There is an update to our Supply Chain Matters streaming commentaries related to aircraft engine producer Pratt & Whitney. In October, we published a Pratt focused commentary with the theme of the good and not so good news when on eyes are focused on your supply chain. Over the weekend, unionized workers ratified a new five-year labor contract assuring some longer-term stability regarding the firm’s workforce.
The pact was approved by two labor unions representing upwards of 2600 production related workers at Pratt facilities in East Hartford and Middletown Connecticut. With these new labor agreements, Pratt can move forward in addressing ongoing challenges to double existing production levels of its new geared-turbo fan (GTF) engines.
According to published reports the new contract provides for 2.5 percent wage increases in each subsequent year of the contract along with enhancing certain pension focused terms among existing employees. As a concession to management, new workers hired after January 1, 2017 will be enrolled in a defined-contribution retirement plan as opposed to the traditional defined-benefit plan that existing workers currently have.
With this settlement, commercial aircraft OEM’s Airbus and Bombardier can breathe some sigh of relief in that Pratt can now move forward with its short and longer-term delivery commitments to match current delivery commitments for both the new Airbus A320 neo and Bombardier CS family of aircraft, both programs of which have been impacted by engine technical and production shortfall challenges involving the new GTF engines. Airbus has especially been impacted for current delivery commitments of the new engine option A320. The initial challenge comes in just a few weeks since Pratt must deliver on its end of 2016 delivery commitments, followed by a near doubling of deliveries planned for 2017.
This news is somewhat of a contrast to parent United Technologies other business division, heating and air conditioning unit Carrier, which made lots of headlines last week in a confrontation and subsequent agreement with President-elect Donald Trump regarding the movement of upwards of 1000 jobs to Mexico.