risks of third-party parts, The
OEMS STRIVE TO PROTECT THEIR F-CLASS PARTS MARKET, EVEN AS SOME USERS OPT FOR NON-OEM SUPPLIERS
Today, users of F-class turbines from GE and Siemens have the option of buying parts from third-party suppliers. For instance, a plant manager at a 501F facility in the Western U.S. admitted to using hot Gas Path (HGP) replacement parts obtained from Power Systems Manufacturing (PSM) of Boca Raton, Florida.
The two major suppliers in this aftermarket – PSM and Pratt & Whitney (PW) – were both unwilling to provide access to customers. But they were emphatic that their presence benefits users. “PSM, Mitsubishi and Pratt & Whitney are breaking up the OEM monopoly. With competition, prices come down and more innovation enters into marketplace,” says Pat Conroy, PSM’s vice president of commercial operations.
However, consultants, turbine OEMs and lawyers point out that there is risk involved in using third-party parts. “When it comes to selecting replacement parts for F-class combustion turbines from a non-OEM, both lenders and owners can take on significant risk unless both parties fully understand all of the facets and capabilities of the parties involved,” says Michael Giampetro, a senior engineer in the Seattle-based consulting-engineering firm R. W. Beck Inc.
What risks exactly?
There are potential constraints due to insurance, service agreements and warranties that may preclude or restrict the use of third-party gear. In addition, there is operational risk due to faulty components, impact on other parts of the gas turbine, reduced life, and performance deficiencies. “Technical and physical risks include the parts’ ability to function properly,” says Richard Thompson II, a lawyer with Troutman Sanders LLP of New York City. “This includes failing or breaking during operation, as well as the possibility of the part resulting in degraded performance.”
Mitsubishi, a turbine OEM, says that the parts it offers for Siemens 501F turbines have operated successfully in its fleet of 501F and 701F turbines. After the separation of Mitsubishi and Westinghouse in 1998, Mitsubishi has developed products independently. Today it offers Westinghouse hot parts after verifying part intechangability (e.g., cooling air flow rates, tip heights, and mounting hardware). It also offers operation and maintenance, remote monitoring, and field service of 501D and 501F gas turbines.
The risks of third-party parts may be balanced by the upside, some observers say. Giampetro explains the use of third party parts may in some cases provide benefits, such as cost savings, enhanced customer service, increased parts life, and improvements in part performance.
“If I were an operator, I would run with third-party parts,” says Klaus Brun, manager of rotating machinery and measurement technology at Southwest Research Institute (SWRI) in San Antonio, TX. His unit at SWRI provides users, suppliers and manufacturers of gas turbines with technical services, expertise and research facilities. “The prices are 40% of the OEM part in some cases,” he notes.
The struggle of the OEM versus the third party is not confined to turbomachinery. Car manufacturers are famous for trying to protect the aftermarket. Similarly, makers of printers have gone to great lengths to protect massive margins coming from ink cartridges and toners.
In the turbine sector, third-party supplies could undermine warranty and service aggrements with OEMs. In addition, the OEMs point to the high level of engineering know-how involved in gas turbines. But, some say that the OEMs cannot lay exclusive claim to technical superiority. “GE does not manufacture materials, so they have to buy them from someone else,” says Brun. “The bottom line is that they do not have better materials than others.”
Brun is skeptical about OEM coatings being better. Conroy agrees and claims that his company’s coatings, materials and techniques are at least as good, and in some cases superior to those of the turbine manufacturer. Tammi Morytko, Pratt & Whitney’s director of power systems, makes the same statement about Pratt’s third party F-class parts (Figures 1, 2).
Similarly, both companies tout their aerospace background as giving them a distinct advantage when it comes to reengineering such features as the complex cooling-hole structures of the OEMs. Mitsubishi has developed its own gas turbine blade and vane materials that are said to improve durability.
A systems approach
While Siemens refused to participate in this article, GE points to another technical differentiator between the OEM and the third party. Third-party suppliers cannot make the same part that GE makes, says Greg Beggs, GE’s F technology platform leader. “If they did, it would be patent infringement, so they have to build a part that is different from what we build. And they try to enhance it in some manner to get a sales advantage.”
When third-party suppliers design and manufacture the part, they focus on the design of the component, and not the gas turbine as a system, says Beggs. According to him, a “systems perspective” is required to design parts. “If they are designing a bucket, they will focus on the bucket. But you have to look at the wheels, the shroud, the casing, the air flow management system and many other aspects.”
For instance, the air management in an air-cooled gas turbine is complex, he says. If third parties put additional cooling to make the bucket last longer and advertise they have a longer-life bucket, they probably are starving another component of the gas turbine of cooling flow, and that could mean that the other component – potentially a GE part – does not last long. “Customers come back to us and say that our component has a problem. But it does not. It is just that the customer had put a third-party part that affected the entire system.”
The same could happen with materials. Third parties change the material to last longer but fail to consider thermal growth, how the blade is attached, the interaction with the shroud, and the impact on clearances, adds Beggs. “It is an irritating issue for us. Some of the customers think they are great but they are not serving the entire gas turbine design.”
However, some observers are skeptical of any exclusive claim that the OEM has towards supplying parts. “The F-class manufacturers make a lot of claims as they are defending their market,” says Brun. “In essence, they are trying to protect a lucrative long-term revenue stream for parts and service.”
Typically, in advanced gas turbines, combustion parts are the ones that need frequent replacement. Their operating environment sees high temperatures, some of which exceed the melting point of even advanced alloys, says Pat Ombrellaro, senior sales engineer at North American Energy Services (NAES). It takes well engineered cooling to prevent melting. Cooling air is channeled from the compressor through specially shaped cooling passages in the combustor and HPG components, he adds.
