Pratt & Whitney - Company Profile, Information, Business Description, History, Background Information on Pratt & Whitney

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History of Pratt & Whitney

Pratt & Whitney is one of the largest aircraft engine manufacturers in the world. The company gained a leading position in the piston-driven aircraft engine market during the 1930s and made the transition to jet engines during the early 1950s. Today Pratt & Whitney manufactures only jet engines, while smaller engines and those for propeller aircraft are built by its Canadian sister company, Pratt & Whitney Canada.

Pratt & Whitney was organized principally by Edward Deeds, an Ohio businessman who had earlier founded National Cash Register (NCR) and Dayton Engineering Laboratories (Delco). In the early months of World War I, Deeds predicted that the United States would eventually enter the war and understood that European military products greatly surpassed those manufactured by the United States. He purchased the rights to the venerable Wright Brothers name and built a factory to produce aircraft engines for the coming war effort. Deeds was instrumental in the development of the Liberty engine, a giant, standardized, water-cooled 12-cylinder engine that was unsuitable for the light airframes produced at the time. Despite this fact, Deeds's Wright Company built more than 12,000 Liberties.

At the end of the war, the government cancelled its aircraft procurement program, bankrupting hundreds of manufacturers that had expanded in anticipation of government contracts. Deeds left the market in 1918, selling the Wright Company to Mack Truck, but Frederick Rentschler, Wright's president, maintained the company's role as a government supplier.

In 1924 the government requested development of a lighter air-cooled engine, but Wright's board refused Rentschler's funding request for its design. Rentschler resigned in protest, and months later joined Deeds and engineer George Mead in acquiring an interest in Pratt & Whitney, a gun manufacturer. Pratt & Whitney was founded in 1860 by two former employees of the Colt pistol factory, Francis Pratt and Amos Whitney; the latter was a cousin of Eli Whitney, the gunsmith and inventor of the cotton gin. The small company prospered by selling guns during the Civil War, and later expanded into machine tool production, but the glut of armaments after World War I forced the company to convert its factory into space for drying tobacco.

Investing its war profits, Pratt & Whitney funded George Mead to design a light air-cooled radial engine. If successful, the engine would be built by the newly formed Pratt & Whitney Aircraft. Mead's staff completed the engine, called the Wasp, before the end of 1925. It exceeded all expectations and won a strong recommendation from the head of the Navy's aeronautical section, Admiral William Moffett.

In June 1927, the government opened mail delivery contracts to private airline companies. This caught the attention of aircraft manufacturer Bill Boeing, who used the Wasp engine in his Model 40 aircraft. The combination worked so well that Boeing decided to go into the air mail business. Frederick Rentschler and Boeing, acquaintances since 1918, joined efforts in this and other endeavors, purchasing Pacific Air Transport in 1928.

Late in the summer of that year the two decided to merge their companies with Thomas Hamilton, a Milwaukee propeller maker, and Chance Vought, another aircraft manufacturer. The companies were incorporated on January 19, 1929, as the United Aircraft and Transport Company. Drawing on the tremendous public interest in aviation after Charles Lindbergh's solo flight across the Atlantic, public sale of the company's shares netted more than $14 million. Boeing, Rentschler, Mead, and a small group of investors became instant millionaires.

Rentschler, as United's president, used the company's newfound millions to fund a large-scale acquisition program. Purchases included Standard Steel Propeller; the Northrop design shop; Sikorsky, an amphibian builder; and Stearman, a private airplane builder. He also acquired several airline companies, including Stout Airlines, Varney Airlines, and National Air Transport, a major competitor. Combined with Boeing's existing air services, these companies were later grouped into a single unit called United Air Lines. When the stock market crashed in 1929, many aviation companies closed, but United remained financially secure. Indeed, the Depression facilitated Rentschler's plan to build a conglomeration of airplane manufacturers and suppliers because of these companies' reduced market values.

In 1930 Boeing's designers developed a fast new aircraft called the 247, which was fitted with Mead's newest engine, the Hornet. However, United's pilots balked at the difficult handling of the new craft. Rentschler, over Mead's objections, ordered the 247 to be scaled back. Transcontinental & Western Airways, a forerunner to TWA and competitor to United Air Lines, asked to purchase the Boeing 247, but was told it had to wait until Boeing completed building 60 models for United. In response, TWA invited bids for large scale production of any aircraft that could outperform the Boeing 247. The challenge was met by Donald Douglas, who developed the DC-2, which was powered by Curtiss-Wright's Cyclone engine, a strong rival to the Pratt & Whitney Hornet. By the time Boeing had completed its order for United, Douglas's DC-2 was on the market. The new model eliminated interest in the Boeing 247 and provided Douglas with the capital to incorporate improvements that led to the development of the highly successful DC-3.

