P&W, UTC and governor agree to long-term aerospace commitment called 'historic' and 'transformative'
- Last Updated: 29 September 2014
- Published: 01 March 2014
- Written by Bill Doak
An agreement between the governor's office and United Technologies Corporation would see the construction of a new Pratt & Whitney headquarters, Engineering Building and UTC Center for Global Research here in East Hartford.
In rolling out a video and details of the committment to Connecticut, and East Hartford, Stratford and Windsor Locks to pour $375 million to build new facilities and upgrade existing headquarters and research labs company officials praised Gov. Dannel Malloy for his understanding of the importance of the aerospace industry. The proposal projects the multi-national company's Connecticut plans decades into the future, including a committment to provide good jobs and careers to local graduates, "transformative" careers for both the company which has been historically dependent on research and development here.
"This is the next chapter of aerospace in Connecticut," said United Technologies Chairman & CEO Louis Chênevert who called Malloy a friend since the Stamford mayor declared his candidacy for governor. "With this investment the facilities will be the flagship" for the expansion of production of the Pure Power engine in Middletown. "And I think it is going to grow even more," Chênevert added.
For its promises of retaining job levels and hiring engineers, UTC is asking for sales tax relief as it ramps up production of the Pure Power engines in Middletown. The fuel-saving and lower-emissions power plant appears to be the winner that Pratt and UTC hoped it would, and its success as a preferred choice globally in commercial airplanes is powering the company's profits as well as the announcement made Wednesday.
The potential state sales tax relief UTC is asking is estimated at $400 million over 14 years. In return UTC will commit not just to the East Hartford facilities but to renovating and investments at UTC's facilities Windsor Locks and at helicopter maker Sikorsky in Stratford, agreeing to keep its divisional headquarter going (despite a spate of recent layoff announcements) as the conflict in the Middle East winds down and Washington scales back on its helicopter orders.
The agreement requires approval of the state legislature as it must allow some $20 million a year of previously earned, but unused, tax credits to pay for the company's new construction. The final value of the package to both the state and UTC will depend on the weighted averages of the number of engineers hired or retained, the total number of UTC employees and total wages paid.
The company had revenue of $62.63 billion last year.
Mobility in the global aerospace marketplace, and the fact that 80 percent of the parts used to assemble a jet engine are manufactured by some 2,500 suppliers in Connecticut making one of every two of Connecticut's 44,000 aerospace workers dependent upon UTC for a job and the state has a major stake in the arrangement.
As part of the investment, UTC committed to maintaining Pratt & Whitney headquarters in Connecticut for 15 years. The development of both a new world headquarters and engineering facility and a new United Technologies Research Center at Pratt & Whitney in East Hartford, build new engineering labs and renovate an Aerospace systems facility at UTC in Windsor Locks and improve Sikorsky facilities in Stratford brought invited suppliers to fill the back of the pre-War airplane hangar now a museum in East Hartford. Company officials called it an historic moment that would assure the future of the company here "for the next two generations."
East Hartford Mayor Marcia Leclerc was in attendance, and said afterward the announcement "was a long time coming. We have been working on this. Give credit to Governor Malloy." The mayor and her economic development director did not have an estimate as to the value of the new construction in terms of additional tax revenue to the town. Also several years ago East Hartford settled a tax case by agreeing to forgo building permit fees for the new engineering building. However "they didn't come to us for anything," said the mayor, so the potential town revenue for building permits for $375 million in new construction also remains a question mark.
Congressman John B. Larson, reached by phone in Washington D.C., was elated at the news and what it means for his hometown, the IAM union members, UConn, Connecticut, the estimated 75,000 aerospace workers in Connecticut as well as for the nation's future.
"Today's announcement by Governor Malloy of a $500 million commitment to upgrade and expand United Technologies' operations in Connecticut will not only 'Keep the Eagle Flying'; it will 'Make the Eagle Soar'," he said referring to the slogan of the legendary Connecticut-based aeronautical power manufacturing facility. Larson said he spoke to Governor Malloy when he was in Washington over the weekend and they spoke "structurally about the plan." Larson noted more important is the long-term commitment it represents to Connecticut.
