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Collins Aerospace’s cost-cutting goal of $600 million is now up to $1 billion by 2025, company President Stephen Timm told investors Tuesday morning.
“About half” of the cost reductions already have happened, company spokeswoman Pam Tvrdy-Cleary told The Gazette.
Timm said Collins Aerospace has 36 active projects that take, on average, two to four years to recover the cost from investment.
“It means we’ve still got opportunities to continue to optimize this cost structure,” Timm said.
Timm said integrating digital systems between business units also will “really drive cost optimization.”
While Timm did not specifically mention staff layoffs in Tuesday’s livestreamed event, Collins Aerospace laid off more than 100 employees at its Cedar Rapids, Decorah and Bellevue facilities earlier in the pandemic.
The company, the largest employer in Cedar Rapids, employs about 9,000 people in Cedar Rapids and Coralville.
The Collins Aerospace $1 billion cost-cutting goal is part of parent company Raytheon Technologies’ larger cost-cutting plans.
Raytheon has identified $1.3 billion in “gross cost synergies” and $2.5 billion in savings from “procurement initiatives” by 2024, according to its presentation Tuesday.
“We’re still developing new (cost reduction) ideas, so I don’t think the tank is out of gas,” Michael Dumais, Raytheon’s chief transformation officer, said at the meeting.
“Some of our early success has been in eliminating redundancies in the corporate office, harmonizing benefit plans” and consolidating the four former Raytheon Co. business units into two, Dumais said.
Dumais said creating the “office of the future” will be part of the cuts. Most employees, he said, will be working remotely or in a hybrid format.
“That really gives us the opportunity to eliminate square footage and also reconfigure where we can work more effectively,” Dumais said.
The cuts at Raytheon Technologies continue as the company enters its second year as a company following the merger between United Technologies Corp. and Raytheon Co., which was finalized in April 2020.
“We’re using the merger as a vehicle to transform the company and sharpen our focus on operational execution,” Dumais said.
Dumais touted his past experience helping companies — including Rockwell Collins in 2018 — shed expenses, so this is familiar territory for him.
“In every case, we’ve exceeded our projected synergy numbers,” Dumais said.
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