2 larry trowel general manager, government business practices & processes ge july 26, 2007 9:30...
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Larry TrowelGeneral Manager, Government Business Practices & ProcessesGE
July 26, 2007 9:30 a.m. – 10:30 a.m.
Common Ground: The New Specialty Metals Rules and How Government and Industry Can Work Together
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“Defense” Industry has Multiple Business Models
• Defense-focused Facilities– Build-to-DOD-order; supply chain responds to DOD orders with serial
processes– No need to segregate materials
• Integrated Commercial-Military Facilities– Build-to-DOD-order with common components and integrated
production lines– Segregated materials impractical
• Commercial Facilities– “Off-the-shelf” products and components; global supply chain driven by
forecast, not individual orders– No opportunity to segregate
Business Model Drives Impact of Restrictions
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Integrated Production - Example
Efficient Production Drives Common Processes
COMMON PART NUMBER
COMMON DESIGN – DIFFERENT PART NUMBER
TitaniumBar Stock
CommonAirfoil
Forging
Final PartNumber
Common Inventory
CF34 Comm’lApplication
TF34 Military Application
TitaniumBar Stock
CommonAirfoil
Forging
In-processDifferentiation
of Part Numbers(usually minor differences)
Final Part -Number
CF34 Comm’l Application
Final Part -Number
TF34 MilitaryApplication
Jet Engine Airfoils
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Commercial Off-the-Shelf Item - Example
Commercial Market Drives Production, Support – DOD Benefits
Commercial Applications
Boeing 747-300, -400, -400ER767-200, -300, -400MD–11
Airbus A300–600A310–200, -300A330-200, -300
Engines in Commercial Operations = 6641+Commercial Operators = 249
US Military Applications
VC-25 (Air Force One) E-4 KC-10 Air Borne Laser C-5M (re-engining in process)
Engines in Military Operations = 225
Spare Parts
Commercial Operators Consume 99% of Spare Parts
DOD procures its spares directly from commercial warehouse in same manner as other commercial
customers
CF6 Engine
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Commercial Conundrum – Specialty Metals
• End items and components forecasted and manufactured for commercial market – DOD participates, but does not drive
• Materials typically procured well in advance of customer orders– Little opportunity to impact basic materials
• Segregation in production impractical, costly, disruptive– Requires “job order” processes
• Commercial products focus on material properties, not country of origin– Some exceptions for special applications
• Unreasonable choices . . . – Compliance across all products – commercial and DOD?– Segregate DOD materials, production, inventory?– Do not sell to DOD or its suppliers?
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Summary
• OSD, DCMA, Contractors working well together to make current policy work
• Statutory and policy flexibility are warranted… specialty metal industry is healthy now and in foreseeable future
• Policy flexibility especially important where DOD relies on commercial market place