Aerospace, building giant delivers green, tech-focused products

Eager to enhance its sales potential in the world's second largest economy, United Technologies, the world's leading aerospace and building systems provider, is expanding amid China's "new normal" development stage and industrial boom.

"New normal" has become a popular economic term in China. After a series of concerted policy efforts to tackle the effects of the 2008-2009 global financial crisis, China has moved up the value chain amid this developing model of slower but quality growth. This progression has reshaped many global companies' business policies and investment strategies in the country.

Doug Cai, president of Greater China, Pratt & Whitney, United Technologies' aircraft engine manufacturer, said the country's aviation market will undergo in dramatic changes as China looks to optimize its industrial structure and further reduce carbon emissions.

China's air travel demand has boomed in recent decades, and its growth outlook is still positive. According to government plans, the number of airports across the nation will have increased from 175 in 2010 to 230 by the end of this year. Central and local governments are expected to invest 40 billion yuan to construct air traffic management systems and to increase capacity by 70 percent before 2016.

Pratt & Whitney's PurePower Geared Turbofan jet engines are expected to formally enter into service in China this year. To prepare, the company has invested heavily in production and supply management capabilities, as well as maintenance, repair and overhaul network building.

Most of the direct operational costs of airline companies come from fuel consumption. Pratt & Whitney GTF engines can help reduce fuel consumption by up to 16 percent, and can make the aircraft up to 75 percent quieter. Pratt & Whitney will continue to enhance this game-changing engine in order to lower fuel consumption even further.

"Improving fuel efficiency by an additional 2 percent will further help the A320neo realize its objective of lowering fuel consumption by 20 percent by 2020, and will also help Chinese airline companies reduce their operational costs," said Cai.

Sichuan Airlines became the first Chinese airline to directly order Pratt & Whitney's PurePower engines, as the airline recently signed a Memorandum of Understanding to purchase PW1100G-JM engines to power its new fleet of 24 A320neo aircrafts.

"United Technologies is committed to continuously supporting the growth of the Chinese civil aviation industry and being part of its success in the years to come," said Cai. "Pratt & Whitney is a long-term friend to China's aviation industry, and we are proud to work with our Chinese partners to foster a healthy and sustainable market."

Over more than 80 years, Pratt & Whitney has established a proven track record of long-term partnerships with the China's aviation industry, and has put considerable emphasis on China's market. Pratt & Whitney Aerotech - a joint venture between Pratt & Whitney, Chengdu Engine Company and Aviation Industry Corporation of China - has been an important part of the PurePower engine strategy in China.

In 2012, Pratt & Whitney Aerotech moved into a new facility with expanded capabilities to accommodate the company's global focus on PurePower engines.

Pratt & Whitney has also established a MRO joint venture with China Eastern Airlines in Shanghai. The facility has delivered more than 400 overhauled aerospace engines since it opened in 2009.

In cooperation with Chinese aerospace companies, United Technologies also participates in major Chinese aviation programs, including the C919, China's first large jetliner, and the ARJ21 and MA60/700.

Cai said developing sustainable products will be a key factor in determining business competitiveness. Both Chinese and global companies have identified low-carbon emissions and digital, intelligent products as important areas for breakthroughs in advanced manufacturing.

With more than 25,000 employees throughout China, United Technologies recorded $5.8 billion in net sales in the market in 2014. It has 211,000 employees working in more than 71 countries and regions worldwide. The US company's global net sales for 2014 reached $65.1 billion.

As the "New Normal" and technology boom continue, China is ideally placed to benefit from greener, more sustainable development, said Sun Fuquan, a researcher at the Chinese Academy of Science and Technology for Development in Beijing. New models for sustainability need to be invented in manufacturing, infrastructures, buildings and cities, he said.

"This trend has increased market demand for green buildings, air-conditioners, efficient and intelligent elevators, as well as more fire control and safety solutions from global conglomerates such as United Technologies, because they are essential in keeping up the pace of urbanization," said Sun.

Sustainable buildings and urban design create long-term and profitable opportunities for the use of land, energy and capital, as well as for building technologies, materials and supporting facilities.

Perry Zheng, president of UTC Building & Industrial Systems China, said China will soon become the world's largest market for green buildings as the country makes long-term commitments to ensure that 30 percent of all new construction by 2020 is green.

China's plans, released two years ago, focus on sustainable development strategies for urbanization, environment and industrialization sectors.

"China has become a major focus for foreign and domestic elevator makers due to the fast pace at which urbanization drives new building construction," said Zheng.

The populations in many of China's second- and third-tier cities are much larger than those of big cities elsewhere in the world. Providing high-efficiency elevators and escalators - not only for buildings, but transportation infrastructure such as airports, railways and metro stations - is critical to meeting the country's demand for public services, Zheng said.

Otis, a United Technologies business and a world leader in elevator and escalator manufacturing and service, saw 5 percent year-over-year growth in its revenue in 2014, backed by double-digit growth in new equipment sales, primarily driven by China and the United States.

In the US, Otis maintains nearly 70 percent of the equipment it has sold, compared to only 20 percent in the Chinese market. This indicates that there is a huge market for service growth in China. The Safety Law for Special Equipment released in 2013 had a positive impact on Otis, imposing strict requirements for maintenance services.

"Otis will continue investing in expanding its service infrastructure because quality maintenance is core to extending equipment life and, most importantly, to safeguarding passengers," said Zheng.

To compete with rivals in China, Otis has built a large mechanics team with broad geographic coverage. Using mobile technology, Otis mechanics can manage orders and reports with convenience and efficiency.

Zheng said future elevator technology will focus on the most efficient way to move people throughout the building. Advanced dispatching systems will be used to increase efficiencies, safety and speed.

These systems will be integrated with other building technologies, such as video analytics and intelligent evacuation systems in fire and security applications, to increase overall sustainability and customer satisfaction, he said.

zhongnan@chinadaily.com.cn

(China Daily 09/23/2015 page25)