United Technologies Forms Aero, Building Units Amid Goodrich Buy
United Technologies Corp. (UTX) is bundling its aircraft-parts units and climate and security businesses into two broad groups specializing in the innards of buildings and planes.
Alain Bellemare, 50, becomes chief operating officer of the aerospace unit, which includes Hamilton Sundstrand systems, Pratt & Whitney jet engines and $16.5 billion acquisition target Goodrich Corp. (GR) Carrier air conditioning’s Geraud Darnis, 51, will run UTC Climate, Controls and Security Systems, which will include UTC Fire & Security.
Chief Executive Officer Louis Chenevert’s reorganization will curb supply costs, combine research efforts and synchronize sales programs, the company said.
“This organization change really helps me sustain superior momentum and helps me bring it home in markets filled with new opportunity,” Chenevert said in a telephone interview. “It allows me to focus on a different level than day-to-day operations to a certain extent, and I need guys to go get it all done.”
The aerospace division will be run by Goodrich CEO Marshall Larsen, 62, once United Technologies acquisition of that company closes in mid-2012. The new segments have been in the works for about a year.
“Quite a bit of planning” is under way to fold in Goodrich, Chenevert said. United Technologies shares have fallen 4 percent to $71.85 since the deal, the company’s largest ever, was announced a week ago. Goodrich shares have climbed 11 percent in the same period to $121.09.
In addition to integrating Goodrich, Chenevert, 54, will be free to concentrate on selling in emerging markets like India that are driving growth in the commercial construction group of businesses, he said.
United Technologies, based in Hartford, Connecticut, began examining the reorganization about a year ago, focusing on it more intensely in the last six months, Tom Bowler, the senior vice president for human resources, said in an interview.
The aerospace division positions United Technologies better for a surge in demand as Airbus SAS and Boeing Co. (BA) prepare for record production. This week, Boeing delivered its first 787 Dreamliner with newly created Hamilton Sundstrand electrical systems.
Carrier and UTC Fire & Security will report separately until 2012, when they will be blended, while the parent company will continue to report individual results for Pratt & Whitney and Hamilton Sundstrand.
The company decided to keep Otis, the world’s biggest elevator maker, separate because of the way elevators are sold: Tall buildings need elevators no matter what, Chenevert said.
Keeping Sikorsky Helicopters
Sikorsky will remain separate because it is an aircraft maker, not a supplier, like the other two aerospace divisions. The unit is “absolutely not” for sale and keeping it separate shouldn’t be interpreted as a sign of such, he said.
“Sikorsky is a prime asset for us,” Chenevert said.
Even as Europe grapples with its own financial crisis, emerging markets continue to help drive United Technologies growth, he said.
Chenevert said the company is “tracking” to eventually resume a pre-2008 pace of increases of as much as 8 percent in organic sales, or revenue from existing businesses.
“The mood on the Street is worse than what the order book looks like,” Chenevert said, saying the company is still “growing double-digit” in emerging markets. “They’re building so much new stuff that they want the best technology advantage and minimal energy consumption. The same can be said about aerospace. I see those markets remaining very strong.”
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