Category Archives: Aerospace

UTC Machinists Voting Sunday On National Challenge By Local Candidate

by Categorized: Aerospace, Labor Date:

The historic, long-shot challenge by a Metro North mechanic trying to unseat the International Association of Machinists president comes to a vote at the union locals for Pratt & Whitney and UTC Aerospace on Sunday.

Jay Cronk, a mechanic at the New Haven rail yard and former Machinists union official, won the right to an election against IAM president Tom Buffenbarger at more than 800 local lodges around the United States and Canada. Cronk and his challenge slate won the endorsement of 42 locals, triggering a general election vote for president, believed to be a first in the union’s history.

Jay Cronk Rick Hartford/The Hartford Courant

Jay Cronk
Rick Hartford/The Hartford Courant

The campaign has been nasty, with accusations flying on web sites for both sides. And as voting unfolds at locals’ regular April meetings, both sides are claiming a strong hand.

“We’re crushing them,” said Rick Sloan, spokesman for the incumbent slate, including Buffenbarger.

Challenge slate spokesman John Courtmanche said it appeared to be a close race based on unofficial results filtering out. “Jay’s team is winning many lodges and many big lodges,” he said.

Voting is Sunday at the two lodges that represent about 2,500 Pratt workers at the East Hartford and Middletown plants; at the lodge that represents several hundred workers at United Technologies Aerospace Systems, formerly Hamilton Sundstrand, in Windsor Locks; at the Berlin lodge that represents Stanley Black & Decker; and at two Groton lodges.

Cronk’s local, representing Metro North, is scheduled to vote next week. Cronk returned to work there in December after a 22-year stint working for the union, mostly at the Maryland headquarters.

The Seattle area, where Boeing employees comprise about 10 percent of the roughly 325,000 active Machinist members, is a sharp battleground as a result of discontent stemming from a recent contract dispute.  Steve Wilhelm, a writer for the Puget Sound Business Journal, reported that he “criscrossed the parking lot” while voting was occurring on April 3, and found “every single person I asked, with no exceptions,” claiming to vote for Cronk and his slate.

Up for election are the president, the No. 2 position and eight general vice presidents who serve as the union’s board of directors, and hold full-time jobs at the headquarters.

Turnout could be a deciding factor. The endorsement votes, held nationwide Feb. 8, drew extraordinarily light numbers — just a small handful at the Connecticut lodges, sources said — because the union did not publicize that vote.

The U.S. Department of Labor is overseeing the election as a result of an agreement with the union after an accusation that the union did not properly handle a 2013 challenge.

For this month’s general election balloting, the local lodges have posted announcements of the national election on their web sites, and members are receiving some emails.

Cronk’s team said federal officials found that the Buffenbarger slate sent campaign materials to an email list meant for official union business. As a result, Labor Department officials emailed challenge slate materials to that same list, Courtmanche said.

A Labor Department spokesman had no comment and Sloan, the spokesman for Buffenbarger’s incumbent slate, also declined to comment about it.

 

UTC Forecast Hurts Shares On Down Day For Markets

by Categorized: Aerospace, Manufacturing, Wall Street Date:

United Technologies Corp. delivered a less-than-stellar profit forecast Thursday, sending its shares down $2.92, or 2.5 percent, to $112.89 on a day when every company in the Dow Jones Industrial Average lost ground.

UTC said it expects to earn a net $1.25 a share in the current quarter, down from $1.39 in the 2013 first quarter, as the Pratt & Whitney union settlement, one-time restructuring and “headwinds” in commercial aerospace sales dragged down organic gains.

For the full year, the Hartford-based conglomerate repeated an earlier estimate for per-share income of $6.55 to $6.85 a share, up from $6.21 in 2013, with sales up less than 1 percent to $64 billion.

The first-quarter numbers, coming from a company known for consistent, double-digit growth, fell short of estimates by analysts surveyed by Bloomberg.  Markets were already spooked by fears of a growth slowdown in China, as the Dow fell by 231 points, or 1.4 percent and UTC, with major exposure in China, was the second-biggest percentage loser in the bellwether index.

UTC’s own presentation to financial analysts showed a forecast for a smaller increase in commercial construction in China this year.

New Haven Machinist Forces National Election For Union Boss

by Categorized: Aerospace, Labor Date:

Jay Cronk, who returned to his Metro North job after 22 years with the long-shot hope of winning election as international head of the Machinists union, has made history.

Jay Cronk Rick Hartford/The Hartford Courant

Jay Cronk
Rick Hartford/The Hartford Courant

No, Cronk hasn’t wrested the top job from Thomas Buffenbarger — not yet, anyway. But Cronk has forced a national election for president, believed to be the first time that’s ever happened in the storied union’s 125 years.

