Skip to main content

UTC Selling The Silver?


In February 2011, Aetna Insurance Company’s CEO, Mark Bertolini told a Middlesex County Chamber of Commerce breakfast group that Connecticut was not a profitable place to do business.

“Connecticut,” said Mr. Bertolini, “falls very, very low on the list as an environment to locate employees . . . in large part because of the tax structure, the cost of living, which is now approaching, all in, the cost of locating an employee in New York City.”

The Malloy administration quickly moved to shower Aetna with preferments, and Aetna’s honcho offered a weak apology, promising Mr. Malloy on a stack of bibles that his company would not hightail it to another state but continue to maintain its headquarters in Connecticut. He was grateful that Mr. Malloy, agitated by the possible loss of tax revenue, had opened Connecticut’s treasury to Aetna. Mr. Malloy in turn was grateful that Aetna would continue to remain in the spot, here to be plundered by tax starved government officials.


The Chief Executive Officer of United Technologies Company (UTC), Gregory Hayes, likely was watching the performance from the wings, and he picked up the script where Mr. Bertolini had dropped it. UTC had been nodding its head sadly for quite some time. In December 2014, Mr. Hayes told the Wall Street Journal that the company’s board of directors had “authorized a long, sober look at the helicopter manufacturer [Sikorsky] with a view to selling or spinning-off  the UTC owned company, according to a front page, below the fold story in a Hartford paper.

This astonished and dismayed US Representative Rosa DeLauro, who stamped her foot and screeched, “I understand that UTC is exploring options and no decisions have been made, but UTC CEO Greg Hayes has previously assured members of Connecticut’s congressional delegation that he is committed to keeping Sikorsky in Stratford. I expect him to honor that and will be communicating that directly to him."

This was not the first time Ms. DeLauro was cut out of the information loop.

Early in 2010, Sikorsky President Jeff Pino, “under marching orders to raise the division's profits,” according to a news story, boasted to stock analysts, “We've nearly tripled the amount of direct production labor hours from 2006 to 2009. And for the first time in the history of our company, more than half of our hours are outside of Connecticut. We're very proud of that because outside of Connecticut, as I told you last year, by definition is low-cost sourcing." Having met his goal of a 10 percent profit margin in 2010, Pino was then aiming for fourteen percent by 2014.

Details concerning the September 2011 cuts made by Sikorsky were not shared with Connecticut’s all Democratic U.S. Congressional delegation; the cuts included the elimination of 567 positions, 419 of which were in Connecticut. In the first round, 384 hourly members of the Teamsters Union were let go. Having met his goal of increasing the company’s profit margin by ten percent, Mr. Pino boasted to the stock analysts that he was aiming for fourteen percent by 2014, news that no doubt would make Sikorsky an attractive buy should UTC decide to sell or spin-off the company.

These tea leaves were in the cup long ago. Busy with political campaigns and anxious to impress on voters the necessity of their re-election, Connecticut’s governor and Democrats in the General Assembly were content to forgo an accurate reading of the tea leaves.

A decision to sell or spin-off Sikorsky has not yet been made, Mr. Hayes said a few days ago. Precisely because Sikorsky has become so profitable a company, tax liabilities might interfere with a purchase. In the last couple of months, Mr. Hayes had talked to some people concerning an acquisition.  "As we had those discussions,” he told reporters, “it became clear that very few people would probably step up and do it."

Sikorsky, Mr. Hayes explained, is a horse of a different color. As a military contractor, the company has slower growth prospects and lower margins; therefore, in any sale after a spin off, Sikorsky “will attract a type of investor different than those that are looking for higher-growth commercial businesses."


Let anyone who will read these tea leaves and predict accurately whether in the near future Sikorsky will be spun-off as a separate company (likely) or sold outright to a buyer (maybe) or spun-off as an independent company and then sold (possibly). No one – and especially not Connecticut’s politicians – will know precisely when the hammer will drop. In telegraphing to politicians and the general public though media reports the prospect of a company’s sale, sellers and buyers speak in the accents of the Oracle at Delphi. Their press releases are intentionally inscrutable.

Comments

peter brush said…
Aetna would continue to remain in the spot, here to be plundered by tax starved government officials
--------------
"The managers will exercise their control over the instruments of production and gain preference in the distribution of the products, not directly, through property rights vested in them as individuals, but indirectly, through their control of the state which in turn will own and control the instruments of production. The state - that is, the institutions which comprise the state - will, if we wish to put it that way, be the "property" of the managers. And that will be quite enough to place them in the position of ruling class."
James Burnham
-----------
The truth is that men are tired of liberty.
Benito Mussolini

Popular posts from this blog

The Blumenthal Burisma Connection

Steve Hilton , a Fox News commentator who over the weekend had connected some Burisma corruption dots, had this to say about Connecticut U.S. Senator Dick Blumenthal’s association with the tangled knot of corruption in Ukraine: “We cross-referenced the Senate co-sponsors of Ed Markey's Ukraine gas bill with the list of Democrats whom Burisma lobbyist, David Leiter, routinely gave money to and found another one -- one of the most sanctimonious of them all, actually -- Sen. Richard Blumenthal."

Powell, the JI, And Economic literacy

Powell, Pesci Substack The Journal Inquirer (JI), one of the last independent newspapers in Connecticut, is now a part of the Hearst Media chain. Hearst has been growing by leaps and bounds in the state during the last decade. At the same time, many newspapers in Connecticut have shrunk in size, the result, some people seem to think, of ad revenue smaller newspapers have lost to internet sites and a declining newspaper reading public. Surviving papers are now seeking to recover the lost revenue by erecting “pay walls.” Like most besieged businesses, newspapers also are attempting to recoup lost revenue through staff reductions, reductions in the size of the product – both candy bars and newspapers are much smaller than they had been in the past – and sell-offs to larger chains that operate according to the social Darwinian principles of monopolistic “red in tooth and claw” giant corporations. The first principle of the successful mega-firm is: Buy out your predator before he swallows

Down The Rabbit Hole, A Book Review

Down the Rabbit Hole How the Culture of Corrections Encourages Crime by Brent McCall & Michael Liebowitz Available at Amazon Price: $12.95/softcover, 337 pages   “ Down the Rabbit Hole: How the Culture of Corrections Encourages Crime ,” a penological eye-opener, is written by two Connecticut prisoners, Brent McCall and Michael Liebowitz. Their book is an analytical work, not merely a page-turner prison drama, and it provides serious answers to the question: Why is reoffending a more likely outcome than rehabilitation in the wake of a prison sentence? The multiple answers to this central question are not at all obvious. Before picking up the book, the reader would be well advised to shed his preconceptions and also slough off the highly misleading claims of prison officials concerning the efficacy of programs developed by dusty old experts who have never had an honest discussion with a real convict. Some of the experts are more convincing cons than the cons, p