Analysis-Rolls Buys Allison

A $1.8 billion development effort has kept Allison a lossmaker over the past few years. But that programme is coming to an end with three related engines entering the market: the 6150shp (4590kW) T406 itself; the 3685shp (2750kW) AE2100 for the Lockheed C-130J, Saab 2000 and IPTN N-250; and the 7150lb (32kN) AE3007 turbofan for the Citation X and EMB-145. Working with AlliedSignal, Allison has also just developed the 1340shp (1000kW) T800 small turboshaft for the US Army. Note that the development programme cost much more than Rolls is paying for Allison.

The proposed AE3012 model would push the AE3000 range to around 13,400lb (60kN), nudging the Rolls-BMW BR700 family, which is the bottom of the Rolls range. This could be a problem, because Rolls-Royce has since said it will not allow its products to compete against each other.

Allison has concentrated on smaller engines for years, coincidentally moving down market as Rolls-Royce moved up. The US company was not technically strong during World War II, as was shown when the Mustang traded in its Allison V12 for the Rolls-Royce Merlin. Its position as a defense contractor diminished after the war, overshadowed by General Electric, which had been asked during the war to use its steam turbine expertise to work on gas turbines. After the war Allison’s biggest success was the T56 turboprop, which powers Lockheed’s P-3 Orion, L-188 Electra (as the 501) and C-130 Hercules and Northrop Grumman’s E-2 Hawkeye. The first major connection with Rolls-Royce followed in the 1960s, when the RR Spey became the A-7 Corsair’s Allison TF41.

The Allison takeover does give the British company some interesting advantages, particularly improved access to the US military market and the Pentagon’s research budget. Selling an aeroplane (and its engine) to the Pentagon can be as much about pleasing parochial Congressmen as showing technical excellence. The Harrier was always damned as a “foreign airplane” by members of Congress who would have preferred to see the Marines buy something with bits made in their own electoral districts. But now Rolls can offer to build an engine, or parts of it, in the good ol’ US of A. Importantly, that also implies research funding for proposed engines. Rolls-Royce has always complained that its competitors are subsidised by the US military research budget. The British company went broke in the early 1970s trying to build the RB211, which it needed to match Pratt and GE high-bypass turbofans partly funded by the C-5 Galaxy programme. Buying Allison also means buying a large slab of existing Pentagon research: Vast sums have been spent developing the V-22 Osprey’s Allison T406 turboshaft and, more importantly, its advanced core that is being adapted to drive other engines, including jets.

However, buying Allison still leaves Rolls-Royce smaller than its two US competitors. Pratt & Whitney, a subsidiary of United Technologies, is the traditional leader of the civil engine market while the vast General Electric conglomerate, which has led the sales race recently, is an order of magnitude larger than any other aeroengine builder, with interests in everything from toasters to the CBS television network.

But the deal has stifled speculation that the aeroengine market was big enough for only two major players and that Rolls would be forced to merge with Pratts. These worries always seemed to be driven more by the temporarily depressed state of the industry than by long-term prospects. (But, in my mind at least, there remains the nagging concern that the industry has badly weakened itself with three huge and enormously expensive new engines when only one or two are needed. The RR Trent, the PW4070/PW4080 and the GE90 have to share the business of just two new airliners, the 777 and A330 [the GE90 is currently only on the 777], which need only two powerplants each, implying few sales. One of the big three may suffer badly if the market dumps its engine.)

There was another interesting little development relating to Rolls-Royce in December: The Vickers industrial conglomerate announced that its Rolls-Royce Motors subsidiary, maker of Rolls-Royce cars, would tie up with BMW to replace its ancient but awesome 6.75 litre V8. This reestablishes a tenuous connection between the two sides of Rolls, although, curiously, under the auspices of an old German rival.

Rolls-Royce was established at the turn of the century by a gentleman adventurer (Charles Rolls) and a perfectionist engineer (Henry Royce) who reckoned he could build a better motor car than the French. This he proceeded to do but when World War I broke out a few years later the company was asked to build French aircraft engines. Royce again thought he could do better and developed the Eagle, which was pushed into a huge production programme. From then on, the aeroengine tail wagged the automotive dog, although the public still overwhelmingly identified the name Rolls-Royce with the world’s poshest car.

It all ended in tears in the early 1970s with the RB211 and its adventurous carbon fibre fan blades which shattered during bird impact tests and drove the hugely expensive project, and the company, to a crumbling ruin. In the end, the government bailed out Rolls-Royce, which was nationalised, except for the little car making wing, which was hived off under private ownership and eventually bought by Vickers. The aeroengine maker became Rolls-Royce plc when Margaret Thatcher privatised it in the 1980s. Searching for a partner to share the risk of developing a Tay replacement it has since teamed up with BMW for the BR700. So now both Rolls-Royces are linked to BMW although they remain unrelated to each other.