"What this does for the supply chain is to assure them that they can continue to provide for their communities, for their employees, for the future. For me this is like a lifetime of work in the legislative process. It is created a sigh of relief. What they are saying is that we are the 'Aerospace Hub'. And that is how the President was describing the relationship. And it's not just with Pratt but it is with the IAM hall and Goodwin College across the street."
Goodwin College President Mark Scheinberg was also in attendance as was East Hartford Town Council Chairman Richard Kehoe and East Hartford Chamber of Commerce President Tim Coppage. Coppage noted that Gov. Malloy will be speaking to the Chamber March 19 as the latest guest of the Chamber's AT&T breakfast series. Goodwin just launched a new manufacturing certification program that just graduated its first 8 students. It's next class is 24, then 48 and 100 graduates will be certified next spring. Although diminished from the days when 34,000 employees worked there in 1972, over 7,200 work two shifts in East Hartford and the presence and health of the company is integral to East Hartford - as well as Connecticut.
"When is the last time you saw any new building at UTC?" Congressman Larson asked. "This is positive, positive news for East Hartford. We have to build around this that we are world class in Connecticut with a defense and manufacturing base that are moving forward." Even absent, Larson was singled out for praise. "There is no stronger friend to our company in Washington D.C. than John Larson," said Chênevert.
The historic P&W hangar adjacent to Rentschler Field, where there is a wood desk containing the signature of Charles Lindbergh and where Amelia Earhart visited is next to a former P&W airstrip that is now home to a 40,000-seat football stadium built on 75 acres UTC donated to the state in 1996. The UConn Huskies call it home. Further planned development of the 600-acre Rentschler Field has stalled. One suggestion was to build a new access road from Main Street to the airfield where the old circa-1961 engineering building is now located. Should that building be demolished it would open up the west end of Pratt's Main Street campus toward the rapidly-expanding Goodwin College neighborhood and its four new magnet and charter schools.
Congressman Larson said the latest annocement sums up everything he has done as a legislator, from his days on the Town Council to leading the Connecticut State Senate as its long-time President Pro Tempore to leading the Democratic Caucus in Washington D.C.
"I was proud to work alongside Republican colleagues to ensure Pratt builds the only engine for the F-35, bolstering work for a generation of machinists. We have also seen the development of the Geared Turbofan by Pratt, who have already received thousands of orders, in addition to the Air Force's Next Generation Tanker to be built in America," stated Congressman Larson. The aircraft company is an integral part of East Hartford as well as his family as his father, Ray, took great pride in his job as he headed out the door from his home on Chandler Street in Mayberry Village to help 'keep the eagle flying.'
But the company is just as vital to the future of the next generation of leaders also. State Rep. Jason Rojas, co-chairman of the legislature's Planning and Development Committee issued a statement: "I want to thank Governor Malloy and UTC for making this significant investment in the state and in East Hartford. The proposed plan mirrors a proposal the East Hartford delegation introduced in 2011 that would allow for a new use for economic incentives that the state has granted for years. This proposal has the potential to ensure that Pratt & Whitney's long history in East Hartford continues."
State Senator Gary D. LeBeau was front and center for the proposed agreement in the hanger. LeBeau noted UTC expects to invest up to $4 billion in research and other capital expenditures in the state impacting 75,000 jobs. But he also said it was not a done deal and still requires the legislature's OK.
"Once acted on by the legislature, this agreement will ensure that the future of Pratt & Whitney and other major divisions of UTC remain in Connecticut for the next two generations," said Sen. LeBeau, who is Senate Chairman of the legislature's Commerce Committee. "It means we can stabilize our workforce and see the potential for enormous job growth, especially with the hundreds of aerospace subcontractors we have in the state."