Strong market positions, technology driven
The overarching slide provided by management for the capital markets day emphasised the strong relationships and market positions that the business has with all major engine original equipment groups.
Exhibit 1: Key operational strengths
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Source: Melrose Industries capital markets presentation October 2023
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This is best evidenced by the group’s portfolio of 19 RRSPs. These stretch across the industry in terms of both engine supplier and short/long haul.
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Source: Melrose Industries capital markets presentation May 2023
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Key to achieving these positions have been GKN Aerospace’s technical and manufacturing capabilities, which differentiates the business, promoting it up the value chain as a ‘customer partner’ rather than a ‘make-to-print’ component manufacturer. The timeline/product chart in Exhibit 3 highlights this shift over time. It is further evidenced with full design and manufacturing responsibility for the exit nozzle of the Ariane 6 rocket and as the only global player involved in the technical phase on the only future jet programmes currently in development, the Pratt & Whitney (P&W) GTF next-generation and the CFMI (GE Safran JV) RISE.
Exhibit 3: GKN Aerospace’s key engine programme timeline
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Source: Melrose Industries capital markets presentation October 2023
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The technology that GKN Aerospace can bring along with its manufacturing know-how enables it to add value in the development and design phase, including design for manufacture. Technical developments have been driving significant engine performance improvements, while on the production side developments have been more incremental. This could be about to change as the industry looks to embrace the use of AF/AM. Additive offers the potential to significantly reduce component weight, enhancing an engine’s performance, and reduce manufacturing cost, time, emissions and waste, providing direct financial and sustainability benefits.
Additive fabrication and manufacturing
Metallic aerospace components are currently forged or cast before being machined. The formation of the raw component (forging/casting) ensures the required mechanical properties of the component. However, ‘subtractive machining’ is wasteful. Additive approaches the challenge from the other direction, ‘building’ a component from the ground up, adding material layer by layer to create a component in a ‘near net shape’ form. The benefits of AF/AM are numerous:
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Elimination of the casting/forging process: the potential to eliminate a high-energy consuming process.
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Reduced waste and cost: forgings may have as much as 90% of material machined away during the manufacturing process, leading to significant scrap/waste, often of expensive alloys. Such subtractive manufacturing requires significant machine hours, which is costly and increases the total machining capacity required. AM also offers the potential for a lower carbon footprint.
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Shorter lead times and reduced supply chain complexity: the ability to produce a component from a single machine will reduce the complexities of the supply chain where multiple components from different suppliers are combined into a single casing or component. This is particularly important at present given the sector’s capacity constraints and lengthening lead times.
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Increased design flexibility: AM can produce more complex components, permitting non-essential elements of a component to be designed out. This in turn reduces the weight of a component and improves the overall performance of an engine. These benefits are more likely to be realised on a next-generation design.
The aerospace industry has a number of characteristics that make it suitable for the adoption of AF/AM. Components are complex, use high-value alloys, tend to have high levels of material subtraction from machining, require exacting tolerances and are relatively low volume. However, the conservative and safety/regulation drivers mean that the industry is still very much at the early stage of adoption.
One of the leaders and greatest advocates of AM is General Electric (GE), which acquired two equipment manufacturers in 2016, Arcam and Concept Laser. GE Aerospace has been 3D-printing the fuel nozzle tip for the LEAP engine since 2015. It is a relatively small component yet, according to GE, it consolidates 20 parts into one single structure, achieving a 25% weight reduction and 30% cost efficiency improvement.
GKN Aerospace Engines additive fabrication and manufacturing
GKN Aerospace has been developing its AM capabilities for many years and has a global technology centre in Fort Worth, Texas, primarily for the Structures division. The engines business, based in Sweden, has been working on two technologies:
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Laser metal deposition: a laser creates a melt pool on the surface of a component into which the metal powder or wire is inserted, with the laser fusing the two together, similar to welding, and subsequently constructing the required additional metal structure from the additional metal added.
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Powder bed fusion: thin layers of metallic powder, often 0.1mm thick, are addressed by a laser or electron beam to fuse the material. The accuracy of the energy applied enables a tight tolerance lattice to be formed, by refreshing the powder and adding layer on layer so the structure of a component is built up.
GKN Aerospace Engines already supplies components that include additive fabrication features. For instance, the intermediate compressor case (ICC) for the Trent XWB-84 with laser wire additive non-structural components, as per the probe insert inspection nodes highlighted in Exhibit 5.
Exhibit 4: Trent XWB-84 ICC
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Exhibit 5: AM inspection nodes
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Source: Melrose Industries capital markets presentation May 2023
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Exhibit 4: Trent XWB-84 ICC
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Exhibit 5: AM inspection nodes
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Source: Melrose Industries capital markets presentation May 2023
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The full benefit that AM brings can be seen in Exhibit 6. Of particular note is the improved buy-to-fly ratio, reflecting the level of material required to that which ends up in the final component. In the fan case example, there is an improvement from 11:1 to 3:1, leading to a 70% reduction in scrap.
Exhibit 6: AM benefit example
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Source: Melrose Industries capital markets presentation May 2023. Note: 1 Entry into service. 2 Relates to savings during material processing.
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To support the development, GKN Aerospace purchased Permanova Lasersystem in October 2022. Based in Gothenburg, Permanova is a leader in advanced laser technology and laser metal deposition systems.
Exhibit 7: Permanova Permaflex AM station
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Source: Permanova Lasersystem
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The GKN Aerospace Engines business is now entering scale commercialisation, arguably a first for the aerospace supply sector, with a £40m investment in laser wire, based on Permanova equipment, to be followed by power bed utilising third-party equipment from SLM (SLM announced GKN Aerospace had order two of its latest 12 laser machines in September).
The programme will start by replacing complete machining of forged parts to partial machining of a smaller, tighter tolerance forging with AF/AM used to create additional features such as flanges before moving to powder metal generation to replace the base forging, enabling a fully additive produced component. This staggered adoption will permit tighter control and assist in any certification requirements, albeit these should be limited as a replacement part rather than a newly designed component. The business plans to migrate three parts currently being fully machined: a low-pressure compressor case, a fan case and a turbine rear frame component, to include laser deposition AF elements. The second stage will involve replacing the forgings with powder bed AM modules and hence, with the AF elements, a fully additive fabricated component. Full production is expected from 2025.
Management has pointed to a return on investment of over 20%. It has not indicated the potential margin expectations, but the savings in terms of materials and processing requirements should permit a win-win situation for both GKN Aerospace and the engine OE. More importantly, the success of establishing such a capability as the industry grapples with supply chain issues potentially offers accelerated opportunities.