United Technologies spinoffs to allow for focus on aerospace

The head of United Technologies Corp. - the multinational company that acquired Cedar Rapids-based Rockwell Collins late Monday - said it likely will take between 18 to 24 months to spin off two of its units.

The move to turn Otis, its elevator and escalator unit, and HVAC unit Carrier into separate companies will enable UTC to better focus on its aerospace business, UTC CEO Greg Hayes said in a Tuesday morning analyst conference call.

UTC will retain jet engine maker Pratt and Whitney and the newly formed Collins Aerospace Systems - made up of Rockwell Collins and UTC Aerospace Systems - under its portfolio, the Farmington, Conn.-based company said in its announcement Monday.

Hayes told analysts he expects the aerospace segment to generate $50 billion in sales by 2020.

'That gives us the ability with that scale to think about a stand-alone aerospace business,” he said.

'From a Collins Aerospace perspective, this is a positive move for our company which will be part of a more focused, aerospace-centric business that will further enable us to grow, innovate, and move the industry forward,” Collins Aerospace spokeswoman Pam Tvrdy-Cleary told The Gazette.

UTC had been under pressure by some activist investors to split up the conglomerate into three segments to operate with sharper focus in their specific industry.

Manjot-Singh Bhussar, an Iowa State University business management professor, said he doesn't expect any immediate changes to Collins Aerospace operations in Eastern Iowa in the near future because UTC and Rockwell didn't have many overlapping products in their portfolios, which reduces the need for UTC to cut costs elsewhere.

'I would expect minimal obstruction, but over time we will see,” he said.

Tvrdy-Cleary said there are no immediate plans to change employee headcounts in Eastern Iowa.

Earlier Tuesday, crews hung banners bearing Collins Aerospace's logo over the Rockwell Collins signs outside their buildings across Cedar Rapids. Kelly Ortberg, now Collins Aerospace CEO, gave welcoming remarks via internet broadcast to all employees.

On Tuesday, the Washington Post reported the company's stock price dropped nearly six percent in Tuesday afternoon trading. Analysts told the Post the sell-off probably was from longtime UTC investors who favored a diversified holding company.

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