Textron Lycoming Turbine Engine

550 Main Street
Stratford, Connecticut 06497
U.S.A.
(203) 385-2000
Fax: (203) 385-3122

Wholly owned subsidiary of Textron, Inc.
Incorporated: 1920 as Lycoming Motor Corporation
Employees: 2,600
Sales: $670.0 million
SICs: 3724 Aircraft Engines and Engine Parts; 4581 Airport Fields & Terminal Services

Textron Lycoming Turbine Engine is the aircraft engine manufacturing division of Textron, Inc. Acquired by Textron in 1985, Lycoming has a long and distinguished history in engine building, and was for many years the primary manufacturing entity of Avco, one of the largest aviation conglomerates of the first half of the twentieth century.

The company originated in the Lycoming Foundry and Machine Shop, established in 1908 in Williamsport, the seat of government for Lycoming County, Pennsylvania. The company was an early developer of internal combustion engines and later built a variety of models for industrial and automotive markets. This business expanded so rapidly that on April 20, 1920 the company established a separate engine-building entity called the Lycoming Motor Corporation.

In 1923 Lycoming acquired the operations of the Standard Heater Company, a manufacturer of heating appliances and systems for industrial and automotive markets. Lycoming established separate motor and heating divisions on May 5, 1924, and changed Standard to the Spencer Heater Company. During the early years, Lycoming’s primary line of business was automobile, industrial, and marine engines. The company supplied motors for a variety of manufacturers, including Cord, Dusenberg, and International Harvester. Eventually, the Auburn Automobile Company took over Lycoming.

Lycoming was drawn into the aircraft engine business during the late 1920s, when hundreds of airframe builders sprung up, hoping to build better craft for mail delivery. Experienced with the small engines that were demanded for these new, light aircraft, Lycoming quickly established a name for itself among airplane builders. Its most promising aviation product was the nine-cylinder R680 radial engine. Rated at 215 horsepower, this engine was standard on many civilian and military aircraft.

Charles Lindbergh’s solo flight across the Atlantic in 1927 created such investor enthusiasm for aviation stocks that by 1929, approximately $9 billion had been poured into the industry. Several organizations took advantage of this demand by patching together vertical monopolies that included airframe and engine manufacturing, airline services and airport management. One of these conglomerates was the Aviation Corp. of the Americas, or Avco.

Avco was established on March 1, 1929. Under the leadership of railroad magnate Averell Harriman, Avco stitched together several air services, including Colonial Airways, Universal Aviation, Embry-Riddle Aviation, Southern Air Transport, and Interstate Airlines to form American Airways, the forerunner of American Airlines. Separately, Avco also amassed a small interest in Pan American Airways.

After the stock market crashed in October of 1929, many of the backers of aviation companies were ruined. Many of the original founders of Avco were forced to sell their interests in the company to cover other losses. As a result, Avco went up for grabs, and a lengthy battle for control ensued. The company eventually fell into the hands of E. L. Cord, whose empire included Auburn, Dusenberg, Columbia Axle, Checker Cab, Stinson Aircraft, Lycoming, and the New York Shipbuilding Corporation.

With a steady stream of income from carrying air mail, and aided by the depression in share values, Cord moved Avco into the field of manufacturing. The company consolidated Stinson, and took over the Airplane Development Corporation (later called Vultee Aircraft) and Smith Engineering. On November 30, 1934, Avco acquired the aircraft engine and propeller manufacturing business of the Lycoming company, which subsequently operated as a division of Avco’s aircraft subsidiary, the Aviation Manufacturing Corporation. Earlier that year, however, a Congressional investigation led by Senator Hugo Black resulted in legislation that forced the aviation combines to divest either their manufacturing operations or their airlines. Avco spun off its airlines, and in 1937 Cord sold his interest in the company to a utilities financier named Victor Emmanuel.

Lycoming engineers developed a four-cylinder piston engine in 1938 called the O145. This model was the company’s first to go into mass-production, and it was used in 1939 to power the first helicopter, the Vought-Sikorsky VS-300. In addition to its line of engines, Lycoming held a joint patent with Smith Engineering for a revolutionary variable pitch propeller that enabled pilots to alter their air speed without changing the speed of their engines.

Aided by the proceeds from the divestiture of Cord’s 45-company empire, Emmanuel engineered Vultee’s takeover of Consolidated Aircraft Corporation. As the nation geared up for World War II, Avco was enlisted to build a wide variety of war implements. Emmanuel negotiated contracts to build 33,000 airplanes from Consolidated Vultee, and the engines to run them from Lycoming. In addition, Avco’s shipbuilding unit won contracts to build nine aircraft carriers and even the battleship South Dakota.

