Post by ferryfast admin on Nov 14, 2011 12:09:58 GMT -5
Why Rolls-Royce is seen as engine of recovery for UK economy
Engineering group that makes 85% of sales abroad
is expected to see £1bn in pre-tax profits despite
manufacturing gloom
o Dan Milmo, industrial editor
o guardian.co.uk, Friday 11 November 2011 14.48 EST
www.guardian.co.uk/business/2011/nov/11/rolls-royce-engine-recovery-economy?newsfeed=true
On a damp evening at Heathrow airport, the roar of Rolls-Royce engines is the dominant sound as dozens of planes land and take off with the aid of technology made by the industrial group.
For all the disquiet over Britain's supposed loss of manufacturing prowess, at least one of British industry's biggest names is an international force. Such is its industrial star power, David Cameron hosted a cabinet meeting at Rolls-Royce's Derby headquarters this year and Ed Miliband singled it out as one of Britain's "genuine" wealth creators in his critique of predator businesses.
Seen up close on the tarmac, the Rolls-Royce engine is less intimidating than it sounds. A Virgin Atlantic engineer shows how, for all the technical wizardry on display, these machines operate on basic principles.
The titanium fan blades at the front– their dimensions calibrated to within a fraction of a human hair – suck in air which is crunched and compacted by smaller sets of blades within the engine. That air, becoming progressively more powerful as it speeds through the grip of each set of compression blades, is then funnelled into a combustion chamber. There it is mixed with lit kerosene and the subsequent controlled explosion powers a turbine that, in perfect symmetry, powers the fan blades that began the process that suck in the air that goes through the compression chambers and so on. It is a powerful loop and the air blasted out of the rear of the engine by the churning blades at the front – it doesn't even go through the combustion process – provides around 80% of the aircraft's thrust.
This Trent 500 engine is the product of engineering excellence and a canny corporate bet. Having been rescued from bankruptcy by the government in 1971, Rolls-Royce emerged from state ownership in the late 1980s seeking a fresh strategy.
In the following decade, the then chairman, Sir Ralph Robins, set a goal of building an engine for every type of airline – and the Trent was born.
Then came the acquisition of the US Allison Engine Company, which gave Rolls-Royce a foothold in the engine maintenance and service business, now a significant part of its revenues.
Rolls-Royce is now an international business that makes 85% of its sales outside Britain, having doubled its exports over the past two decades.
Politicians clamour to be associated with it because it is pulling off the wider political aim – shared by all parties – of rebalancing the British economy so it exports products other countries want.
Cameron and Miliband hope a resurgent manufacturing sector will create high-value jobs and help tackle record youth unemployment. Rolls-Royce is a star pupil, employing 40,000 worldwide including 200 new British apprentices every year. Most of its 200-strong graduate intake is British as well.
The group confirmed in an interim management statement that its diverse range of products and demand from emerging markets is helping it overcome the consequences of the eurozone crisis and government spending cuts. As well as aircraft engines, it makes power station turbines and designs ships.
"The breadth and balance of our portfolio and the strong access we have to parts of the world where demand remains robust have made Rolls-Royce increasingly resilient," said the chief executive, John Rishton, who replaced the lauded Sir John Rose this year.
With an order book worth a record £61.4bn, analysts expect pre-tax profits of more than £1bn this year. It is a positive sign amid the darkening outlook elsewhere in British manufacturing.
The October purchasing managers' index (PMI) – a measure of orders for manufacturing equipment – dropped to 47.4 from 50.8 in September, indicating economic contraction, and underlining the struggle the government faces in strengthening UK manufacturing, which currently contributes 10% of gross domestic product.
It is not just inventing and making things that makes Rolls-Royce a powerful multinational. More than half its revenues come from servicing its products. For instance, Virgin Atlantic leases its engines from Rolls-Royce under a "total care" arrangement under which the company oversees repair, overhaul and monitoring of the engines, with the latter task performed from a permanently staffed facility at the group's Derby headquarters. Virgin Atlantic's head of engineering, Phil Maher, says it is not just about the technology. "The level of customer service and support is exemplary. If we have any issues they respond quickly." He adds: "Rolls-Royce understands a customer's needs and that is something we have seen time and time again."