Depending on the machine, some HGP parts are changed or replaced on an 8,000 hour to 12,000 hour frequency (for an hour-based machine) during a combustion inspection. The parts are then refurbished and returned to service (or replaced) during the next outage. “There is a great deal of engineering and design that goes into these parts as well as the coatings,” says Ombrellaro. “However, third-party part producers claim to have success in duplicating or surpassing OEM parts life and performance.”
Competing with OEMs
PSM manufactures all of Siemens 501F and GE 7FA airfoils (Figure 3) and transitions, as well as 7FA combustion liners, and 50IF pilot nozzles. The 50IF parts offered by Mitsubishi include compressor row 1 through 3 diaphragms to address hook-fit wear problems in the Siemens 501FD compressor. The diaphragms are under production and expected to be shipped this year.
While Mitsubishi’s gas turbine business was founded on the original Westinghouse gas turbine technology as a licensee, PSM benefits from open access to F-class turbines via its parent company Calpine. This has enabled PSM to study customer-supplied OEM parts. It has manufactured and supplied 22 sets of 50IF transition pieces (Figure 4), which are among the hottest parts of the turbine.
The PSM transition piece (see p. 26, July/August 2004) is claimed to incorporate a series of improvements, such as a thermally free mount system that attaches to the stage 1 vane-retaining ring. Water jet technology helps to install conical shaped cooling holes to improve cooling potential.
PSM also uses an advanced Nimonic alloy for improved high temperature strength, and a thicker wall that resists creep and bulge. According to Conroy, the PSM transition pieces require combustion inspections every 24,000 hours while the original transition pieces needed combustion inspections every 8,000 hours.
Mitsubishi offers a thick-walled version of the M-T fin-cooled transition piece that was originally applied to the 501F gas turbines. The thick-wall design is said to provide operation without creep or bulge problem.
PW entered the F-class repair business in 2001, then got into parts in 2003. However, it provides the full hot gas path section for 7FA, not the 50IF. “We have low temperature products and repairs that have run for a full cycle already and F-class products in excess of 16,000 hours,” says Morytko. “The parts are priced competitively against the OEM and have been purchased independently and in multiple lots depending on the maintenance needs of the customers.”
PW says that each part is manufactured to be fully interchangeable with the OEM parts of the same generation. These incorporate improvements to mitigate the distress modes sometimes seen in repairing the OEM hardware.
Like PSM, the company plays down the risks of using third party hardware. Technologies in alloys, coatings and cooling schemes enable it to compete head to head with the OEM.
However, the fact is that the nonOEM parts don’t yet have a track record of longevity in the field. They are still too new. Risk is evident, at least on that front. So what can users do to minimize risk?
Consultant Giampetro advises users to verify whether third parties are capable of designing and manufacturing these parts. Questions that should be asked include:
* Is the third party supplier ISO 9001 certified?
* Do they use state of the art computer aided drawing, manufacturing, fluid dynamics software and quality assurance and control technology?
* Do the personnel have the requisite experience, and are the material and part supply shops experienced?
SWRFs Brun suggests that users should think about the qualifications of a supplier of a first-stage nozzle or bucket more than a third-stage part as the latter is not so hot and critical. He also recommends looking into the quality of thermal barrier coatings, though he cautions that he has seen OEM coatings done poorly, too.
Long Term Service Agreements (LTSA) should also be included in the equation. The great majority of F-class users have signed LTSAs with OEMs. For example, among NAES’ F-class customer base, Ombrellaro states that most are locked into long term maintenance agreements. Some may have expired, though, while others are approaching their end and can possibly be cancelled without heavy penalty. And that route is not necessarily a one-way street either.
From a legal perspective, Troutman Sanders’ Thompson says to tread gingerly. “Owners with LTSAs or currently in-force parts or unit warranties must be careful to understand whether the introduction of non-OEM parts voids any OEM warranties or risk coverage,” he says.
Thompson insists that care should be taken concerning third-party warranties. Some can be too limited in scope, such as excluding design defects, he says. As regards duration, if a non-OEM part is only warranted for one year, the owner could be left out to dry if the part fails to make its originally advertised parts life e.g., a 12,000 hour part lasting 8,000.
This is obviously not a risk limited to non-OEM parts, because OEM parts have this same risk, notes Thompson. “Owners should also check their insurance policies to make sure that there are no exclusions that would relate to the use of non-OEM parts.”
For Independent Power Producers, there may be little leeway, as the risks are specified by lenders. However, owners with large fleets can often afford to absorb the risk associated with savings in third-party parts, as the financial impact associated with a catastrophic failure is not as high as the independent owner with one or two plants.
In terms of warranties, there may not be much to choose between both options. Third-party suppliers offer similar terms to that of the OEM – typically one year or 8,000 hours. And both may have matching deficiencies. “What you find is that neither the OEM nor a third-party parts company offer relief for consequential damage or downstream damage that is caused by a failure of a part,” says Ombrellaro.
PSM warrants one year of operation, with an extended warranty available for longer periods at extra cost. “Most customers are confident enough of our parts to not bother with an extended warranty,” says Conroy.
Thompson concludes that it really comes down to the turbine owner’s becoming comfortable with the quality of the parts and future services required to refurbish those parts. From the legal perspective, his best advice to an owner who has found that comfort level is to make sure that the non-OEM is willing to offer the same (or better) quality of warranty or other risk coverage as the OEM, under the relevant parts purchase agreement or LTSA.
Copyright Turbomachinery International Jan/Feb 2007
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