(Corrects name of vice president in third paragraph.)
Sept. 4 (Bloomberg) -- General Electric Co. is facing such demand for its newest commercial jet engines that it’s planning a second factory for making ceramics-based components -- and the first one hasn’t even opened yet.
The company’s GE Aviation unit is scouting potential manufacturing sites to keep up with a record order backlog, according to Bill Fitzgerald, vice president of commercial engine operations, who didn’t identify any locations. The plant will make ceramic matrix composites used in engine parts.
“We’re building out our capability,” Fitzgerald said yesterday in a telephone interview. “We’re going to build an additional factory because we think we’re going to need that capacity and we want to be well ahead of it.”
GE is still hiring for a plant set to start operating in January in Asheville, North Carolina, that it said will be the first to mass produce ceramic matrix composites. The second factory, which hasn’t been formally announced, probably will be similar in size to the 340-worker Asheville facility, said Rick Kennedy, a GE Aviation spokesman.
Advanced materials are crucial to GE’s bid to boost fuel efficiency by as much as 15 percent in the Leap engine due to enter service in 2016. Ceramic matrix composites, which GE has been developing for two decades, offer improved performance in high temperatures at much lower weight than traditional materials like metal, Fitzgerald said. Temperatures inside a jet engine can reach about 2,400 degrees Fahrenheit (1,315 degrees Celsius).
The Leap will power several upgraded jet models reaching the market later this decade, including Boeing Co.’s 737 Max and Airbus Group NV’s A320neo. CFM International, GE’s joint venture with France’s Safran SA, has secured orders for about 7,500 Leap engines. GE is the world’s biggest jet-engine maker.
GE and its engine ventures have a backlog of more than 14,000 units valued at $27 billion, including a $2 billion order last week from BOC Aviation Pte. Along with services deals of about $100 billion, GE’s backlog is up 23 percent since early 2013, according to information provided by the company.
Engine makers are accelerating production efforts amid a rise in aircraft purchasing by carriers seeking more efficient models. At a time when fuel represents the largest share of airline operating costs, improvements in under-wing technology have helped jets operate more economically, said Richard Aboulafia, an analyst at Fairfax, Virginia-based Teal Group.
“It becomes essential to replace older, less-efficient jets with newer ones. They pay for themselves,” he said. “Every decade we get about 10 or 12 percent better. The meaning of that double-digit improvement is so much greater because of the high cost of fuel.”
GE plans to increase ceramic output to accommodate the engine-order volume as well as to expand the use of the material in more parts of the engine’s hot section, Fitzgerald said. The company currently uses composites for the turbine shroud, which directs the engine’s air flow. “That’s all about what we’ve learned from the use of the technology and where it can be reapplied in a smart, efficient, cost-effective way,” Fitzgerald said.
Pratt & Whitney, GE’s primary competitor in engines for narrow-body jets, is basing its latest power plant on so-called geared turbofan technology, which uses a gearbox to improve operating efficiency rather than advanced materials.
Pratt and GE compete to power the A320neo, which became the fastest-selling aircraft in commercial aviation history after Airbus committed to the plane in late 2010. The GE joint venture has about a 55 percent market share, Kennedy said. Pratt declined to comment.
GE’s engine-related revenue rose 13 percent last year, compared with less than 4 percent increases at Pratt and Rolls- Royce Holdings Plc, according to data compiled by Bloomberg. GE was the only one of the three to increase its market share.
While commercial-engine orders are up, GE’s military business has been hurt by falling demand resulting in part from reductions in the defense budget. The company said it will eliminate about 80 positions at a plant in Madisonville, Kentucky, making turbine blades for military engines.