Rolls-Royce is keen to stress that it is not just an aircraft engine business – the Trent technology bolted to the wings of a Virgin Atlantic A340-600 at Heathrow, for instance, has inspired sister products in a different field.
At Rolls-Royce's Filton factory in Bristol 120 miles away, engineers are building the MT30 turbines that will help power the Queen Elizabeth aircraft carriers and the US Navy's Littoral combat ships. The 6.5 tonne turbine is based on the same technology as the Trent family and shares a majority of the parts.
Rolls-Royce says this is sound business sense. Research and development or inventing and testing a product, is a costly business so when you strike gold with an invention it is best to use it in as many ways as possible. "Invent once and use many" is a phrase common with Rolls-Royce managers.
For all the emphasis on the profitable business of repairing and maintaining its products, Rolls-Royce still needs to keep inventing, and is able to do it on a world-leading basis thanks to another British strength: universities. It has 28 university technology centres including sites at Loughborough and Sheffield, where research is funded by Rolls-Royce.
"Academics bring the thought and Rolls-Royce brings the manufacturing," says Richard Dingley, an executive at Roll-Royce's marine business.
Civil aerospace engines dominate Rolls-Royce's figures, accounting for 37% of operating profits, with marine 31%, followed by 29% at its defence unit and 3% at the energy wing.
In a modest office block in Bristol there are hopes the company has discovered another world-leading product. Tidal Generation, a Rolls-Royce subsidiary, is developing underwater power turbines that could, with the backing of utility firms and the government, provide 7.5% of the UK's electricity.
A prototype is spinning off the Orkney Islands, turning its blades in the direction of the tide every few hours, and a more powerful version will launch next year. Rob Stevenson, Tidal Generation's chief executive, says tidal energy could become a mass-market phenomenon by the end of the decade, given looming energy and carbon constraints. "We think it has tremendous potential," he says.
Engineering group that makes 85% of sales abroad
is expected to see £1bn in pre-tax profits despite
manufacturing gloom
o Dan Milmo, industrial editor
o guardian.co.uk, Friday 11 November 2011 14.48 EST
www.guardian.co.uk/business/2011/nov/11/rolls-royce-engine-recovery-economy?newsfeed=true
On a damp evening at Heathrow airport, the roar of Rolls-Royce engines is the dominant sound as dozens of planes land and take off with the aid of technology made by the industrial group.
For all the disquiet over Britain's supposed loss of manufacturing prowess, at least one of British industry's biggest names is an international force. Such is its industrial star power, David Cameron hosted a cabinet meeting at Rolls-Royce's Derby headquarters this year and Ed Miliband singled it out as one of Britain's "genuine" wealth creators in his critique of predator businesses.
Seen up close on the tarmac, the Rolls-Royce engine is less intimidating than it sounds. A Virgin Atlantic engineer shows how, for all the technical wizardry on display, these machines operate on basic principles.
The titanium fan blades at the front– their dimensions calibrated to within a fraction of a human hair – suck in air which is crunched and compacted by smaller sets of blades within the engine. That air, becoming progressively more powerful as it speeds through the grip of each set of compression blades, is then funnelled into a combustion chamber. There it is mixed with lit kerosene and the subsequent controlled explosion powers a turbine that, in perfect symmetry, powers the fan blades that began the process that suck in the air that goes through the compression chambers and so on. It is a powerful loop and the air blasted out of the rear of the engine by the churning blades at the front – it doesn't even go through the combustion process – provides around 80% of the aircraft's thrust.
This Trent 500 engine is the product of engineering excellence and a canny corporate bet. Having been rescued from bankruptcy by the government in 1971, Rolls-Royce emerged from state ownership in the late 1980s seeking a fresh strategy.
In the following decade, the then chairman, Sir Ralph Robins, set a goal of building an engine for every type of airline – and the Trent was born.
