Larry Trowel General Manager, Government Business Practices

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(No Transcript)
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Common Ground The New Specialty Metals Rules
and How Government and Industry Can Work
Together
Larry TrowelGeneral Manager, Government Business
Practices ProcessesGE July 26, 2007 930
a.m. 1030 a.m.
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Defense Industry has Multiple Business Models

• Defense-focused Facilities
• Build-to-DOD-order supply chain responds to DOD
  orders with serial processes
• No need to segregate materials
• Integrated Commercial-Military Facilities
• Build-to-DOD-order with common components and
  integrated production lines
• Segregated materials impractical
• Commercial Facilities
• Off-the-shelf products and components global
  supply chain driven by forecast, not individual
  orders
• No opportunity to segregate

Business Model Drives Impact of Restrictions
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Integrated Production - Example
Jet Engine Airfoils
CF34 Comml Application
COMMON PART NUMBER
Titanium Bar Stock
Common Airfoil Forging
Final Part Number
Common Inventory
TF34 Military Application
COMMON DESIGN DIFFERENT PART NUMBER
Titanium Bar Stock
Common Airfoil Forging
In-process Differentiation of Part
Numbers (usually minor differences)
Efficient Production Drives Common Processes
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Commercial Off-the-Shelf Item - Example
Commercial Applications Boeing 747-300, -400,
-400ER 767-200, -300, -400 MD11 Airbus A300600
A310200, -300 A330-200, -300 Engines in
Commercial Operations 6641Commercial
Operators 249
CF6 Engine
US Military Applications VC-25 (Air Force
One) E-4 KC-10 Air Borne Laser C-5M
(re-engining in process) Engines in Military
Operations 225
Spare Parts Commercial Operators Consume 99 of
Spare Parts DOD procures its spares directly from
commercial warehouse in same manner as other
commercial customers
Commercial Market Drives Production, Support
DOD Benefits
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Commercial Conundrum Specialty Metals

• End items and components forecasted and
  manufactured for commercial market
• DOD participates, but does not drive
• Materials typically procured well in advance of
  customer orders
• Little opportunity to impact basic materials
• Segregation in production impractical, costly,
  disruptive
• Requires job order processes
• Commercial products focus on material properties,
  not country of origin
• Some exceptions for special applications
• Unreasonable choices . . .
• Compliance across all products commercial and
  DOD?
• Segregate DOD materials, production, inventory?
• Do not sell to DOD or its suppliers?

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Summary

• OSD, DCMA, Contractors working well together to
  make current policy work
• Statutory and policy flexibility are warranted
  specialty metal industry is healthy now and in
  foreseeable future
• Policy flexibility especially important where DOD
  relies on commercial market place