The secret balloting will be held under U.S. Department of Labor supervision at the first April meeting of more than 800 Machinist union locals.  To make that happen, Cronk and his challenge slate had to win the nomination vote of at least 25 locals in a Feb. 8 vote.

The final tally: Cronk won 42 local lodges and Buffenbarger, who has headed the Maryland-based International Association of Machinists and Aerospace Workers since 1997, won 758.  Cronk won his own local in New Haven and the Middletown local at Pratt & Whitney, but not the East Hartford Pratt local.

So it’s still a long-shot for Cronk and his “reform slate” of six other Machinist union members vying to take over.  But Cronk said he’s optimistic. About 500,000 union members and retirees will be eligible to vote, and Cronk won the largest local, at Boeing in Seattle, along with three other locals there.

The campaign, already underway on web sites and Facebook pages, is not high-budget but it’s nasty — and has been since November, when Cronk was fired from his job as a union official in headquarters, the week he declared his candidacy, and returned to work as a mechanic.

“I think most IAM members are so fed up with Jay Cronk and his lies and his false accusations and his slimy tactics that they will crush him,” said Rick Sloan, spokesman for the incumbent officers, including Buffenbarger.

Cronk, who makes similar charges against the incumbents, has already defied predictions by winning the 42 lodges around the country. “This is where they never wanted to be,” he said of the sitting officers. “They have controlled the process for years.”

They still do control the process. Cronk’s main task is to get the word out to members nationwide that there’s a national election for president, something none of them has ever seen.

Pratt Workers Stage Rally Inside East Hartford Plant

by Categorized: Aerospace, Labor, Manufacturing Date:

About 200 Pratt & Whitney workers in the Machinists union marched through the East Hartford factory Tuesday morning, shouting “solidarity forever” and blowing whistles.

Workers at the Pratt & Whitney East Hartford factory in a 1-hour job action Tuesday.   Handout photo

Workers at the Pratt & Whitney East Hartford factory in a 1-hour job action Tuesday.
Handout photo

The one-hour march came five days before the deadline for the company and the union to reach a new contract for 2,700 Machinist members in East Hartford and Middletown. There is still no agreement on Pratt’s major demand, that the union give back 252 jobs and allow the company to bring in outside vendors to pack and move parts and materials inside the plants.

Health insurance costs are also at issue, according to postings by the company and the union.

It’s customary for the union to hold a solidarity march inside the plant as talks reach the final stretch. While the event is technically a work-stoppage, production is not typically disrupted as not all union members participate for the entire time.

The union is scheduled to vote on Pratt’s final offer Sunday and could strike as soon as Monday morning at 12:01 a.m. both sides are preparing for a walkout but, it should go without saying, both sides hope to avoid it.

Bradley Keeping Seatbelts Fastened For American-USAirways Merger

by Categorized: Aerospace, Transportation Date:

As USAirways and American Airlines prepare to merge with a federal antitrust deal in hand, all commercial airports including Bradley International are watching closely for fear of losing flights and competition.

The outlook is decent for Bradley for two reasons. First, USAirways and American don’t compete against each other in their Bradley routes, said Kevin Dillon, executive director of the Connecticut Airport Authority, which runs Bradley and five small airports. American flies to Los Angeles, Chicago, Miami and Dallas, while USAirways serves Pittsburgh, Charlotte, Philadelphia and Washington, DC.

“There would be a high likelihood that you won’t see a reduction of those flights,” Dillon said.

That’s mostly true across the country. The second good sign for Bradley is that even with the merger, Connecticut’s flagship airport would still be far more balanced than other regional airports, what Dillon calls “a healthy mix.”

Based on the current flights, the merged airline would have 28 percent of all passenger traffic at Bradley — 18 percent from USAirways and 10 percent from American. That would make it the largest airline locally, barely edging out Southwest, which has 27 percent.

Those two carriers alone are balanced, and Delta has 21 percent, while United and JetBlue add 10 percent each. The small remainder is either Air Canada or commercial charters, Dillon said.

One wild card is whether the merged airline reduces Bradley flights as a result of cutbacks elsewhere. For example, at Reagan National Airport in Washington, USAirways and American are forced to sell off “slots,” or landing rights, which are controlled at a small handful of airports.

If they give up a slot for a Hartford flight by USAirways, which has six round-trips a day to Bradley, that could mean a lost flight or more here. But it could also be good for this market if, say, JetBlue picks up those slots and adds Hartford service from Reagan National.

