Workers at a Pratt & Whitney factory work on three large engines. Three engines are in view

Collins parent UTC cuts costs as it feels effects of coronavirus

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United Technologies (UTC) is immediately implementing a number of cost-cutting measures, including ordering a hiring freeze and suspending discretionary spending, as the economic volatility and uncertainty created by the coronavirus pandemic extends to its commercial customers.

The American multinational conglomerate is parent to aircraft engine manufacturer Pratt & Whitney and mega-aerospace supplier Collins Aerospace, which boasts remarkable nose-to-tail content on commercial aircraft – from flight deck avionics and communications to aircraft seats, lavatories, cabin lighting and electrical power systems.

Noting that global air traffic volumes have dropped severely, leading airlines to cancel flights and ground planes, UTC chairman and CEO Greg Hayes says in a letter to employees and colleagues that the COVID-19 crisis “is having a direct and immediate impact on UTC’s commercial aerospace businesses, requiring us to take multiple steps to aggressively reduce costs”.

To that end, the company is immediately suspending discretionary spending, including discretionary engineering and development programs; significantly reducing its capital investment in buildings and facilities, excluding safety-related investments; and deferring annual merit increases for executive and salaried employees, consistent with local practice; in addition to freezing hiring.

“These steps are difficult but necessary to protect UTC’s ability to weather this rapidly evolving crisis and are similar to the steps we took in past crises, representing a global shared sacrifice in the face of these challenging times,” says Hayes.

“Despite the difficult situation, we continue to stand ready to serve our nation and assist with the supply and manufacture of medical goods that are in need, including offering our 3D printing capability and access to our workforce.”

Given UTC’s suspension of discretionary engineering and development spending, Leeham News editor Scott Hamilton suggests that work towards Boeing’s new midsized airplane concept might be suspended. “NMA, FSA, whatever you want to call it, would seem a part of this,” he opines.

One of Collins Aerospace’s largest customers Boeing yesterday announced it would temporarily suspend production operations at its Puget Sound area facilities “in light of the state of emergency in Washington state and the company’s continuous assessment of the accelerating spread of the coronavirus in the region”.

Collins Aerospace has remarkable content placement on commercial aircraft. Image: Collins Aerospace

Meanwhile, UTC has committed to donate 19,000 masks, 75,000 pairs of gloves, and 3,000 medical grade Tyvek suits to support US national efforts to combat the spread of COVID-19.

“We are in discussions with the US administration to determine where else we can lend our expertise and assistance, and expressed that we are eager to assist in this moment of need,” says the firm.

UTC aims to merge with Raytheon to create Raytheon Technologies and become the premier aerospace and defense systems and services provider.

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