UTC loss is alarm­ing but not a catas­tro­phe

The News-Times - - NEWS - [email protected]­medi­act.com

Near the end of the mar­riage-made-in-heaven con­fer­ence call Mon­day morn­ing be­tween United Technologi­es CEO Greg Hayes and Tom Kennedy, his coun­ter­poart at Raytheon, Kennedy said why the new com­pany couldn’t pos­si­bly keep its head­quar­ters in Connecticu­t.

The Raytheon CEO never mentioned Connecticu­t or the head­quar­ters. But the mes­sage was clear.

He was talk­ing about “com­ple­men­tary technologi­es,” fus­ing the lat­est com­mer­cial aero­space de­vel­op­ments with sci-fi de­fense wizardry into one menu for the De­part­ment of De­fense.

“We con­stantly hear word about the DOD want­ing to go to Sil­i­con Val­ley for com­m­mer­cial technologi­es. Well, they don’t have to go to Sil­i­con Val­ley any­more,” Kennedy de­clared. “We have that technology with the com­bined com­pa­nies. It’s very com­ple­men­tary technology. We’re ap­ply­ing that technology in the com­mer­cial world. We’re ap­ply­ing that technology in the de­fense world.

”And so they’re going to have the best of the best.”

The best of the best, in that world, means a very, very small num­ber of places. Metro Bos­ton. New York. Greater Washington, D.C. Sil­i­con Val­ley and the Bay Area. Maybe Seat­tle. That’s the re­al­ity of mod­ern American de­mo­graph­ics that Kennedy was talk­ing about.

It’s about peo­ple and where they want to live, not just technology.

That should both com­fort and alarm Connecticu­t as we lose the head of­fice of the largest pri­vate com­pany lo­cated here, the com­pany that has de­fined the state since it launched the avi­a­tion busi­ness in 1929.

On the one hand, de­spite the non­sense that Connecticu­t’s Nat­ter­ing Neg­a­tive Nut­meg Naysay­ers are drib­bling, the likely exit of the UTC head­quar­ters in

2020 is ut­terly un­re­lated to tolls, pen­sion li­a­bil­i­ties, the income tax or any of the other po­lit­i­cal-eco­nomic de­bates that tear us apart.

The sky is not fall­ing on Connecticu­t. UTC’s Pratt & Whitney isn’t tak­ing its

13,000 or so Connecticu­t em­ploy­ees (the com­pany won’t give an ex­act count) and jet­ting off to West Palm Beach, where it has a win­ter home, I mean, a large design and manufactur­ing cen­ter.

On the other, it shows us that Connecticu­t has a long way to go to keep com­pet­ing on the same field where we’ve won some and lost some. Un­like in our grand­par­ents’ day, when tens of thou­sands of work­ers flocked to East Hart­ford to build Pratt WASP engines for World War II, com­pa­nies fol­low peo­ple now.

And that means big metro ar­eas that are costly but cool.

What we have is a big loss — even though it’s just

100 cor­po­rate jobs in the ini­tial move, out of more than 18,000 at UTC in Connecticu­t. This is a bad way for Gov. Ned La­mont to start his first summer af­ter his first Gen­eral As­sem­bly session.

It’s not just an­other blip in the state’s eco­nomic history and no one should spin it that way. Lost will be more than the pres­tige, the phi­lan­thropy and the spinoff work that a global com­pany head­quar­ters brings — it’s a mind­set, a sharp at­ten­tion that says “this is da place” for a gi­ant com­pany that mat­ters, and it af­fects the whole state.

”With­out the head­quar­ters being here, there’s just less of a fo­cus on manag­ing lo­cal is­sues and getting lo­cal peo­ple to deal with it,” said one per­son who has done work for UTC and some of its sub­sidiaries.

We do have a roadmap if we care to fol­low it, or maybe I should call it a flight plan.

”We need to create an en­vi­ron­ment where com­pa­nies feel like they can re­cruit and thrive,” said David Lehman, the gover­nor’s top eco­nomic ad­viser and com­mis­sioner of the state De­part­ment of eco­nomic and Com­mu­nity De­vel­op­ment.

”We’re never going to create our own Bos­ton but Connecticu­t needs to crate a city that can com­pete in our own way, in a Connecticu­t way, Lehman added.

That means, he said, “New Haven needs to com­pete with Cam­bridge and we need to do it head-on.”

Well, that sounds simple, hmmm. The good news is, we have some of the ve­hi­cles we need to fol­low that plan. Lehman’s idea starts with UTC’s ex­ist­ing jobs — which he seems con­vinced will grow, not shrink in Connecticu­t.

Connecticu­t, with Yale, a hefty num­ber of For­tune 500 com­pa­nies and, well, UTC, with a very large num­ber of PhD’s and patents per-capita, is high on the list of states for en­gi­neer­ing and science ex­cel­lence. No, we’re not Bos­ton high. And even if we are that good, we don’t also have the fi­nan­cial and man­age­ment clout in a nearby pop­u­la­tion ready to come to work at Raytheon Technologi­es, the name of the new com­pany.

Dumb name be­cause, as one friend said, Raytheon just screams out killing ba­bies in Ye­men with mis­siles. But that’s a dif­fer­ent story.

What Kennedy’s com­ment tells us is this: Raytheon and UTC wanted to join forces to make themselves in­vin­ci­ble. We al­ready saw in 2016 that UTC, which held a courtship with Honey­well, could be in play, and that doesn’t al­ways mean it gets ac­quired.

In this type of deal, one com­pany doesn’t buy an­other; they merge and pool their stock. That means the larger com­pany, in this case UTC, doesn’t of­fer a pre­mium to share­hold­ers of the smaller com­pany. No money means the larger part­ner has to of­fer some other en­tice­ment.

And that en­tice­ment was, hey. you’re in Bos­ton? We’ll come to your back yard and we’ll take your name.

It’s not a great re­sult for Connecticu­t, but it’s not a calamity, es­pe­cially if all those thou­sands of jobs stay put, and grow.

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