Hartford Courant from Hartford, Connecticut on January 1, 2010 · Page A08
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Hartford Courant from Hartford, Connecticut · Page A08

Hartford, Connecticut
Issue Date:
Friday, January 1, 2010
Page A08
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A8 FRIDAY, JANUARY 1, 2010 THE HARTFORD COURANT PAGE ONE UTC CONTINUED FROM Al this week and executives were unavailable for interviews.) Lower costs from massive restructuring actions in 2009 about $800 million worth, including the dismissal of 15,000 employees worldwide will help the bottom line, as will modest economic growth in the U.S. and Europe and much stronger growth in China, Chenevert said. So will $350 million in additional cost-cutting, which could prove especially painful in Connecticut if the company carries out previously announced factory closings here. How and whether Chenevert maintains employment levels in Connecticut remains to be seen. While hundreds of UTC employees lost their jobs in Connecticut in 2009, more than 1,000 are now on the chopping block at Pratt & Whitney alone, one of three UTC divisions with large workforces in the state. UTC is still Connecticut's largest private employer, with more than 25,000 workers in the state, mostly at Pratt, Sikorsky Aircraft and Hamilton Sundstrand. Employment at Sikorsky has held up especially well as the helicopter-maker has worked overtime through the recession filling orders for the Pentagon. China And India On Sept. 21, Pratt, one of the world's largest jet engine producers, said that it would close one of its last three Connecticut factories, in Cheshire, and a small East Hartford unit, laying off most of the 1,000-plus workers this year and the rest by early 2011. The main obstacle is a federal lawsuit brought by the Machinists union, which represents about 3,700 hourly workers at Pratt's Connecticut operations down from nearly 17,000. Total victory for the Machinists in the suit a trial began Dec. 21 in Bridgeport and resumes Jan. 11 would probably delay the layoffs until 2011, but it wouldn't stop them, especially given Chenevert's enthusiasm for efficiency and for doing work in low-cost, emerging economies, such as China and India. After announcing the total of 15,000 job eliminations in 2009, Chenevert told the investment analysts at their Dec. 10 meeting, "The good news is two-thirds of the changes we did are structural. So that is not coming back later on," even as business picks up. China, India and other large, emerging economies figure prominently in UTC's plans for 2010 and beyond, both as markets for the company's products, especially elevators and air conditioners, and as a place to manufacture at lower cost. Pratt, for example, recently opened a 275,000-square-foot engine maintenance factory in Shanghai that is expected to employ 800 people within three years. The company is in the final stages of opening a new engine overhaul center in Istanbul. Pratt intends to move some work now done in Connecticut to Singapore. UTC, which even publishes a "UTC China Newsletter," is so encouraged by its prospects in China that Chenevert recently appointed a former Otis Elevator executive, Sandy Diehl, as UTC's vice president for integrated building solutions. Diehl, who has extensive experience in China, is charged with helping UTC coordinate and maximize its divisions' sales opportunities in Asia's emerging "megacities." "We see a lot of momentum developing in China," Chenevert, who made his 45th trip there last fall, told the analysts. UTC generated $500 million in sales in China in 1999. Sales there in 2009 will reach $3 billion, the company has said; there is no projection for this year. The rapid expansion of China's cities, in particular, presents UTC's building systems divisions Otis Elevator, Carrier Corp. and UTC Fire & Security with an extraordinary opportunity Although UTC expects the U.S. economy to grow between 1 and 2 percent this year, it expects China's gross domestic product to grow by nearly 10 percent. "We kind of like countries that have this GDP number associated with such a large population," he said. "It is one thing if your GDP growth of 6.5, 7 percent is in a country that is 100 million people, but a country of 1 billion-plus, it is a world of opportunity for us. And we are all over it. " UTC also expects big things of India, where it projected that it would generate $500 million in 2009 sales. Eventually, Chenevert expects that India will become the world's largest market for helicopters and thus for UTC's Sikorsky Aircraft division, the healthiest of its three aerospace divisions. Although airlines' attempts to minimize maintenance costs are constraining growth at Pratt and Hamilton Sundstrand, defense contracts have made Stratford-based Sikorsky one of UTC's best performers. In the last three years, Sikorsky has doubled its revenue. No Judgment Yet UTC will also spend energy, and money, integrating its largest acquisition to date under Chenevert. The company expects to close on its $1.8 billion deal for General Electric's security equipment business early in the second