That move would seem to make sense since JetBlue is growing in this market, and since the current USAirways flight to Reagan National is generally very expensive, catering to business travelers.

Another concern is that while American and USAirways have 28 percent of passengers, they have a slightly larger share of flights — 32 percent — meaning they have fewer customers per flight than, for example, Southwest, which has just 20 percent of flights. That could point to the demise of less profitable trips.

And USAirways and American could give up some facilities at Bradley, where they now hold a total of six gates. That could happen even if they didn’t curtail flights, Dillon said. “Of course we like to get the rental income that comes from those gates,” he said, but a cutback would free up those gates for future use.

At the moment, Bradley has three unused gates among its 22 available, and plenty of times available for flights to be added to the existing gates. So, growth is far off.

Bottom line: Nothing is certain but Bradley has a good seat assignment going into the merger.  Just keep those belts fastened for more turbulence.

 

Pratt To Machinists Union In Contract Talks: Give Up 252 Factory Jobs

by Categorized: Aerospace, Defense, Labor, Management Date:

In an opening salvo of contract talks, Pratt & Whitney management is asking the Machinist union to give up 252 jobs at the East Hartford and Middletown plants, clearing the way for the company to bring in outside contractors for materials handling work on the shop floors.

The number is included in a one-page flier (PDF here) that the union is giving to its members Thursday, based on negotiations Tuesday and Wednesday.

The flier also said the union was told by Bennett Croswell, the Pratt military engines chief, that the ramp-up for the f135 engine for the F-35 Joint Strike Fighter will not happen until 2016, rather than 2015 as planned. That engine is already in production in Connecticut and it’s unclear what the delay, or the ramp-up, will mean for jobs.

Pratt said in a memo to its employees that the number of f135 engines it will produce between 2013 and 2020 is 400 fewer than was anticipated in 2009.

Although the 252-job figure is just a starting point in talks that will intensify as the Dec. 8 contract expiration approaches, the proposal shows the direction Pratt plans to take. As the company moves deeper into the next-generation geared turbofan commercial engines and the f135 military work, its goal is to further outsource work to contractors that isn’t a core function, and to disperse company work to more sites around the world.

Both of these trends have been happening for years, angering union leaders in Connecticut, the most expensive place where Pratt has regular production.

Pratt’s hourly ranks have steadily thinned, mostly through retirements but with some layoffs, to about 2,700, divided equally in Middletown and East Hartford. The number is down from 3,400 three years ago, when the current contract was sealed, and is down from about 27,000 25 years ago, before a crushing series of cuts in the 1990-93 recession.

With those numbers in mind, the Machinist union has made job security far and away the primary issue in the talks. The union has already posted a strike picket assignment schedule starting Dec. 9, complete with names and shifts — a common tactic in contract negotiations.

Pratt has also taken pre-strike measures, preparing salaried employees to operate machines.

The union calls the plan “despicable” as some members charge the United Technologies Corp. unit  with greedily padding profits while it pays executives richly.

The company insists it must cut costs aggressively as it competes fiercely with General Electric and Rolls Royce for new-generation engine sales, as Pentagon budgets tighten and as the company endures a delay of two to three more years before high-volume production kicks in.

A typical union member makes $90,000 a year — a figure that can be reached with a base rate of $36 an hour and eight hours a week of overtime.

But the outsourcing of material handling it’s not just about saving money. Bringing in a large logistics firm to move parts, assemblies, components and finished engines around the Pratt complexes could be seen as part of the company’s ongoing effort to focus on its core function of developing and making engines. Companies such as FedEx and UPS have boosted their in-factory services for manufacturers, making a switchover more viable.

Until now, much of the argument between Pratt and the Machinists has been about moving work to locations outside of Connecticut. A provision known as Letter 22 prevents the company from moving union work on the existing generation of engines, unless the Connecticut plants lack capacity to do that work.

The issue of replacing union workers with outside contractors on the shop floor could be equally explosive — and is also protected under the current contract, for work on the existing generation of engines.  The company has done it in years past, notably in the “cribs” where tools and supplies are handled, and among skilled tradespeople such as electricians. The outside contractors, known as “yellow badges” for the ID’s they wear, typically earn less than union workers.

But the company has rarely if ever laid off union workers whose jobs were replaced by contractors, instead typically making the new hires after retirements, or transferring affected workers. And while it’s too early to know whether Pratt’s current proposal would mean layoffs, many of the materials handlers who would be affected have little or no experience in regular production, a source familiar with operations said.

“It is early in negotiations brothers and sisters but the company is heading down a slippery slope,” today’s flier said.