Long before the war’s end, Emmanuel began planning for the postwar conversion to a civilian economy. Even before the shooting stopped, Emmanuel directed Avco into the manufacture of several types of consumer products, including household appliances, refrigerators, washers, and radios, which were marketed under the Crosley, Shelvador, and Bendix brand names. Because few of these items had anything to do with engine building, Avco units other than Lycoming conducted the manufacturing. For its part, Lycoming emerged from the war as a small but important aircraft engine builder.

The company, however, was ill-prepared for the industry’s switch to jet engines. The armed forces already were awash in surplus piston engines, so there were few orders for new engines from Lycoming. To make matters worse, in Avco’s rush to get into civilian markets, it virtually abandoned critical investments in technology at Lycoming.

With the outbreak of war on the Korean Peninsula in 1950, the company was once again pressed into action for the armed forces. Emmanuel hired James R. Kerr, a former air force official, to rebuild Avco as a defense supplier. In 1951, Lycoming received permission to take over a 1.8-million-square foot plant at Stratford, Connecticut. Formerly owned by Chance Vought Aviation, and shuttered since the end of the war, the plant became Avco’s Stratford Lycoming Division and its new headquarters for aircraft engine development.

Lycoming had already been eclipsed in aircraft technology by Pratt & Whitney, Allison, and the newcomer General Electric. Management at Lycoming realized that niche markets were the key to survival. Dr. Anselm Franz was place in charge of developing a new gas turbine engine for helicopters in 1952. The result was the T53, a light, powerful design that became Lycoming’s most popular engine. T53s later drove the Bell UH-1 Huey and AH-1 Cobra helicopters and Grumman OV-1 Mohawk reconnaissance aircraft.

Avco, meanwhile, encountered problems within its aircraft division, now called Convair. The company had only turboprop commercial aircraft under development at a time when Boeing Co. and Douglas had jetliner designs well under way. On the military side, Convair had built hundreds of B-36 bombers for the Air Force and was a leader in the development of delta-wing jet bombers.

Avco, strapped for cash and apparently unwilling to carry a company so dependent on defense contracts, sold Convair to the Atlas Corporation, and was subsequently acquired by General Dynamics Corp., leaving Lycoming as Avco’s one remaining aircraft enterprise. In typical fashion, the flamboyant Emmanuel chose to invest the proceeds of the Convair divestiture in a completely new line of business. He purchased Delta Acceptance and a string of other finance companies in an effort to turn Avco into a financial services conglomerate.

Lycoming had less and less to do with Avco during this period. After demonstrating its success with missile technologies— Lycoming successfully tested the first re-entry vehicle in 1959—the company won additional contracts in engine propulsion. In 1954 Lycoming won a contract to develop a slightly more powerful gas turbine for similar applications. This engine, the T55, was employed aboard the Boeing CH-47 Chinook and Bell 214A helicopters. Later that year, Victor Emmanuel brought Dr. Arthur Kantrowitz to Avco to develop missile systems for Lycoming. His work led to contracts for the re-entry vehicles for the Titan and Minuteman missiles, and firmly established Avco as a leading research-oriented company.

Emmanuel retired, turning over Avco’s reins to Kendrick Wilson and James Kerr. Avco continued its diversification into a dizzying array of businesses, including television, motion pictures, credit cards, insurance, real estate development and farm equipment. Rather than bolster Avco’s earnings, the diversification only bled the company of its strengths. Fortunately, Lycoming avoided the distractions at Avco and kept its eye intently on its market.

During the early 1960s, the company invested heavily in a new jet engine, the PLF-1A turbofan. This engine incorporated a wide fan which, driven by a jet engine, produced high amounts of thrust with relatively low fuel consumption. Not suitable for supersonic jet propulsion, the turbofan was intended primarily for non-combat service. By virtue of its compact design, it was perfect for small and medium size aircraft, including small transports. Pratt & Whitney and General Electric, which by now dominated the jet engine business, also had turbofan designs under development, but these were huge engines intended for freighters and jumbo jets. Lycoming’s smaller PLF-1A, tested in February of 1964, set the trend in efficient turbofan propulsion.

Lycoming’s parent company continued to be driven down by a series of bad investments and poor management. It fared poorly in its attempt at the financial services industry, which was heavily dependent on interest rates. When rates soared in the late 1960s, drying up investment demand, Avco took tremendous hits on its earnings. Avco suspended dividend payments in 1970, and by 1974 had amassed more debt than equity. Shares in the company, which had been as high as $49, plunged to $2. The company’s board ultimately took out its frustration on Kendrick Wilson, who was demoted and replaced as chairman by James Kerr.

In the midst of this managerial malaise, Avco made one last attempt to re-establish itself in the aircraft market by manufacturing wings for Lockheed’s L-1011 Tristar jetliner. The Tristar, however, was doomed by problems with its Rolls-Royce engines, which ultimately cost Lockheed its position in the commercial jetliner market and plunged Rolls-Royce into bankruptcy. Avco managed only a small profit from its wing building venture.

