Farmington-based conglomerate United Technologies has announced it will break itself up into three separate companies. The breakup, which had been signaled for months, follows the closing of a massive deal to buy aerospace systems maker Rockwell Collins.
CEO Greg Hayes outlined the future shape for the conglomerate's companies in an announcment late Monday.
One company — still called United Technologies — will focus on aerospace businesses including East Hartford engine maker Pratt & Whitney, and it will incorporate the new acquisition of Rockwell Collins.
Otis Elevator will be its own standalone company, as will Carrier -- that business makes H-VAC systems, as well as building security products.
Hayes called the plan a “pivotal moment” in the company’s history. He indicated that he believes the era of big conglomerate companies -- like UTC and GE -- may be over.
“The world has changed," he said on a conference call Tuesday with analysts. "I think we all recognized the fact that focused businesses tend to do better. We’re not spinning out any weak businesses here - we’re spinning out three great businesses all with the ability to invest for the future and invest with a longterm focus.”
UTC executives say the breakup will be complete by 2020. It’s not yet clear what it may mean for the location of the businesses’ headquarters, or for their Connecticut workforces. UTC's aerospace businesses are some of the state's largest employers.
Hayes said the $23 billion acquisition of Rockwell Collins -- the largest ever deal in the aerospace industry -- is what enabled the restructuring.
"We will now have an aerospace business that will have sales of roughly $50 billion by 2020, and that gives us the ability I think, with that scale, to think about a standalone aerospace business," he explained.
He said Otis and Carrier were always capable of operating independently, but their steady income supported the sometimes decades-long long cycles of investments necessary to develop new products in the aerospace industry.
"We always thought, we need commercial businesses to support the aero businesses," said Hayes. "But with the aero scale the way it is today, that's no longer the case."
The aerospace industry is in the midst of an historic ramp-up in demand, as commercial airlines expand and retool their fleets with different jets and new technology engines.
Meanwhile, reaction among politicians and the business community in Connecticut has been swift.
Governor-elect Ned Lamont told reporters Tuesday he'll be watching the company's future moves "like a hawk," although he admitted there are no guarantees about the future location of the standalone businesses.
"I want Carrier here, I want Otis here - I surely want UTC here. And I'm going to make darn sure they know they've got a governor that, the door's open. We'll do everything we can to make sure this is a place they can call home."
UTC is one of the state's largest employers, with some 18,000 workers in Connecticut. The preponderance of that employment is well-paid, with highly skilled manufacturing positions and thousands of engineers.
Joe Brennan, the CEO of the Connecticut Business and Industry Association said he remains confident.
"As far as Connecticut's concerned, every conversation I've had with people in the company, tell me that Connecticut's going to be fine," he said.
But while the aerospace businesses may remain anchored here by recent investments in their manufacturing plant, it's a lot less easy to predict the future of Otis and Carrier, which could take more than a year to fully separate.
"What happens to those two companies remains to be seen," said Brennan. "But that's just the way of doing business in Connecticut all the time."