Tuesday, September 22, 2009

Pratt And Whitney Closes Facilities In CT

In this statement from Pratt and Whitney on the Decision to Close Cheshire Engine Center and Conn. Airfoil Repair Operations:
Tom Mayes, Vice President, Pratt & Whitney Commercial Engines & Global Services [stated]

"Despite our best efforts and those of the IAM and the state, we have been unsuccessful in identifying a reasonable alternative to keep the Cheshire Engine Center and Connecticut Airfoil Repair Operations (CARO) businesses open. As a result, we are going to begin the process of closing these two facilities. CARO will be closed by Q2 2010 and Cheshire by early 2011.

This was an extremely difficult decision. We share the union and state's commitment to keeping good jobs in Connecticut. The best way to protect the jobs that remain is to ensure we are competitive in a rapidly changing industry and challenging global economy.

The company has made every effort and explored all options to preserve this work - including assigning extra value to options that kept jobs in Connecticut.

Unfortunately, the reality we are facing is a dramatic and sustained drop in volume, a shifting customer base and a declining aerospace market. We would like to extend our appreciation to the employees of these two facilities. This decision is in no way a reflection of their skills, dedication and professionalism, and during this time of transition we will provide employees with the support their hard work and service to our company deserves. With the exception of volume-related layoffs, we do not anticipate any immediate workforce reductions as a result of this decision. Layoffs will be phased beginning in early 2010.

We thank the State of Connecticut - particularly Governor Rell and the Connecticut Department of Economic and Community Development, the Connecticut delegation - and the union for working hard to try to avoid this outcome. We appreciate their responsiveness and initiative. Unfortunately, the union's proposals and the state's offer, which we value together at $30.8 million, still left us far short of the $53.8 million in annual recurring, quantifiable savings needed to keep these operations competitive and preserve this work in Connecticut.

We estimated that the union's final proposal would generate approximately $26 million in annual savings. The additional savings they proposed - potential savings such as working together to reduce overtime and improvements through our manufacturing processes - were not quantifiable and therefore could not be factored into our economic analysis. All of which would be subject to renegotiation when the contract expires in December 2010.

The State of Connecticut made a generous and creative proposal in an unprecedented effort to keep jobs in the state. However, the key issues for Cheshire and CARO are volume losses, labor costs, and the sustainability of these operations in the long-term. The state's proposal could not sufficiently address these critical issues.

The final proposal from the company, took into account the offerings of the union and the state would have kept the work in Connecticut had it been accepted by the union. Unfortunately, the union rejected our proposal.

Now it is time to move forward - quickly and deliberately. We will begin transition planning immediately to ensure that our customer commitments are maintained and the transition is as seamless as possible. Our commitment to the operational readiness of our military customer is, as always, paramount and without compromise.

And our commitment to our employees will include severance pay, continued group health insurance, outplacement services and up to four years of continued educational assistance through the UTC Scholar program for those who are eligible. Because of the market realities we face, time is of the essence. These realities include a dramatic and sustained drop in volumes, a shifting customer base and a declining aerospace market.The aerospace industry is experiencing a severe economic downturn of historic proportions. This makes the need for a timely decision imperative.

Recently, the Director General and CEO of the International Air Transport Association announced that airline losses are expected to be $11 billion in 2009 and the scale of this crisis is bigger than the impact of Sept. 11, 2001, on the aerospace industry. We are not immune to the massive aerospace downturn that already has claimed 30,000 industry jobs this year. The hard fact is that the issues we face will not materially change when the economy recovers. The consolidation in our industry due to the downturn, the facilities' uncompetitive cost structures, and our changing customer base are not temporary factors. When the market does recover, the growth for the commercial, non-military work performed at these shops is projected to be primarily in Asia. We have a responsibility to our employees, our customers and our shareholders to position the company for long-term success. Our competitors are restructuring to reduce costs and we must do the same.

To be competitive and retain Connecticut jobs, we must listen to our customers and respond to market realities. If we do not position ourselves to be competitive, our customers will take their business elsewhere, and the associated volume reductions would result in even greater job losses. The only way we are going to be able to keep those jobs is to structure ourselves to be competitive in the emerging market environment.

We've responded to these market forces before when we relocated 1,200 Pratt & Whitney engineers here from Florida, reflecting not only our commitment to Connecticut, but also the change in our business - a change that has resulted in an increase in higher paying, higher value-added work that can make long-term sense in this high-cost location. What has remained unchanged is our long-standing commitment to Connecticut - one our parent company and the largest private employer in the state , UTC, shares. Since 2003, UTC has grown its employee population here by more than 3 percent, creating more than 900 new jobs, 500 of which were union-represented jobs at Sikorsky.Pratt & Whitney still plans to be a vital member of the Connecticut community, with 10,000 employees remaining in the state. We look forward to continuing to work in close partnership with the state to cultivate a dynamic business environment and position Connecticut and our company for growth and success for years to come."
And there you have it.... Pratt is leaving because it just costs too much to do business here in Connecticut. Our state legislature and the unions have put the final nails in the coffin of this company's ability to do business in this state. High energy costs, high taxes and other costs have just made it a losing proposition for them to stay here. And why should they stay here, if they can get a better deal somewhere else? Does anyone running the State in Hartford understand the realities of doing business? Don't they see the albatross that they continually place on the producers in our State?

How many more companies must we see leave CT before the State legislature and union bosses get a clue?

And as for continually taxing and burdening those who create jobs and actually produce stuff, by those who legislate on behalf of special interests, this reads like a paragraph out of Ayn Rand's Atlas Shrugged:
"when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed....

You stand in the midst of the greatest achievements of the greatest productive civilization and you wonder why it's crumbling around you, while you're damning its life-blood--money. You look upon money as the savages did before you, and you wonder why the jungle is creeping back to the edge of your cities. Throughout men's history, money was always seized by looters of one brand or another, whose names changed, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, deprived of honor. That phrase about the evil of money, which you mouth with such righteous recklessness, comes from a time when wealth was produced by the labor of slaves--slaves who repeated the motions once discovered by somebody's mind and left unimproved for centuries. So long as production was ruled by force, and wealth was obtained by conquest, there was little to conquer, Yet through all the centuries of stagnation and starvation, men exalted the looters, as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised the producers, as slaves, as traders, as shopkeepers--as industrialists.
Way to go Connecticut.