Wednesday November 8, 11:40 am Eastern Time
Press Release
SOURCE: FORECAST International/DMS
GE and Honeywell: Their Positions in the Gas Turbine Market,
and GE’s Standing After Purchasing of Honeywell
The planned purchase of Honeywell by GE raises many questions in the turbine engine community as to how the two companies’ product lines fit together, and how this will impact on the rest of the players FORECAST International/DMS, a leading producer of gas turbine research studies, offers the following view of GE’s position in the turbine engine market after gaining Honeywell’s business.
Small, High-Bypass Turbofan Engines - Gaining Honeywell’s small, high-bypass turbofan business will give GE a much wider range of engine models for the business and regional jet markets. In particular, the addition of Honeywell’s popular TFE731 and its planned successor to GE’s business engine line-up will enable GE to effectively compete with Pratt & Whitney Canada’s business jet engines from 2,600-4,600 pounds thrust. In addition, Honeywell’s new AS900 turbofan also fits well between the TFE731 and the GE’s bigger CF34.
Honeywell (as enhanced by the former AlliedSignal, Garrett and Lycoming engine companies) has a great deal of experience developing turbofans in the 3,500-7,000-pound-thrust range, while GE has experience in the 8,500-9,200 pounds thrust range with its CF34 turbofan, now growing to 18,000 pounds thrust. Some synergism, and perhaps initially some conflicts, might occur with the melding of the two small turbofan divisions. The breadth of market which GE would have as a result of this joining, however, would be the widest ever managed by one company in terms of the range of thrust available from its many turbofan engines. Considering GE’s now ample and growing revenue, Pratt & Whitney and Rolls-Royce might find it compelling to unite at some levels to effectively counter further gains by GE.
Large, High-Bypass Turbofan Engines - GE is already a major player in the large, high-bypass turbofan engine field, both on its own, and partnered with France’s Snecma in CFM International. Adding Honeywell’s engine business would not alter GE’s position in this segment, as Honeywell does not field any high-bypass turbofan engines above 7,000 pounds thrust.
Low-Bypass Turbofan Engines - GE produces low-bypass turbofan engines for military aircraft. GE’s current engine thrust range is 17,000-29,000 pounds thrust, with a 32,500-pound-thrust engine, the F110-GE-132, going into production in 2002. A pair of GE’s 22,000 pound-thrust F414 turbofans power Boeing’s F/A-18E/F Super Hornet, several hundred of which will likely be produced. GE is also developing a 35,000-pound-thrust engine, the JSF120, which is being offered as an alternate engine to P&W’s JSF119 for the planned Joint Strike Fighter (JSF). A market for 3,000 aircraft (and installed engines) is currently projected.
Honeywell produces one low-bypass turbofan, the 9,250 pound thrust F124, which powers Taiwan’s Chang-Kuo fighter, the Czech Aero Corp. L-159 light attack jet, and Boeing’s recently rolled-out Unmanned Combat Air Vehicle.
Turboprop Engines - GE will gain little in the turboprop market through acquisition of Honeywell, as this market is now limited. The most notable gain for GE would be partnering with Rolls-Royce Allison in the engine company LHTEC, with which Honeywell is currently allied. LHTEC’s modern CTP800 turboprop will be produced by the hundreds for Ayres’ Corporation’s new LM200 cargo aircraft, being built for Fedex, among others.
Turboshaft Engines - Honeywell has very advanced turboshaft technology, partly developed under the Army’s Joint Turbine Advanced Gas Generator (JTAGG) program. With Honeywell’s turboshafts added to GE’s stable, GE will have an engine on three of the four most important US Army helicopters: UH-60 (T700), AH-64 (T700) and CH-47 (T55). Rolls-Royce Allison powers the fourth: the Bell OH-58 (Model 250/military T703.) When the T800-powered RAH-66 begins replacing OH-58s around 2008, GE will have half of the engine business generated by it. With Honeywell’s advanced turboshaft technology GE will be well positioned to compete for future military helicopter projects.
Industrial & Marine Gas Turbines - When we line up on a power-output grid the GE/Nuovo Pignone gas turbines and the Honeywell gas turbines outside the realm of non-flying engines the picture that emerges is a classic product fit. GE’s offerings start at 1.5 MW and extend through 280 MW; Honeywell’s engines start at 75 kW and extend through 8.9 MW. The "overlap" occurs only with the Vericor TF/ASE40/50 at 1.8-3.3 MW and the GE-2 (PGT 2) at 2.0-2.5 MW. Other than these minor overlaps, there are no redundancies.
GE has sought expanded access to the rapidly growing microturbine market, and the acquisition of Honeywell will accomplish just that – given that Honeywell/AlliedSignal has perhaps the most developed microturbine power package as well as an extensive supplier network. Forecast International believes that annual production in 2001 will reach at least 600 units by all major participants, of which GE/Honeywell and Capstone will each have a large share. The average price of a microturbine is estimated at $500-$600 per kW for commercial and industrial markets.
To summarize, there is little overlap between GE’s and Honeywell’s turbine engine businesses, and there are several good fits where the addition of Honeywell’s engines will enhance GE’s position. GE is already a juggernaut in gas turbines for power generation and marine propulsion. The addition of Honeywell will make GE a much stronger player in small power generation and marine turbines, where it has been practically absent for quite some time. In addition, GE will inherit Honeywell’s auxiliary power system (APU) business, the largest in the world (valued by Forecast at $3.24 billion through 2009.) Acquiring Honeywell will make GE a powerful competitor in any turbine engine market, from 0.75 megawatts to 282 megawatts, and the market doesn’t get much broader than that, nor will any one company span it to that degree!
Forecast International/DMS is the leading provider of analytical market services for the aerospace and defense industries, including those of aerospace and industrial and marine gas turbines. An expanded version of this synoptic report may be obtained by contacting monty.nebinger@forecast1.com. (203 426 0800 X140).