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United Technologies to Eliminate 13,900 Jobs : Economics: The aerospace and manufacturing giant will restructure and close more than 100 factories, including one in the City of Industry.

January 22, 1992|From Times Staff and Wire Reports

United Technologies Corp. unveiled Tuesday a sweeping restructuring that will eliminate nearly 14,000 jobs at the industrial giant, close more than 100 factories worldwide and result in a $1.02-billion loss for 1991, the company's first loss in 20 years.

In California, UTC's Carrier air conditioner subsidiary will close its City of Industry factory, which employs 400 people. The 35-year-old factory, which manufactures small air conditioners, will be shuttered early next year, a Carrier spokesman said.

In addition, a "handful" of jobs might be eliminated at UTC's Advanced Systems Division in San Diego and Chemical Systems Division in San Jose, both aerospace-related, a UTC spokesman said.

"United Technologies will be a very different company, leaner and tougher-minded. In short, a company that can earn the kind of return its share-owners expect and deserve," said Robert F. Daniell, UTC chairman and chief executive.

"We are financially well-positioned to tackle this restructuring because of our strong cash-flow performance in 1991," he said in a statement.

In announcing the overhaul, UTC joins a club of shrinking corporate giants that includes International Business Machines Corp. and General Motors Corp. UTC has been hit hard by cuts in defense spending, by the recession and by increasing competition.

"It's a real tough look at the realities of business in the '90s, and in some cases they have abandoned the gradual approach and jumped in with both feet at once to solve the problems," said Howard Rubel, an aerospace analyst with C. J. Lawrence Inc.

The restructuring is expected to reduce annual costs by $1.1 billion by 1994, UTC said. On the New York Stock Exchange, UTC's stock dropped $1.25 to $54 a share as the market overall tumbled.

Among the high-technology products and services produced by United Technologies are aircraft engines made by its Pratt & Whitney subsidiary, helicopters manufactured by its Sikorsky subsidiary, and elevators and escalators produced by its Otis Elevator subsidiary. The company also makes industrial products for cars and appliances.

The restructuring, which aims to meet cost-cutting goals first announced in August, resulted in a $1.275-billion pretax charge. Hartford, Conn.-based UTC also reported a $256-million pretax charge to increase environmental reserves.

Because of the charges, UTC reported a loss of $1.22 billion, or $10.33 a share, on revenue of $5.8 billion for the fourth quarter, compared to earnings of $169 million, or $1.32 a share, on revenue of $6 billion for the same quarter a year earlier.

For the year, UTC posted a loss of $1.02 billion, or $8.91 a share, on revenue of $21.3 billion, compared to earnings of $751 million, or $5.91 a share, on revenue of $21.8 billion in 1990. The last time UTC recorded a deficit was in 1971, when it posted a $43-million loss.

About 100 plants will be closed or consolidated, reducing manufacturing capacity by 16%, the company said. In all, 13,900 jobs, or 7% of the company's work force, will be eliminated.

About 25% to 30% of those jobs are expected to be cut through direct layoffs, with the rest going through severance and early retirement programs, said William Bucknall, UTC's vice president of human resources. About 6,400 jobs, or 45% of the total, will be eliminated in the state of Connecticut, where UTC is the largest private employer.

Daniell said there isn't much the company can say to the employees who will lose their jobs.

"The thing that I feel the worst about is that this is a terrible time to be doing this," he said.

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