Once home to some of the most important aero engine, military trainer, and helicopter factories in the Eastern bloc, post-communist Poland has powered its way back to the top ranks of European aerospace, after a painful transition to a market economy. It is thanks largely to the success of one particular part of the country in persuading some of the biggest brands in the industry to set up there. Over the past 15 years, the largest five engine companies, together with two major helicopter manufacturers and more than a dozen other suppliers, have established themselves in or around Podkarpackie province in the country’s south-east – marketed as Aviation Valley. The investment has made it one of the fastest-growing aerospace clusters in the world.
Pratt & Whitney was among those leading the charge when parent United Technologies bought near-bankrupt, state-owned WSK in 2003. It has been joined by Munich-based engine systems specialist MTU, GE Aviation Italian unit Avio Aero, France’s Safran, and Rolls-Royce, which in 2017 opened its gearbox joint venture with the French company Aero Gears International. Poland’s two helicopter factories – PZL Mielec and PZL Swidnik – were acquired by Sikorsky (now owned by Lockheed Martin) and Leonardo, respectively. P&W's sister landing gear and aerostructures specialist UTAS is also present, as are a large number of lower-tier suppliers – foreign-owned and local – several of them establishing production sites on an enterprise park next to the airport in Podkarpackie’s main city, Rzeszow.
When the former Soviet market collapsed in the 1990s, thousands were laid off in what had been Poland’s aerospace workshop. By the early 2000s, less than a quarter of the 40,000 employed in the 1980s still had a job in the industry. Pratt & Whitney Poland chief executive Marek Darecki – long-serving president of the Aviation Valley board and at the time head of WSK – remembers it being a “dark time”, with “families who depended on the factory losing their living”. With a heritage dating back to before the Second World War, the educational infrastructure to go with it, and a willing, low-cost workforce, local politicians and industrialists began casting for ways to attract overseas investment to what was threatening to become a rustbelt, emigration-scarred region of the newly capitalist country.
Today, thanks largely to the efforts of Aviation Valley in attracting aerospace investment, the area is prospering, despite unemployment still higher than the national average. Rzeszow has a thriving university and polytechnic, and its lively historic centre is packed with smart restaurants, themed bars and boutique hotels. A new airport terminal opened in 2012 and what once were fields facing it are filling with modern factories, a convention centre and a complex that serves as a “business incubator”, offering short-term low-rent offices and production space to aerospace and other technology start-ups. Some 25,000 people now work in the cluster, which represents 90% of Poland’s aerospace industry. While employment levels are still below those of the early 1990s, the jobs are better-paid and higher-skilled.
United Technologies is the largest aerospace employer in Aviation Valley with 4,000 staff at P&W in Rzeszow and 10,000 across its seven other Polish factories, including at a UTAS site next to Rzeszow airport. The US group has invested $700 million in turning the 80-year-old Rzeszow campus – state of the art when it was opened in 1938 – into a 21st century production facility. “This is big money in Poland,” notes Darecki. And while Poland’s wage rates remain competitive, it would be wrong to characterise the country purely as a low-cost territory for outsourcing lower-value production, he says. Half of Darecki’s staff are graduates, and half of those engineers, with Rzeszow responsible for major programme elements and a research and development centre of excellence.
The site is also a centre of excellence for static structures – among them the frame for the PW800, the engine on the new Gulfstream G500 and G600, and now the replacement for the Dassault Falcon 5X. Rzeszow also specialises in gearboxes, making the fan drive gear system for the PW1000G family. According to Darecki, 25% of the narrowbody geared turbofan engine is produced in Poland, between P&W and MTU, second in value only to the USA, whose P&W factories have a 50% share. In addition, five years ago United Technologies moved its San Diego-based former Hamilton Sundstrand auxiliary power unit business to Rzeszow. About 500 APUs are manufactured every year in the Polish city – for the Airbus A320 and Boeing 787 among others – and a further 500 repaired.
Darecki says the Rzeszow factory’s evolution from a largely build-to-print facility shortly after its takeover by UTC in the mid-2000s, to one handling more complex models, and eventually one able to carry out design engineering – with a materials laboratory and advanced prototyping and test facilities – was achieved partly with a $30 million grant from Brussels. Using European taxpayers’ money to boost a US company was a “slightly delicate” matter when many saw European-controlled industry as the priority, he admits. However, he maintains “it was a smart use of funds because we have created hundreds of high-value jobs in one of the poorest regions of Europe”.
Part of the huge WSK campus has been turned over to a newer arrival in Poland, Consolidated Precision Products. In July 2016, the Cleveland, USA-based castings specialist took over two P&W foundries, from where it produces engine parts using single-crystal and direct solidification methods, one of a handful of facilities worldwide using these techniques. The operation’s 350 staff, including 40 engineers, came with the acquisition. CPP has now begun expanding the client base of the former in-house business, winning contracts from GE Aviation and Rolls-Royce, both of them based in Aviation Valley. “We were previously purely orientated to P&W but were keen to fully utilise the plants, so we are very excited to welcome new customers,” says general manager Magdalena Nizik.
