United Technologies is one of the world’s biggest industrial conglomerates, and it manages to get robust returns from all four of its major business units. But the breakout performer going forward will likely be Pratt & Whitney, one of the global “big three” in the aircraft engine industry. Pratt has introduced disruptive technologies on both the commercial and the military sides of its business that threaten to eclipse rivals, enabling it to claim a growing stream of aftermarket revenues through mid-century. On the commercial side, the breakthrough innovation is the geared turbofan, which is much more efficient that conventional turbofans. On the military side, the F135 engine will dominate tactical aircraft propulsion for the foreseeable future. Beyond specific products, Pratt & Whitney has transformed its entire culture over the last two decades, fashioning a lean and flexible enterprise that combines cutting-edge innovation and just-in-time quality in an aerospace powerhouse. I have written a commentary for Forbes here.
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