Daily Memo: GE Aerospace Chief Sees No Quick Fixes For Supply Chain Woes

Chairman and CEO Larry Culp’s transformation of iconic General Electric from a troubled industrial conglomerate into a focused aerospace and defense company will culminate on April 2, when he rings the opening bell on the New York Stock Exchange and marks the official standup of GE Aerospace.

And while the new company’s future looks bright, Culp will have to grapple with a challenge bedeviling much of the industry: his company can’t move fast enough to meet surging demand for aircraft engines and MRO services.

“I think the near-term challenge is just back to supply chain,” Culp said in an interview in New York with Aviation Week. “We’ve had quite a good run here. If we could get more product out, we’d be doing even better.”

With 70% of its business coming from MRO, GE Aerospace’s balance sheet is in some ways a reminder of General Electric in its blue-chip heyday. But Culp still has a few headaches to deal with on Day One. At the top of the list is fixing durability and supply chain issues with the Leap 1 engine. “We will get CFM56 levels of durability—time on wing—by the end of the year from a production perspective,” Culp says. “The Leap 1A and Leap 1B will follow. We’ll have work to do, obviously, with our friends [at Boeing] to lay that into next year.”

But Culp sees no quick fixes to his company’s supply chain. “I think we’re making progress,” he says. “But we just can’t make enough progress, be it a part or a shop visit for the CFM56 or even the Leap—or be it ramping up with Airbus, with Boeing, and everybody else. It’s just hard. I probably should be more positive because we are making progress.”

Culp acknowledges that progress isn’t fast enough for airlines or the CEOs of Airbus and Boeing. “As for when, it’s a moving target,” he says. “I think we’ve easily got a couple of years that I think we’ll be talking about this.”

At its birth, the company is unveiling its Flight Deck lean operating model, and Culp and other GE leaders are increasingly looking to bring proprietary versions of lean and kaizen practices to the company’s contractors. “It’s not all about what happens inside of our four walls,” Culp said at a recent investor event. “Our supply chain has a critical role to play.”

Culp tells Aviation Week he is willing to consider easing terms in which suppliers aren’t paid for 120 days to help replenish the sub-tiers so they can make capital investments needed to ramp-up aircraft production. “We’re open to any good idea that would improve the dynamics within our supply base,” he says. “There’s no question that with rates where they are we’ve seen some suppliers challenged financially. But there also are a host of other issues we’re working with our suppliers on.”

He also “feels good” about the GE-Safran RISE program, which is looking into a suite of next-generation propulsion options, including an open fan. “Each airframer is going to shape their product roadmaps in part by what they see RISE being able to enable,” Culp says. “If we really are going to meet the sustainability challenge in the mid-to-late 2030s, we as an industry are going to need a step function in propulsive efficiency.”