Rolls-Royce brings its suppliers on site

Rolls-Royce will next week see a second of its suppliers move on site to set up operations alongside its own manufacturing plant – marking an emerging trend in the aeroengine giant’s way of doing business with suppliers. Last month, heat treatment supplier Bodycote opened a £7.5m purpose-built facility within Rolls-Royce’s Derby civil engine manufacturing plant […]

Rolls-Royce will next week see a second of its suppliers move on site to set up operations alongside its own manufacturing plant – marking an emerging trend in the aeroengine giant’s way of doing business with suppliers.

Last month, heat treatment supplier Bodycote opened a £7.5m purpose-built facility within Rolls-Royce’s Derby civil engine manufacturing plant – the first such agreement to bring a supplier’s plant within the factory gates. It is based on a contract to heat treat turbine blades over the next ten years.

Next Wednesday at Rolls-Royce’s Filton military aeroengine plant near Bristol, a second supplier facility will be opened, this time by US industrial gases and surface treatment giant Praxair. It will apply thermal spray coatings to engine parts.

Rolls-Royce’s interest in getting contractors to set up on its sites hinges on the economies of scale created by some of the biggest specialists in industrial services. The approach also saves time by doing away with shipping components to and from external third-party contractors.

`The approach has been to reduce the numbers of suppliers, and to concentrate on intimate long-term relationships. You can expect to see more of this happening,’ said Rolls-Royce chairman Sir Ralph Robins.

Under the terms of the Bodycote deal, all turbine blades produced by Rolls-Royce Derby will be vacuum heat treated and hot isostatically pressed within the new centre.

`There is a growing trend to strip out the numbers in the supply chain and repay the survivors with a more privileged relationship,’ said Keith Hayward, research head at the Society of British Aerospace Companies.

The move echoes the well-established pattern in the car industry, where systems suppliers are taking on design, integration and assembly work alongside or within a car manufacturer’s assembly plant.

Bodycote said it would be looking to strike similar deals with its biggest customers across all industry sectors. `I’d be disappointed if another such deal did not come through in 1999,’ said the company’s heat treatment managing director Mike Hallas.