In 1934 the government changed its rules regarding air mail delivery, stipulating that no aircraft holding company could qualify for a contract. This prompted Frederick Rentschler to diversify his company to avoid losing its most profitable business. He spun off the unprofitable Boeing Company, but retained Pratt & Whitney, Vought, Hamilton Standard, and Sikorsky under the United Aircraft umbrella.

After the Boeing 247 debacle, Curtiss-Wright, whose Cyclone engine powered the DC-3, was poised to surpass Pratt & Whitney as the nation's leading engine manufacturer. In a major coup, Rentschler won a $15 million engine order for the military, but his insistence on supplying propellers to Japan in defiance of a State Department request led the War Department to abruptly switch the order to another company.

Fortunately for Pratt & Whitney, several French and British delegations placed orders to help their military organizations maintain parity with their German counterparts. The business enabled Rentschler to build new plants and increase employment from 5,200 workers to more than 15,000. Furthermore, after President Franklin Delano Roosevelt called for an industry capable of producing 50,000 aircraft a year, Pratt & Whitney was assigned to supply the U.S. Navy with Wasp and Hornet engines. The company eventually built or leased factory space in seven additional plants, and by 1943 Pratt & Whitney employed 40,000 people. The company's engines powered the Grumman Hellcat, the B-24 bomber, the Vought Corsair, and the Curtiss Commando. By the end of the war, Pratt & Whitney had turned out 129,505 engines and its licensees had produced another 234,114.

At the end of World War II in 1945, the government cancelled more than 85 percent of its orders with Pratt & Whitney, representing more than $400 million worth of business. Rentschler laid off all but 6,000 workers. In the postwar period, Pratt & Whitney's plans included attempting to win support from the U.S. military or foreign governments for development of a jet engine, but the U.S. Navy purported to have no use for jets on its 200-foot carrier decks, and other support was not forthcoming. Rentschler decided to develop a jet engine without government backing, bearing the entire $15 million cost internally. The task was made easier after Pratt & Whitney was asked to build two Rolls-Royce jet engines as a subcontractor. The company built several models used for combat during the Korean War, but none that rivalled models by General Electric, Westinghouse, and Allison.

The company's competitors had built jet engines with up to 4,000 pounds of thrust, and were planning models capable of up to 7,000 pounds. In order to take the lead, Pratt & Whitney had to build an engine capable of producing even higher amounts of thrust. The engine designed to do so, the J57, was introduced in 1953, rated at 13,500 pounds of thrust. It was perfectly suited for Boeing's new eight-engine B-52 bomber, then under development. The B-52 succeeded, and by 1956 the company was turning out nearly 3,000 jet engines a year. With the success of its J57, Pratt & Whitney was positioned to dominate the civilian aircraft engine market as it had the military.

With the encouragement of Pan Am's chairman, Juan Trippe, Boeing and Douglas began to augment the development of passenger jetliners. When the Boeing 707 and Douglas DC-8 entered service in the late 1950s, they both used Pratt & Whitney engines. This success helped establish Pratt & Whitney's place at the top of the nation's jet engine manufacturers, a position it would retain for 15 more years. The 707 and the DC-8 also provided the funding necessary for the development of another new design, the JT8D. This engine was created specifically for the Boeing 727, but ultimately powered the Douglas DC-9 and Boeing 737.

Pan Am's Trippe stayed involved in aircraft design, approaching Lockheed to modify its C-5 military cargo plane for use as a jumbo jetliner, the 747. Lockheed refused, and when Douglas suggested only a stretched version of its DC-8, Trippe turned to Boeing, which held a losing design for the C-5. Trippe insisted, however, that Boeing take full responsibility for delivering the aircraft on time.

Boeing was sure that any problem with the 747 would likely come from its engines, Pratt & Whitney JT9Ds. Jack Horner, Pratt & Whitney's new chairman, was forced to abide by subcontractor terms and cover Boeing for breach of contract if the engines did not work. Ultimately, the engines performed, and as demand grew for the 747, Pratt & Whitney had a second period of major prosperity, this time from commercial aircraft.

Despite the company's apparent financial success, it was criticized for what was seen as a growing arrogance and lack of focus on customer needs, as well as for having relied for too long on the success its JT8D. Realizing that some of the criticisms were justified, Pratt & Whitney began to pay closer attention to its customers' needs. General Electric began to make quick gains in the market, encroaching on Pratt & Whitney's market share. Pratt & Whitney's new chairman Robert Daniell began a new effort to win back the business the company had lost.

