No. 19: UTC keeps eye on the ball

Company focuses on building efficient, affordable flight systems

United Technologies Corp.

Top 100 revenue: $1.3 billion

2007 revenue: $54.8 billion

2007 net earnings: $4.2 billion

2006 revenue: $47.8 billion

2006 net earnings: $3.7 billion

Employees: 225,600

http://www.utc.com

The future looks green for United Technologies
Corp. The company, based in Hartford, Conn.,
won several major government contracts in
2007 that will keep revenues rolling in for
years.

UTC is made up of several brand-name companies,
including Sikorsky Aircraft Corp., Pratt
and Whitney, Hamilton Sundstrand aerospace
systems and UTC Power. The company ranks
No. 19 on this year's Top 100 list with $1.3 billion
in 2007 prime contracting revenue and is
led by Louis Chenevert, who became chief executive
officer in April.

The most significant win for UTC during the
past year was a five-year contract award to
Sikorsky in December for
the delivery of 537 H-60
HAWK helicopters to the
Army and Navy, with
options for an additional
263 aircraft. The contract is
worth between $7.4 billion
and $11.6 billion.

David Manke, UTC's vice
president of government
and international affairs,
said the contract is critical
to providing UTC with continuing revenue and
the ability to plan.

"When you have a nice backlog of work like
that, you can make investments that you might
not otherwise do if you only had a year-to-year
contract and didn't know when these things
were going to stop being made," he said. "With
a nice contract like this, you've got enough runway
to make the big investments and really
benefit from the learning curve that comes with
it."

UTC's Hamilton Sundstrand is heavily
involved in space systems, including being the
prime contractor for NASA's space suit and life
support systems. The
company works on environmental
controls,
mechanical systems and
thermal control systems
for international space
programs. Another division
is working on sophisticated
systems for the
Homeland Security
Department, which include chemical and biological
countermeasures, such as handheld and
fixed facility monitors. Meanwhile, UTC's Pratt
and Whitney Rocketdyne, the space division of
Pratt and Whitney, captured a $1.2 billion contract
from NASA. It will design, develop and
test a J-2X engine to power
the upper stages of the Ares
I and Ares V launch vehicles,
which are slated to
eventually power manned
flight missions to the moon
and Mars.

Manke said the contract
was considered significant
because of the high visibility
of the project and because it
will give the company a
chance to be on the cutting edge of the latest
technology. "There's a lot of learning that goes
on with a new development contract like this,"
he said.

Pratt and Whitney also continued the development
of the F135 engine for the Air Force's F-
35 Lightning II aircraft. The service awarded the
company in September a $69.3 million production
contract for F-135 power plants. The first
engines are expected to be delivered in 2009.

For all its recent success, UTC is keeping an
eye on the near future, which Manke said is
marked by customer concerns about fuel supplies,
carbon footprints and flat budgets. UTC is
responding by building more efficiency into
conventional engines and ensuring that they are
robust enough to handle more than one type of
fuel.

Pratt and Whitney has developed what's
known as a Geared Turbofan engine that can
provide a 12 percent improvement in fuel consumption,
environmental emissions, engine
noise and operating costs. The engine is initially
being marketed to the airline industry but Manke said it is also
applicable to Defense Department platforms
such as long-range bombers and unmanned
aerial vehicles.

Given the tight fiscal environment, UTC is
trying to improve efficiency and lower costs,
though Manke said that goal is clearly being
challenged by the fast-rising costs of commodities,
including titanium, copper and aluminum,
required for aircraft engines.

"If we can't bring the price down, at least we
can keep it steady, because affordability is going
to be a critical requirement of the government
customer going forward," Manke said.

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