United Technologies to Cut 13,900 Jobs in Restructuring : Economics: The aerospace and manufacturing giant will close more than 100 factories, including one facility in the City of Industry.
United Technologies Corp. unveiled Tuesday a sweeping restructuring that will eliminate nearly 14,000 jobs at the industrial giant, close more than 100 factories worldwide and result in a $1.02-billion loss for 1991, the company’s first loss in 20 years.
In California, UTC’s Carrier air conditioner subsidiary will close its City of Industry factory, which employs 400 people. The 35-year-old factory, which manufactures small air conditioners, will be shuttered early next year, a Carrier spokesman said.
In addition, a “handful” of jobs might be eliminated at UTC’s Advanced Systems Division in San Diego and Chemical Systems Division in San Jose, both aerospace-related, a UTC spokesman said.
“United Technologies will be a very different company, leaner and tougher-minded. In short, a company that can earn the kind of return its share-owners expect and deserve,” said Robert F. Daniell, UTC chairman and chief executive.
“We are financially well-positioned to tackle this restructuring because of our strong cash-flow performance in 1991,” he said in a statement.
In announcing the overhaul, UTC joins a club of shrinking corporate giants that includes International Business Machines Corp. and General Motors Corp. UTC has been hit hard by cuts in defense spending, by the recession and by increasing competition.
“It’s a real tough look at the realities of business in the ‘90s, and in some cases they have abandoned the gradual approach and jumped in with both feet at once to solve the problems,” said Howard Rubel, an aerospace analyst with C. J. Lawrence Inc.
The restructuring is expected to reduce annual costs by $1.1 billion by 1994, UTC said. On the New York Stock Exchange, UTC’s stock dropped $1.25 to $54 a share as the market overall tumbled.
Among the high-technology products and services produced by United Technologies are aircraft engines made by its Pratt & Whitney subsidiary, helicopters manufactured by its Sikorsky subsidiary, and elevators and escalators produced by its Otis Elevator subsidiary. The company also makes industrial products for cars and appliances.
The restructuring, which aims to meet cost-cutting goals first announced in August, resulted in a $1.275-billion pretax charge. Hartford, Conn.-based UTC also reported a $256-million pretax charge to increase environmental reserves.
Because of the charges, UTC reported a loss of $1.22 billion, or $10.33 a share, on revenue of $5.8 billion for the fourth quarter, compared to earnings of $169 million, or $1.32 a share, on revenue of $6 billion for the same quarter a year earlier.
For the year, UTC posted a loss of $1.02 billion, or $8.91 a share, on revenue of $21.3 billion, compared to earnings of $751 million, or $5.91 a share, on revenue of $21.8 billion in 1990. The last time UTC recorded a deficit was in 1971, when it posted a $43-million loss.
About 100 plants will be closed or consolidated, reducing manufacturing capacity by 16%, the company said. In all, 13,900 jobs, or 7% of the company’s work force, will be eliminated.
About 25% to 30% of those jobs are expected to be cut through direct layoffs, with the rest going through severance and early retirement programs, said William Bucknall, UTC’s vice president of human resources.
UTC’s Restructuring Here are the major points of a cost-cutting plan announced by United Technologies Corp., maker of Pratt & Whitney jet engines and Sikorsky helicopters:
Eliminate 13,900 jobs over the next four years, or 7% of the company’s 186,000-person worldwide work force, for an expected savings of $440 million.
Close or consolidate more than 100 plants worldwide to reduce manufacturing capacity by 16%, to save $260 million.
Improve product design, engineering and manufacturing processes, to save $380 million.
The job cuts break down as follows:
At Pratt & Whitney, cut 5,096 jobs and reduce manufacturing suppliers from about 500 to about 250.
At Sikorsky, cut 209 jobs.
At Hamilton Standard, maker of aerospace systems including spacesuits, eliminate 950 jobs.
At Norden, maker of defense systems, consolidate manufacturing operations in Norwalk, Conn., eliminating 703 jobs.
At Carrier, producer of heating and air-conditioning equipment, close plants in Industry, Calif., Knoxille, Tenn., Ellijay, Ga., and several plants outside the United States, eliminating 1,525 jobs.
At Otis Elevator, eliminate 3,952 jobs.
At United Technologies Automotive, close or consolidate 16 plants, cutting 880 jobs.
Cut corporate headquarters and research and development staff by 500.
