Pratt Cuts 400 Jobs, About Half In Connecticut

Affected employees will receive severance packages, outplacement services, continuation of group insurance and a one-year benefit of the company's Employee Scholar Program


Pratt & Whitney laid off 400 salaried employees Tuesday, a tough tail end to a restructuring action that began in May when the company launched a broad buyout offer.

About 200 of the cuts were in Connecticut.

Combined with earlier layoffs in January and buyouts in June, these put the global Pratt & Whitney job cuts at more than 1,400 this year.

Challenges for the aerospace manufacturer include slow sales of spare parts, reduced defense spending and the conclusion this year of a military engine program. New business for the company — engine production of the military's Joint Strike Fighter and the ramp-up of its commercial geared turbofan engine — is set, although still a few years out.

"When necessary, we make staffing adjustments required to keep our cost structure competitive," company spokesman Ray Hernandez said in a written statement. "Our long-term outlook is very bright; however, to secure this bright future we must address some near-term challenges."

Affected employees will receive severance packages, outplacement services, continuation of group insurance and a one-year benefit of the company's Employee Scholar Program, Hernandez said.

"Taking necessary actions to manage our cost structure, while continuing to invest in new programs, positions Pratt & Whitney for the long term and ensures a strong future for the company, our employees, customers and shareowners," Hernandez said.

United Technologies Corp., Pratt's parent company, has recently accelerated its restructuring actions — such as layoffs, but also including supplier efficiencies and facilities closings — as one way to improve profitability.

"It was a solid first half of the year, even in an uneven economic environment," Gregory Hayes, the company's chief financial officer, said in a July conference call with analysts. "We've accelerated restructuring to position the business, though, for future growth. Additional restructuring savings, combined with good orders momentum and easier [year-over-year comparisons] in the back half, give us confidence to increase the bottom end of the [earnings per share] guidance rage."

The Hartford-based company increased its cost-cutting estimates to $450 million for the year, up from $350 million, while raising the lower end of its profit guidance to $600 million, up from $585 million.

In 2013 and 2014, UTC expects to reduce its workforce head count by 2,400 employees and to exit 400,000 square feet of facilities, according to securities filings.

"The fact is, restructuring is a way of life here at UTC," Hayes said. "It's how we drive productivity."

David Cadden, a management professor at the Quinnipiac University School of Business who follows the aerospace industry, said in an email that the layoffs were clearly an "effort to reduce costs because of 'issues' in both the military and commercial markets."

Those issues include the ending of the military's F-22 Raptor, for which Pratt made the engine, and the uncertainty of the final production runs of the next generation F-35 Lightning, the Joint Strike Fighter, Cadden said. On the commercial side, soft demand for spare parts has dampened the company's traditional money-maker.

"Hopefully, Pratt & Whitney's geared turbine will revitalize its civilian engine program and if Lockheed can manage the F-35 more effectively, and the sequester issue can be dealt with, then we might see a resurgence in Pratt & Whitney," Cadden said. "That should be followed by hiring, although I'm not sure if those jobs would be in Connecticut."

 

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