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Pratt's Hess: 'Connecticut Is A Good Place To Do The Right Kind Of Work'

Mara Lee

January 08, 2011

Pratt & Whitney President David Hess on Friday defended the jet engine-maker's decisions to move production work to developing nations, but struck a conciliatory tone about the company's home state, saying: "Connecticut is a good place to do the right kind of work."

The right kind of work for Connecticut, he said, is "engineers, technicians, financial managers, the whole support structure you need to grow a global business, with pay averaging about $95,000 a year."

The comments by Hess, in a speech at the Hartford Marriott Downtown to more than 500 business managers and economic development officials, seemed to be a counterpoint to remarks last March by a top executive of Pratt's parent, United Technologies Corp., who declared that the company would move work out of the state, and said, "Anyplace outside Connecticut is low-cost."

Since Hess took the reins at Pratt two years ago, the division has cut more than 550 manufacturing jobs, and will cut 425 more this year as it moves engine and parts repair work out of the state. The union's resistance "generated a lot of heat, headlines in The Courant and legal fees for us," Hess said.

Hess was clear that there's room for Connecticut manufacturing in Pratt's future but he offered warnings about taxes, regulation and attitudes in state government.

The roughly 3,000 manufacturing workers who will work for Pratt in Connecticut once its Cheshire operation closes also are highly skilled, Hess said. They "don't just turn bolts they concentrate on the high complexity, sophisticated work we do."

Hess said those workers make $90,000 a year, on average, including overtime. Pratt's long-term downsizing of its Connecticut manufacturing workforce means there are virtually no workers at the bottom of the wage scale.

Moving work from Connecticut allowed Pratt's profits to grow by nearly 8 percent a year on average over the last 13 years, Hess said. He noted that Pratt now has 8,000 workers in factories in China, Turkey and Poland and in an engine overhaul operation in Singapore.

The division has about 10,500 workers in Connecticut, including 3,500 engineers, and he added, "We're adding hundreds of engineers in Connecticut."

East Hartford engineers designed a high-efficiency, geared turbofan engine called the PurePower, which last month was picked as one of two choices for buyers of the new Airbus narrow-body jet. It will be the first time in 13 years Pratt will have a new engine on either Boeing or Airbus planes, which dominate the commercial market. The engineering hiring is mostly to support that program, Hess said.

While the test engines are being assembled at Middletown, the first production PurePower engines, for Bombardier, will be made in Canada, and Hess refused to say what Middletown's chances are for winning the line for the larger Airbus PurePower models.

"Certainly some of the parts will be made here in Connecticut," he said.

Hess suggested Connecticut politicians have an anti-business attitude though they offered tens of millions to keep jobs in Cheshire and as proof, he said, "The first instinct of some in state government has been to file lawsuits against companies making tough decisions, but necessary decisions, to ensure global competitiveness."

But, in fact, it wasn't the state government that sued UTC over the plan to close engine overhaul and repair facilities in Cheshire and East Hartford it was the Machinists union. Attorney General Richard Blumenthal, now in the U.S. Senate, filed a brief in support of the union, arguing that the state has "obvious, direct and substantial interests" in the matter.

Hess said the fact that state officials have been fighting UTC's longtime cuts to Connecticut production jobs discourages companies from expanding or locating here. To improve the business climate, environmental regulation needs to be less bureaucratic, he said, noting that an East Hartford remediation involved five reviews (three federal, one state, and the town).

He also decried the fact that Connecticut companies are no longer allowed to apply 100 percent of research and development tax credits to state corporate income tax liability. The R&D tax credit, begun in 1993, originally was launched to keep Pratt from moving 3,200 manufacturing jobs to lower-cost states. Pratt has eliminated far more than that since its passage, but has added thousands of engineering and management jobs.

"The stability and predictability of taxes is as important as the actual tax rates," Hess said.

And Hess warned that if the sales tax exemption on manufacturing were eliminated, "it would make our Connecticut operations untenable."

Reprinted with permission of the Hartford Courant. To view other stories on this topic, search the Hartford Courant Archives at http://www.courant.com/archives.
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