UTC loss is alarming but not a catastrophe
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.