It may be a slippery slope but it’s not a one-way road.  As a negotiation tactic, the union could, for example, allow the company to take back the 252 jobs in exchange for protecting jobs in the f135 and geared turbofan programs — jobs that are not now covered under Letter 22.

The flier also said weekly health insurance premiums would increase. Health care costs were a significant issue in 2001, when the union had a strike that lasted several weeks.  In its memo to employees late Wednesday, Pratt said it is urging workers to use a high-deductible, lower cost plan rather than the more costly, full-coverage ConnectiCare plan.

Pratt and leadership of the International Association of Machinists and Aerospace Workers have agreed not to talk publicly about the negotiations.

Defense Industry Caught In Crossfire

by Categorized: Aerospace, Defense, Economy, Government Date:

If it wasn’t immediately clear as the shutdown started that defense firms would suffer heavy collateral damage, United Technologies Corp. put an exclamation point on the issue late Wednesday with its bombshell furlough announcement.

Read the story here as it develops.

Now we’re seeing more evidence, including work backing up at Electric Boat and an aerospace parts export from a Connecticut firm that’s held up for lack of an approval by the U.S. Commerce Department, a tense story relayed by a Stamford lawyer.

Is UTC making a political statement by announcing the furloughs of 2,000 Sikorsky workers, starting Monday, the sixth day of the shutdown, and another 2,000 workers at Pratt & Whitney next week?  Or are the furloughs strictly a prudent business decision based on the fact that defense work can’t happen without Pentagon inspectors on the factory floor?

You might think a $60 billion-a-year company would have the wherewithal to keep its folks busy at least for a couple of weeks, so maybe this is in part a message to Congress and Obama. UTC would be in its rights for sending such a message, but then again, its own workers are the ones who would suffer for it, not to mention its shareholders, whose stock fell by 1.2 percent Thursday, as the defense index slid by 2.3 percent.

Clearly, the Pentagon’s factory inspectors ought to be exempt from the shutdown. Then again, so should the folks who send out checks for Head Start, along with the money for that and other social programs.

UTC isn’t talking beyond the terse press release it sent out at 5:30 p.m. Wednesday. That could be because it’s in the so-called quiet period before the release of quarterly earnings, and it could be UTC’s culture.

Regardless of whether theatrics are involved, the threat to UTC’s business is real and it illustrates just how tightly the ultra-lean, just-in-time aerospace manufacturing culture runs. There aren’t piles of parts, components and assemblies lying around for weeks, waiting for the next step. Everything is a giant machine that operates in sync, or it shuts down — and government inspection is part of that.

Broadly, it illustrates that government, at least the core function of it, is not a drag on industry or an umbrella over industry — it is built directly into the entire American commerce system. That’s why we can’t calculate the economic cost of a government shutdown by adding up the lost wages of bureaucrats and subtracting that money from the system.

In Stamford, attorney John Fusco at Edwards Wildman Palmer LLP is living with a perfect example. His aerospace client, which he can’t name, makes a certain aviation part that it has exported to several nations.

Last month the Commerce Department rejected a bid for the firm to ship an order worth $80,000 to a certain country. Rejections are common and they’re followed by an appeal request — which in this case, had a deadline of Thursday.

“I can’t file that request,” Fusco said. “We can’t find out why it was denied nor can we appeal it simply because the government is not open.”

It’s not clear whether the deadline clock stops with the shutdown, Fusco said. But it is clear that the firm’s owner has a lot of money tied up in this decision as his customer awaits the shipment.

“Depending on the length of the shutdown, it may cause him to be in breach of his contract,” Fusco said.

Multiply that across the thousands of decisions that literally hundreds of government agencies make in Connecticut alone every day, and the picture comes clear. Some aerospace and defense firms had seemed confident they could weather a short outage of federal employees. Their defense contracts were in place, they reasoned, so they could keep working.

The Pentagon even rushed out billions of dollars in contracts last week, figuring that would smooth the way for defense firms during the shutdown, according to a story in the CT Mirror by Ana Radelat.

But now we see that even a short federal shutdown hurts this industry. That’s a national concern not only for defense but also for the economy as a whole.

It should be enough to see poor city residents suffer with Head Start programs closing, and a backup of food assistance payments in the Women, Infants and Children program. That should be enough. But if it takes a message from a company on the Dow Jones that one of the last great American industries is threatened now, not next week, not next month, but now — then the message is worth sending and must be heard.

 

UTC’s Chênevert Among Richest CEOs? Really?

by Categorized: Aerospace, Management, Wall Street, Wealth Date:

Louis Chênevert became CEO of United Technologies Corp. in 2008 and has made something in the ballpark of $20 million to $28 million a year since then.