quarter. It is expected to augment UTC's fast-growing Fire & Security business, based in Farmington. Richard Tortoriello, an equities analyst with Standard & Poor's in New York, estimates that UTC's earnings per share will grow by 11 percent in 2010, to $4.55. The company has executed the most ambitious pieces of its cost-cutting program, he said, positioning itself to make the most of a rebound in its markets, however modest. UTC projects 2010 earnings per share of $4.40 to $4.65, a range that would represent growth of 7 percent to 13 percent, on sales growth of $54 billion to $55 billion, up from 2009, but still lower than 2008's $59 billion. "By cutting costs they sized the company for the current environment," Tortoriello said Wednesday in an interview. For now, Tortoriello is undecided about how to evaluate Chenevert's performance. "I still think it's a little too short to judge. Ultimately how Chenevert does is going to be reflected in how UTC does from an earnings standpoint and a growth standpoint. It's going to take some time for whatever Chenevert puts in place to really have an effect on UTC's earnings compared with what George David put in place during his career. So far, I think UTC has done a good job of weathering this downturn." So far, Tortoriello said he likes Chenevert's restraint in pursuing growth through acquisitions. "I do like the acquisition strategy take it slow, look for things that fit well, wait for an attractive price, don't rush to expand. I am not that big on acquisitions, especially once a company gets to a certain size. You become like General Electric. If the company gets too big, too diversified, it's impossible to manage it very well. There's always a problem happening somewhere." Investors appear happy with UTC's prospects: On Wednesday, stock in the Dow Jones component company closed at $70.49, it's highest price in 18 months although shares closed down $1.08 on Thursday Arson CONTINUED FROM Al escape a fire started on the porch of their two-story Fair Street home. The deaths have been ruled homicides. "I'm sure the state fire marshal's office is investigating any similarities," Provincetown Police Chief Jeff Jaran said. "We are certainly paying attention. Massachusetts is a small enough state, and people do move around. " A spokeswoman for State Fire Marshal Stephen D. Coan referred questions about the Northampton case to Northwestern District Attorney Elizabeth D. Scheibel, who is overseeing the multi-agency task force investigating the Northampton arsons. Scheibel's office has refused to comment about the ongoing investigation other than to say the fires last weekend were all set by the same arsonist or arsonists. Investigators in Northampton have reached out to Connecticut authorities as well, asking about a series of car fires in western Connecticut last year. Four teenagers were arrested for those fires and are currently awaiting sentencing. "It's pretty standard to look at other cases and see if there are similarities," said Connecticut State Police Sgt. Christopher Guari, who oversees the 10-member unit that investigates arson fires. "Arson investigations don't fit into normal police-style evidence collection like fingerprints or DNA," Guari said. "You have to really work at putting someone at a fire scene to make a case." Connecticut has it's share of serial arsonists on the loose. At least nine barns were set on fire along Route 101 in the Killingly area a few years ago. In the late 1990s, there was a series of unsolved arsons in New Britain, where back porches were being set on fire. Guari said the Northampton fires also seem to follow the normal progression of a serial arsonist. "They typically start out doing small fires, like grass fires or trash cans, and then move up to houses where potentially someone is home," Guari said. In 2008, state police solved a series of arson fires involving barns in the Coventry-Hampton area. One of the fires was set in a structure that belonged to a Hampton fire official. Using specially trained arson dogs, police followed a trail that led them to Thomas Nedweden, 29, of Hampton. "Some arsonists do it for revenge, some do it for spite, and some for a thrill," Guari said. "... Nedweden was literally mesmerized by the fires he set." At a community meeting in Northampton this week, town officials told the crowd of more than 500 that the task force was working diligently to solve the arson cases. They told residents to lock their cars, leave their porch lights on and conceded that finding the arsonist or arsonists will be difficult. The most recent FBI crime statistics from 2008 show that roughly 18 percent of arson cases nationally lead to arrests, compared with 64 percent of murders and 55 percent of assaults. In arson cases that are cleared, almost 40 percent of the time it is juveniles, people under 18, that are arrested. Arsons actually may be decreasing nationally, according to the FBI. Preliminary data on 2009 crime statistics indicate that arsons have decreased by about 8 percent nationally 3 SALE DAYS REMAIN! DON'T MISS THE SAVINGS. 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