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UTC Frustration Draws Sympathy From Some Officials, But They Also Point To Company's Prosperity In Connecticut

Costly Debate

eric Gershon

March 17, 2010

Gov. M. Jodi Rell said Tuesday that she sympathizes with United Technologies Corp. executives' frustration with Connecticut as a place to do business and she criticized the legislature for contemplating new or increased taxes as it tries to deal with a $500 million hole in this year's state budget.

Rell said she spoke with UTC Chief Executive Louis Chênevert Tuesday morning about remarks company executives made Friday in New York, where they publicly and repeatedly criticized the state as too costly for further business investment and said they found "anyplace outside of Connecticut" less expensive.

Chênevert agreed to meet with Rell and legislative leaders to discuss the cause of the executives' remarks, according to the governor, who said the UTC boss seemed doubtful that much would come of it.

"I don't want to say he was skeptical, but he has met with leaders before. He does not always feel that he's always being responded to in an appropriate manner," Rell said in remarks after Tuesday morning's bond commission meeting. "And, frankly, I can't blame him."

Rell criticized the legislature for considering a so-called unitary tax, under which giant corporations could no longer shift profits from states with high taxes to states with lower or no corporate taxes.

The state's corporate earnings tax is now 9 percent, including a temporary surcharge — but it is unclear how much UTC pays of that tax.

"When corporations are saying 'Anywhere but Connecticut,' I think that's the wrong message," she said.

Rell said she told Chênevert that UTC has prospered in Connecticut.

"I reminded him of the good quality of life that we have in this state," she said, "and the fact that his company and his executives and his employees have done really well by the state. ... I understand the cost of doing business. This is not a new theory that has come from business people — whether it's UTC, General Electric or small businesses or families in this state that are saying that it is simply too costly to live and to work in the state of Connecticut."

UTC did not immediately offer a comment on the conversation.

About 26,000 of UTC's 205,000 employees in Connecticut, mostly at Pratt & Whitney (11,000), Sikorsky (9,300) and Hamilton Sundstrand (4,000), and at its global headquarters in Hartford and division headquarters of Otis Elevators, Carrier and UTC Fire & Security, all in Farmington. UTC's employment in the state fell sharply in the '90s but has been mostly stable since then.

In an interview in New York Friday after the public comments by UTC executives, Chênevert said the company very much appreciates its workforce in the state but must press hard to lower costs.

"Our workforce is one of the finest in the world," said U.S. Sen. Christopher Dodd, "and given that UTC has enjoyed such great success while headquartered in our state for all these years, these comments are a slap in the face to the 26,000 Connecticut employees at Pratt & Whitney, Sikorsky and Hamilton Sundstrand."

Other Connecticut elected officials have responded since Friday, including U.S. Rep. John B. Larson, D-1st District, who said he will continue to fight for military work for UTC, much of which is done in Connecticut. Others have said they do not believe the remarks must be met with an immediate incentive package, as the state has offered UTC in the past when the company makes a specific job-cut proposal.

"I'm not inclined to panic over some remarks at a conference," said state House Majority Leader Denise Merrill, D-Mansfield. "This is more of the same cultural problem that we have. Everyone in Connecticut is just used to saying bad things about the state. ... We're still a very productive, highly educated state."

Pratt on Friday plans to eliminate more than 150 hourly union jobs through buyouts. The company had said it might use layoffs but enough members of the Machinists union took voluntary packages.

Attorney General Richard Blumenthal, often sharply critical of companies when they consider actions that could result in job cuts, said he takes UTC's latest warnings seriously.

"They must know by now they can't simply bully the state government by threats, so I regard their concerns as serious and significant," said Blumenthal, who is running for U.S. Senate.

The attorney general said he is "strongly sympathetic to concerns expressed by them and other businesses and financial leaders about the costs of doing business in Connecticut. ... I would welcome the opportunity to sit down with UTC officials and discuss ways the state and federal governments can help cut the costs of doing business in Connecticut."

"When corporations are saying 'Anywhere but Connecticut,' I think that's the wrong message." Gov. M. Jodi Rell "Everyone in Connecticut is just used to saying bad things about the state." State House Majority Leader Denise Merrill "Connecticut ranks almost dead last in competitiveness for manufacturing." UTC Chief Executive Louis Chênevert "I regard their concerns as serious and significant." Attorney General Richard Blumenthal