On the military side of the business, Pratt & Whitney provided J58 engines for Lockheed's SR-71 and J75s for the U-2 spy plane. The company's J52 was its military mainstay. In production for 30 years, the J52 was built for the Hound Dog missile in 1960, but later powered a series of naval aircraft. Pratt & Whitney was also asked to design an engine for a dual-purpose fighter-bomber eventually named the F-111. This jet was the brainchild of U.S. Defense Secretary Robert McNamara, who hoped to rein in separate development costs for the Navy and Air Force.

Disagreements between the U.S. Navy and Air Force loaded the plane with so much extra hardware that its performance was compromised, and Pratt & Whitney's engine for the F-111, the TF-30, was unsuccessful. The builders, General Dynamics and Grumman, blamed Pratt & Whitney for not producing a satisfactory engine on time. The F-111 made it into the air years behind schedule, discrediting McNamara and ushering in the era of "fly before you buy" design competitions. When improved, however, the TF-30 was also chosen for use in the Grumman F-14 Tomcat.

Pratt & Whitney's next project, the F-100, rivalled the JT9D, the engine used for the 747, for financial riskiness. Pratt & Whitney won a competition against General Electric to produce the F-100 for the U.S. Air Force and Navy. But after the failure of several prototypes, including one test stand explosion, Pratt & Whitney was liable for a complete and ruinously expensive redesign, without a government safety net.

At the same time, United Aircraft's new chairman, Harry Gray, resolved to lessen the company's reliance on aircraft engines. While Pratt & Whitney contributed 75 percent of United's total revenues, its business provided steadily decreasing margins. Gray subsequently diversified the company and changed its name to United Technologies in 1975. It was Gray and his attorneys who carefully examined Pratt & Whitney's fly-before-you-buy contract with the government and discovered a loophole that obligated the Pentagon to help fund corrections in the F-100. The engine was redesigned with slightly lower specifications and entered production powering McDonnell Douglas's F-15 and General Dynamics' F-16.

But the problems with the F-100 took years to correct, enabling General Electric to step in with an alternative, the F110. This engine powered all of America's leading fighter jets, including the F-15, F-16, and F-14. Eventually, GE's F110 gained 75 percent of the F-100's market. Pratt & Whitney developed new variants of its F-100, and slowly won back a quarter of the business it had lost to GE. It also developed a new engine, the F118, which was chosen to power Northrop's B-2 Stealth bomber.

In the military market, Pratt & Whitney began competing to power the Northrop/Lockheed Advanced Tactical Fighter, or ATF. The company's F119 challenged GE's F120 for an estimated $1 billion supply contract. In the commercial market, the company established an international partnership with the German Motoren und Turbinen Union and Italy's Fiat Avianzione. It developed the PW2037 for Boeing's 757, and the PW4000--designed specifically to compete with GE's CF6--for the 747 and 757.

Pratt & Whitney later formed a second consortium, called International Aero Engines, with MTU, Fiat, Rolls-Royce, and Japanese Aero Engines. The company's V2500 engine was used to power Airbus's A320.

During the mid-1980s, General Electric and Pratt & Whitney began work on jet-driven propeller engines called propfans. While slightly slower than conventional engines, the propfan was twice as fuel efficient as turbofans. Boeing and McDonnell Douglas tested propfans on a 727 and MD-80, and began development of two new twin-propfan designs, the 7J7 and MD-91.

By 1988 competition and deregulation drove commercial airlines into near bankruptcy, while fuel prices dropped. Airlines cancelled orders for hundreds of new aircraft, choosing instead to squeeze a few more years of service out of their existing fleets. As a result, airframe and engine manufacturers were forced to shelve the propfan indefinitely. Despite this, Boeing began planning a larger super twinjet, the 777, intended to compete with the MD-11. Pratt & Whitney's PW4000 was chosen as the launch engine for the 777.

While improvements in quality, increased attention to customers, and continued technological innovation served Pratt & Whitney well, external factors have damaged the company's business. With the end of the Cold War in 1991, defense appropriations in the United States were greatly reduced; at the same time, the number of commercial airlines continued to decline. Pratt & Whitney was forced to reduce its employment levels in 1993, with a goal of 30,000 workers by 1994.

Additional Details

Further Reference

"United Technologies Goes in for a Little Engine Work," Business Week, October 21, 1991, pp. 108-10."Pratt & Whitney's Comeback Kid," New York Times, February 4, 1992, p. D1."United Technologies Posts Big Loss for 4th Quarter, Plans to Cut More Jobs," Wall Street Journal, January 27, 1993, p. A3."Pratt Could Use a Jump," Business Week, February 8, 1993, pp. 26-27.Fernandez, Ronald, Excess Profits: The Rise of United Technologies, Reading, Massachusetts: Addison-Wesley, 1983.Kaplan, Ellen, ed., In the Company of Eagles, Pratt & Whitney: Stanford, Connecticut, 1990.

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