supplier deals “over the last few hours,” UTAS president Dave Gitlin also revealed that UTAS has just launched a cost-cutting program of its own called "PACE" for Tier II suppliers.

 


Boeing chose the name for its PFS 2.0 initiative, which represents the second phase of the OEM’s Partnering For Success supplier cost-cutting effort, to reflect the company’s goal to cut supplier costs by 2 percent a year—mainly through negotiating revised terms and conditions such as extending its invoice settlement periods rather than demanding outright cost cuts, as Boeing’s original PFS initiative did.

 


“We have been laser-focused on finding a solution that was a win-win and I’m happy to tell you that we have achieved that,” said Gitlin, who explained the deal opens the way for in-depth talks between UTAS and Boeing on the latter’s planned eventual New Midsize Airplane (NMA) program. “On the NMA, I think&nbsp;now that we’ve been able to come to an agreement with Boeing that works for both of us, I’m excited to engage in those discussions and see where it goes.”

 


In reference to the parallel new cost-cutting PACE initiative for its own Tier II suppliers, Gitlin reported that UTAS has reduced the number of companies in its supplier base from some 4,000 to about 3,500.&nbsp;“We’ve typically been pretty good at getting a couple of percent a year out of our suppliers,” he said. “Now I would say that we really have to up our game in terms of how much value that we get from our suppliers, similar to what [the major airframe OEMs] get from us.” The PACE program seeks far more “aggressive” pricing deals with its suppliers in return for more contract awards.

 


Gitlin also said UTAS works closely with Airbus to meet that company’s supplier cost-cutting requirements. Mentioning Airbus’s SCOPe and SCOPe+ supplier cost-cutting initiatives for the A320-family program, Gitlin also referred to another such Airbus initiative, called “LR COP, for the long-range” aircraft programs, which it appears Airbus has not previously disclosed publicly.

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