MTU opened its engine plant next to Rzeszow airport in 2009 and extended it by a third four years ago. The factory has since 2015 assembled the low-pressure turbine for the PW1000G, and will ship 600 shipsets this year, from 300 in 2017. However, one of its biggest programmes in terms of volume is the GTF’s predecessor, the International Aero Engines V2500. MTU Poland is responsible for 540 original equipment and more than 2,500 aftermarket parts under its 5% share in that programme. While IAE and its main shareholder P&W represent the majority of MTU Poland’s activities – it also builds elements of all the P&W Canada engine range – a new addition to its portfolio is the hub strut case for the GE Aviation GE9X, the engine that will power the Boeing 777X.
Managing director Krzysztof Zuzak maintains that the factory has been in “constant ramp up” since production began almost a decade ago. It is a young business in more ways than one, with the average age of staff just 36. Some 150 staff were hired last year, taking the workforce to more than 700 – 120 of them graduate engineers. During 2018 a further 100 will join. “By 2022 we will be employing over 800 people, which is double our original target,” says Zuzak. He insists that the business’s upward trajectory is not just down to Poland being a low-cost country. “The most important factor is that you are able to attain a certain level of technology, and can deliver products on time and to the required quality,” he says.
In December, MTU announced another major investment in Poland, this time in a joint venture with Lufthansa Technik. The two German companies will partner to maintain, repair and overhaul PW1000G family engines. Although a site has not yet been disclosed, the JV, to be known as Engine Maintenance Europe, will open in 2020, have a capacity of 400 shop visits of the geared turbofan engine every year, and eventually employ 800. It is Lufthansa Technik’s second big initiative in the country. In September 2017, work began on a joint venture company in Sroda Slaska, western Poland, to overhaul GE GEnx-2B engines and later GE9Xs.
Rolls-Royce became the latest propulsion company to make a move into Aviation Valley in April last year when it and its 50/50 partner Safran Transmission Systems formally opened their Aero Gearbox International (AGI) joint venture in Ropczyce, near Rzeszow. The operation, announced in 2015 as part of a 25-year agreement, will produce accessory drive trains for latest-generation Rolls-Royce engines, the Trent XWB for the Airbus A350 and the Trent 7000 for the A330neo, as well as future programmes from the UK engine maker. AGI will also be responsible for maintenance, repair and overhaul, and the workforce is expected to rise from the current 50 to about 200 in 2021.
Safran Transmission Systems – the former Hispano Suiza – has had its own gearbox plant a few kilometres from AGI and has been an Aviation Valley stalwart even longer than P&W, establishing a plant in former carpet factory in 2001. The facility employs just over 700 and specialises in power transmission systems for CFM International CFM56 and Leap engines, but also makes a range of stators, drums and components for other engines. It was joined last year by a sister unit, Safran Aircraft Engines, which is responsible for low-pressure turbine blades for the Leap, with 200 employees. Both factories are preparing for a boost as deliveries increase of the new CFM engine that powers the Boeing 737 Max, current Comac C919s, and about half of all Airbus A320Neos. “This ramp-up is what our future is based on,” declares Jan Sawicki, president and chief executive of Safran Transmission Systems Poland.
GE-owned Avio Aero is another long-term investor in south-east Poland, having set up its plant in 2001 in Bielsko Biala, 230km from Rzeszow. The site, Avio’s only facility outside Italy, employs about 550 and specialises in stator and rotor blades for low pressure turbines on GE products including the GE90, GEnx, CFM56, and T700 helicopter engine. It also produces components for Pratt & Whitney and Rolls-Royce powerplants such as the PW1100, PW150, Trent 700 and Trent 900. As with the Safran businesses, the GE subsidiary is preparing to reap the benefits of the Leap ramp-up; the plant manufacturers the low-pressure turbine nozzles and stator turbine blades for stages three, four and five of the engine.
This April marks the 15th anniversary of the establishment of the Aviation Valley Association, created by Darecki, fellow industrialists and representatives of two regional development agencies. Although labour rates only a third of those in North America or Western Europe still give the area a “competitive advantage”, Darecki is aware that the next generation of automated factories – so-called Aerospace 4.0 – will start eroding that edge. He notes that the German sports goods giant Adidas recently closed a Chinese factory employing 1,000 and moved production to a more high-tech plant in Bavaria that has a workforce of just 150, in the process considerably shortening the time a shoe design takes from concept to retail shelf. Already, he says, there have been sharp increases in average salaries in the Czech Republic, Hungary and regions of Poland that border Germany.
For this reason, he believes that Aviation Valley must continue to evolve and innovate, “changing the cultures” of companies to make them more open to automation even at the expense of reducing the workforce. Another priority is expanding the local supply chain, helping family-run businesses that might have specialised in, say, automotive parts, develop expertise in higher-value aerospace components, and attracting small investors from abroad as well as the big players. “This year, for the first time, we have had two more exotic SMEs establish themselves here – one from Singapore and one from Australia,” says Darecki. “They want the presence in the EU and they understand our good business environment.”
Source: Flight Daily News