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
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"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
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The truth is that men are tired of liberty.
Benito Mussolini