Then came the acquisition of the US Allison Engine Company, which gave Rolls-Royce a foothold in the engine maintenance and service business, now a significant part of its revenues.
Rolls-Royce is now an international business that makes 85% of its sales outside Britain, having doubled its exports over the past two decades.
Politicians clamour to be associated with it because it is pulling off the wider political aim – shared by all parties – of rebalancing the British economy so it exports products other countries want.
Cameron and Miliband hope a resurgent manufacturing sector will create high-value jobs and help tackle record youth unemployment. Rolls-Royce is a star pupil, employing 40,000 worldwide including 200 new British apprentices every year. Most of its 200-strong graduate intake is British as well.
The group confirmed in an interim management statement that its diverse range of products and demand from emerging markets is helping it overcome the consequences of the eurozone crisis and government spending cuts. As well as aircraft engines, it makes power station turbines and designs ships.
"The breadth and balance of our portfolio and the strong access we have to parts of the world where demand remains robust have made Rolls-Royce increasingly resilient," said the chief executive, John Rishton, who replaced the lauded Sir John Rose this year.
With an order book worth a record £61.4bn, analysts expect pre-tax profits of more than £1bn this year. It is a positive sign amid the darkening outlook elsewhere in British manufacturing.
The October purchasing managers' index (PMI) – a measure of orders for manufacturing equipment – dropped to 47.4 from 50.8 in September, indicating economic contraction, and underlining the struggle the government faces in strengthening UK manufacturing, which currently contributes 10% of gross domestic product.
It is not just inventing and making things that makes Rolls-Royce a powerful multinational. More than half its revenues come from servicing its products. For instance, Virgin Atlantic leases its engines from Rolls-Royce under a "total care" arrangement under which the company oversees repair, overhaul and monitoring of the engines, with the latter task performed from a permanently staffed facility at the group's Derby headquarters. Virgin Atlantic's head of engineering, Phil Maher, says it is not just about the technology. "The level of customer service and support is exemplary. If we have any issues they respond quickly." He adds: "Rolls-Royce understands a customer's needs and that is something we have seen time and time again."
Rolls-Royce is keen to stress that it is not just an aircraft engine business – the Trent technology bolted to the wings of a Virgin Atlantic A340-600 at Heathrow, for instance, has inspired sister products in a different field.
At Rolls-Royce's Filton factory in Bristol 120 miles away, engineers are building the MT30 turbines that will help power the Queen Elizabeth aircraft carriers and the US Navy's Littoral combat ships. The 6.5 tonne turbine is based on the same technology as the Trent family and shares a majority of the parts.
Rolls-Royce says this is sound business sense. Research and development or inventing and testing a product, is a costly business so when you strike gold with an invention it is best to use it in as many ways as possible. "Invent once and use many" is a phrase common with Rolls-Royce managers.
For all the emphasis on the profitable business of repairing and maintaining its products, Rolls-Royce still needs to keep inventing, and is able to do it on a world-leading basis thanks to another British strength: universities. It has 28 university technology centres including sites at Loughborough and Sheffield, where research is funded by Rolls-Royce.
"Academics bring the thought and Rolls-Royce brings the manufacturing," says Richard Dingley, an executive at Roll-Royce's marine business.
Civil aerospace engines dominate Rolls-Royce's figures, accounting for 37% of operating profits, with marine 31%, followed by 29% at its defence unit and 3% at the energy wing.
In a modest office block in Bristol there are hopes the company has discovered another world-leading product. Tidal Generation, a Rolls-Royce subsidiary, is developing underwater power turbines that could, with the backing of utility firms and the government, provide 7.5% of the UK's electricity.
A prototype is spinning off the Orkney Islands, turning its blades in the direction of the tide every few hours, and a more powerful version will launch next year. Rob Stevenson, Tidal Generation's chief executive, says tidal energy could become a mass-market phenomenon by the end of the decade, given looming energy and carbon constraints. "We think it has tremendous potential," he says.