UTC to layoff 1,500 through 2011
I’m still looking for details, but reports are out that UTC has plans to layoff 1,500 through the end of 2011, after laying off 900 already in 2010.
This isn’t unexpected, though. In March 2009, we reported that there were plans to lay off as many as 11,500 through 2009, so this is likely just the finishing up of that restructuring, which didn’t even include GE Security at the time.
And the likelihood that these will be in fire and security? I’ve got a call in on that.
Regardless, it may be that the end is in site for the layoffs as a whole. The numbers UTC reported this week were relatively good: profits up 14 percent, revenues up five percent. Looks like those layoffs increased operating margin, which is what Wall Street wants to see.
And things are a hell of a lot better than last year:
A year ago, UTC reported a 23 percent drop in second-quarter profits on a 17 percent fall in revenues, and a 20 percent decline in earnings per share.
Which has the CFO saying there are signs the worst is behind us:
Speaking to Wall Street analysts in a call Wednesday morning, Chief Financial Officer Greg Hayes cited higher order rates for a variety of UTC goods among the “signs that the worst is behind us,” even if the economic forecast remains hard to read.
That’s not exactly a thrilling endorsement of the economy as a whole, though, is it?
And there’s other evidence, too, that Fire & Security might be spared the layoffs, since that segment is performing well:
Operating profits grew at all six divisions, more than tripling at the Fire & Security division, thanks to acquisitions. That division makes fire suppression equipment, alarms and access controls.
Edit: Digging a little deeper into the most recent SEC filings, it looks like for the first six months of 2010 UTC Fire & Security recorded $29 million in restructuring charges, or 19 percent of the overall charges. If you extrapolate that to the layoffs, which are part of those charges, you could figure that Fire & Security also experienced 19 percent of those 900 layoffs, which is about 170 people.
Going forward, they expect Fire & Security to experience $15 million more in restructuring, which is 27 percent of the $55 million more in restructuring the company has planned. So 27 percent of the 1,500 jobs that go with that restructuring is 405 or so, which seems like a reasonable estimate based on the available numbers.
And, yes, I can see why some people would question layoffs when Fire & Security went from $148 million in operating profits to $291 million in operating profits for the first half of 2010. Seems like they’re doing alright. But any acquisition like this is going to come with redundancy and pieces the company just doesn’t want.
Further, it’s true that, if you back out the acquisition, UTC F&S did experience “organic revenue contraction,” in the second quarter of 2010. So it’s still not all roses and daisies over there.