The end of the Vietnam War in 1975 severely curtailed the demand for Lycoming helicopter engines. The energy crisis, however, created new demand for helicopters in servicing offshore oil platforms, providing some relief. Meanwhile, Ken-began a concerted effort to clean house at Avco. He sold and closed the company’s money-losing ventures, made operations more rational, and reduced debt.

These measures took some pressure off Lycoming, whose helicopter business was booming. The company’s engines had won a place on several helicopter models from Bell, Aerospatiale, and Augusta. In addition, Lycoming had a contract to maintain a fleet of helicopters for the Shah of Iran. In late 1978, however, a populist revolutionary Islamic faction overthrew the Shah. In reaction to the bitterly anti-American clerics that took control, the U.S. government suspended all commercial agreements between American companies and Iran.

Soaring interest rates resulting from the five-year reign of OPEC stifled demand for corporate and private aircraft and the Lycoming engines that powered them. During this time, the U.S. government’s support for missile activities carried the company. In May of 1977, Lycoming won an important contract to develop a gas turbine engine for the Army’s new main battle tank, Chrysler’s Ml Abrams. The ACT 1500 engine weighed half as much as a diesel powered engine, and promised to provide greater power and speed. After successful testing, more than 11,000 ACT 1500s were delivered. In addition, Lycoming won a contract to develop the LT101 turbine, a 650 shaft horsepower engine designed for use on coast guard helicopters. The company also introduced its TF turbine series, designed for marine applications, such as hovercraft and boat propulsion, pumping, and power generation.

For commercial markets, Lycoming was working on a followon to its PLF-1A, an improved turbofan called the ALF502. This engine, capable of generating up to 7,500 pounds of thrust, was chosen to power the Canadair CL600 Challenger business jet. The 502 was the only engine in its class suitable for commuter jetliners, specifically the four-engine BAe 146 being developed by British Aerospace plc. When British Aerospace began the promising production run for the 146, it chose Lycoming’s 502 engine.

Kerr retired as chairman in November of 1981, and Robert Bauman, a former General Foods executive, took his place. By the time Bauman took over Avco, the company had extended its wing building business to Rockwell’s B-l bomber, and the engine business looked more promising than ever. In fact, the ten years that James Kerr had spent cleaning up Avco’s operations and balance sheet made the company an extremely enticing takeover target. Corporate raiders might easily consume Avco and profit from selling the company’s remaining divisions.

Joseph Steinberg and Irwin Jacobs began separate plays for Avco in 1984. At this point, Textron chairman Beverly Dolan contacted Bauman, announcing his company’s interest in Avco. Rather than risk Avco’s acquisition by a mere profiteer, Bauman decided to accept Dolan’s $1.4 billion offer. Almost as an afterthought, it occurred to Dolan and Bauman what a perfect match Textron would be for Avco. Textron was a similarly diversified conglomerate with strong interests in aviation (through its Bell Helicopter subsidiary, a customer of Lycoming), financial services, and manufacturing. By acquiring Avco, in 1985 Textron could assume additional debt that would repel any remaining corporate raiders.

Due to the suspension of business between the United States and Iran, Bell had suffered the same type of losses as Lycoming. The cooling oil industry also contributed to diminished profits. Textron opted to service its debt from asset sales rather than operating income. The company sold off several subsidiaries, eliminating much of the debt that it had counted on as protection. Ultimately, no hostile bids were launched for Textron.

Avco Lycoming, as the engine group had been known, was now called Textron Lycoming. The division suffered several reverses in the late 1980s. The ALF502 engine initially had frequent reduction gear failures and problems with cracks on the spacer rings between turbine disks. To make matters worse, Lycoming had little experience with commercial customers who, unlike the military, demanded strong after-market support. The lowest point came when Canadair decided to switch over to a competing engine from General Electric for its Challenger. The engine’s problems were corrected, but Lycoming had difficulty living down the engine’s reputation. Eventually, the 502 gained high marks in the field, where it exhibited superior resilience in the face of frequent short-haul takeoffs and landings.

In 1989 the coast guard’s mounting problems with the HH-65A helicopter were traced to failures with their Lycoming LTS101 turboshaft engines. While the coast guard began testing a replacement design from Allison-Garrett, the Justice Department charged Lycoming with fraud. Eventually, Avco settled the suit out of court for $17 million.

Lycoming’s former parent, the Avco Corporation, became Textron’s Aerostructure division. The unit won additional contracts to build the fuselage for the Lockheed C-5 Galaxy and the wings for the Airbus A330. Bell Helicopter remained one of Lycoming’s better customers, and because few of its designs competed with those of Lycoming’s other customers, there was no appreciable decline in engine sales.

Lycoming, once the engine division of a major aviation conglomerate, has survived fifty years of consolidation in the industry to emerge as the engine division of yet another aviation conglomerate. Whether Textron can build Lycoming into an engine powerhouse like Pratt & Whitney or General Electric is doubtful. Nevertheless, Lycoming is in a stronger position as a result of its association with Textron.