"MTU has been a sleeping giant," said Bernd Kessler, president and CEO MTU Commercial Maintenance. "We are in the process of waking up."

MTU is one of the world's largest independent turbine engine service companies. The Munich, Germany-based company manufactures parts for engine OEMs such as Pratt & Whitney, International Aero Engines, CFM International, Pratt & Whitney Canada, and General Electric and also offers its own extensive repair and engine overhaul capability. MTU was purchased by investment firm Kohlberg Kravis Roberts about 18 months ago. "The acquisition has helped us to put a financial focus in the company," Kessler said. "Paired with our strength around technology and manufacturing, it's a good combination."

MTU is firmly committed to the maintenance side of the business, and nearly half the company's revenues are from the MRO business. MTU's annual turnover is about $2.5 billion, and $1 billion of that is commercial MRO with another $150 million military MRO. The remainder is from MTU's manufacturing business, mostly making modules and spare parts for its OEM partners.

The engine part of the MRO market is currently growing at 6 to 6.5 percent per year, and Kessler expects to see it reach the $20 million range in 2009. "That's a good growth business," he said. "We intend to secure a large share of that business, and we think we can outgrow the market."

MTU's Munich headquarters is primarily involved in manufacturing activities, while the largest maintenance facility is based in Hannover. At Hannover, large engines are on the menu, such as the V2500, CFM56, CF6, and PW2000. A customer service center is located in Berlin, which is also a joint-venture with Pratt & Whitney Canada on the PW200 and 300. Berlin is also preparing to work on the PW500, PT6, and JT15D. Berlin also works on the GE CF34, as a GE-authorized licensee. The Vancouver base specializes in the CF6 and CFM56. And two years ago, MTU opened a modern new engine overhaul facility in Zhuhai, China, which is a 50-50 joint venture with China Southern Airlines for overhauls and maintenance on Asia-based V2500s and CFM56s. MTU also has a joint venture with Lufthansa Technik in Kuala Lumpur, Malaysia, for compressor vane and blade repair. "We have to find ways to do labor-intensive work in lower-cost regions," Kessler explained. "It's one of our strategies to remain competitive."

MTU Zhuhai has a huge test cell capable of running engines up to 150,000 pounds of thrust. "It's a greenfield operation," Kessler noted, "and it's one of the most beautiful MRO facilities I've seen in my career." Kessler expects the Zhuhai facility, which employs 300 people, to grow about 85 percent during 2005, thanks to its ability already to turn around a CFM56 or V2500 overhaul in just 60 days. "It's a super facility," he said. "Obviously our intention is to grow business not only in China but spread our wings and find business outside China. The growth rate in Zhuhai is just enormous."

The cost of labor outside of Germany isn't the only factor that drives MTU's decision on where to send engines. "If you look at our main engine business," Kessler said, "we still have enormous additional capacity in Hannover. At some point you have to get the right economies of scale." At Hannover, MTU has adopted continuous-flow techniques from the automotive industry (which is something that Pratt & Whitney Canada is doing to assemble its new PW600-series engine). The MTU shop is set up with a flow line that minimizes time spent disassembling the engine. All engine types begin at the disassembly stage, where they are taken apart into modules, then each module flows to a module-specific overhaul line. At the end of the process, the modules come back together at a reassembly flow line and the engine then is sent to the test cell. So far, Hannover is the only continuous-flow facility, but Berlin will be switched next, followed by Zhuhai. "It really requires a shift in mindset," Kessler said, "a cultural change, and investment, too."

To help MTU grow, Kessler added, "we're going to continue being a major partner with engine OEMs. The corporation has enormous potential for the future. We have to transform it and make it a more international and global company, more swift in the marketplace. We don't have a massive infrastructure like big aerospace companies; we can make quick decisions. It's certainly our intention to stay as a standalone company and leverage our technology capabilities and operational capabilities in the future."