UTC Celebrates Education Assistance Program Milestone

Chênevert at a 2012 event. He’s the big guy in the middle.
Michael McAndrews/The Hartford Courant

That puts him in the 1 percent of the 1 percent, for sure, but could it tie him for 4th place on the list of richest CEOs of Dow Jones companies?  Wealth-X, a research firm on ultra-rich people, says Chenevert’s net worth is $430 million, tied with John T. Chambers of Cisco Systems.

Click here to see the list.

Microsoft CEO Steve Ballmer is No. 1 at $17 billion, wealth from his role as co-founder, not as CEO.  Hewlett-Packard’s Meg Whitman comes in at $1.2 billion.  Stephen Hemsley of UnitedHealth Group, who famously netted $102 million in the recession year of 2009, is No. 3 at $480 million.

How does Chênevert reach toward half a billion dollars after just five years in the big money? Wealth-X says it uses public and private sources, so we don’t know for sure, but it seems unlikely. Chênevert holds unvested stock and unexercised stock options worth about $145 million, according to federal filings. He also holds $49 million in UTC shares.

That gets him about halfway there, and his retirement package has to be worth a few tens of millions more.

By contrast, Jay S. Fishman, the Travelers CEO, holds a similar amount of shares, unvested stock and unexercised options, and he’s been CEO since 2004, making similarly crazy annual amounts. He’s also on the Wealth-X list, but only at No. 10 with a net worth of $220 million.

Both CEOs have boosted their own wealth dramatically by pushing share prices higher over the last five years: 16 percent a year for Fishman at Travelers, 12 percent a year for Chênevert at UTC.

Bottom line: Wealth-X might have overestimated Chênevert’s net worth and underestimated Fishman’s.  Neither one is close to making the Forbes 400 list of richest Americans,  which bottoms out at $1.1 billion. And other than as a scorecard, it doesn’t really matter. These guys are thinking legacy, not war chest.

 

Drone Tech: Two Pizzas Delivered, Hold the Driver

by Categorized: Aerospace, Consumer, Technology Date:

What happens when Domino’s meets the Department of Defense? Pepperoni drone warfare!

A British Domino’s franchise produced this video showing a small drone, flying over the English countryside to deliver two pizzas. Maybe it’s a waste of technology, maybe not — either way, a U.S. Domino’s spokesman assures CNN/Money that drone pizza delivery isn’t happening anytime soon, if ever. 

 

 

Pratt’s Israeli Scandal Highlights Two Triumphs

by Categorized: Aerospace, Manufacturing Date:

If you make jet engines, it’s never good news when rogue operators in your far-flung forging operation falsify testing data for 15 years on critical parts.

Pratt executives are no doubt wondering how that could have gone undetected from the mid-1990s all the way to 2011 at the Carmel Forge unit in Israel. But the company is saying there was never a flight safety risk as a result of the fraud.

And, in an internal email I obtained, the company goes to great lengths to laud its in-house whistleblower program, which rooted out the wrongdoing when an employee reported it — albeit after many years.

See the Pratt Carmel Forge memo here.

“The company is grateful that this individual came forward,” said the memo dated March 1, signed by two Pratt VP’s — Joe Santos, the general counsel, and Mary Anne Cannon, head of quality and environment, health and safety.

Santos and Cannon go on to say the program at Pratt parent United Technologies Corp., known as Ombudsman/DIALOG, is confidential, neutral and independent, “which means it operates separately from management.”

The incident, first reported by the Wall Street Journal, was revealed publicly at a time when Pratt’s quality controls and compliance are under close scrutiny.   On Feb. 22, the Pentagon grounded the 17 test aircraft in the F-35 Joint Strike Fighter program, citing a cracked turbine blade made by Pratt. And the company is examining five types of engines might contain titanium from a San Diego supplier that incorrectly certified the metal.

Last year, UTC agreed to pay a $75 million fine to settle criminal charges that Pratt & Whitney Canada and UTC Aerospace Systems illegally sold helicopter technology to a company controlled by the Chinese government.

All of these incidents point to quality control and compliance concerns. But the other piece of good news in the Carmel Forge crisis is the very fact that test records can be manipulated at the unit that makes forgings of engine disks, the parts at the core that hold blades and vanes, without affecting safety. This indicates that Pratt, under close FAA scrutiny, has enough redundant safety systems that a screw-up in one area can’t lead to a compromised part in the final engine.

Still, as the memo said — in the department of the obvious — “manipulation cannot and will not be allowed.”