Name: United Technologies Might Break Up After Closing Biggest Aerospace Deal Ever
Uploaded: 2018-10-09
Duration: 5 min 16 s
Description: Splitting United Technologies could free up Pratt & Whitney jet engines, Otis elevators, and Carrier air conditioners and boost the stock.

Greg, you're in the home stretch of pulling off one of the biggest deals in aerospace history. You're close to becoming the owner of Rockwell Collins. Now how does this $ 30 billion acquisition reshape United Technologies? I've been in the aerospace business 29 years now. We have been talking about Rockwell as the premiere property in aerospace for my entire career. But what Rockwell brings to UTC is something that we just never had before which is the digital cockpit. Rockwell brings a whole different skill set. He's talking about the engineers that know how to do software in the **** pit. They do avionics, they do communications, the do displays, and it gives us the ability with Rockwell to connect the whole airplane now. And to figure out how we can best serve the customers in terms of taking all that data and improving the customer experience. Well, at the same time that all this exciting stuff is going on, you've been telling the investors that you might break up the company. Tell us why? And you're pretty serious about it, too. When you have a $ 12 billion elevator business and a $ 18 billion climate control business, like Carrier They're big enough to stand on their own. And, as we've looked at the universe, I think there's been 74 spins in the last ten years in the US. For the most part, the spin companies do better because of focus. I understand you've been getting pressure from two big- name activist investors, too, Bill Ackman, Daniel Loeb What did they wanna see happen? They wanna see the stock price go up. And it's been going up actually, that just seems to be happy. I think your stocks are like 9 % so far this year. Yeah. So, I think they've obviously seen a return, but. I think both of them, they share my view that focus companies do better over the long term. And so they have not put a lot of pressure on, we've obviously spoken to Mr. Ackman and Mr. Lobe a number of times and their folks. Their whole point though is that UTC, despite it's success. Would probably do better if you had three separate businesses as opposed to one big business and the conglomerate discount that you hear about so much would probably go away. So what do you do to this breakup? How do you see the future of these new individual Companies. Do you think that they will be able to innovate better? Will it be easier for them to make decisions faster, to make decisions easier to recruit some top talent? How do you see it playing out? The speed of decision- making improves, the capital structure can be tailored to their individual business. But also the opportunity for their people is greater. Right? They're gonna grow faster I believe. Faster decision making, a more nimble organization, all of those things can create more opportunities for the people, and more value, I think, for our shareowners. Let's talk about plan B of reinvention. Let's say that you don't break up United Technologies, and here you are, a $ 66 billion company, more than 200, 000 employees, operations in almost 200 companies. What would the future look like for UTC? So I don't think the future would be significantly different than what we see today. I mean, if you think about with Rockwell columns would go from $ 65 to $ 75 billion in sales. We go from 210, 000 to 240, 000 people. There's strength in those numbers, and the financial, strength of the UTC will be unsurpassed. If we decide to stay together, or decide that it makes more sense, I don't think that changes anything. We still want to get out more, we're power people, we want to give people the chance to take risks, to make decisions to improve the customer experience. Mmhmm, but will you do that nimble, innovative company? Well, can you ever be nimble at 240, 000? I think the answer is, you know, is you're as good as you let your people be. You've spent most of your career at this company, and you've been CEO for the last 4 of them. What would you say is the single most important thing that you've had to learn as CEO as the best way to lead a company that's Going through a transformational journey. I mean, how are you reinventing the CEO job? I have tried to people, look, I am not perfect. I will make mistakes. We will make mistakes. And the question is can you learn from them, and can you do better? And I think that's the thing that people wanna see, is not that the CEO is perfect, they wanna see that the CEO is human and that he understands Right, to learn. I've always thought there are some things that are most important in leadership and the first thing is know yourself, know what your strengths are, know what your weaknesses are. And secondly, need an empathy for people. You need to be able to understand where people are coming from because people's motivations are different. And without that empathy, you can't have good leadership. Do you see yourself as the change agent for this 84 year old company? [ LAUGH ] Well I like to think of myself as the propulsion agent behind the change. The fact is the change is not gonna come from me, it's gonna come from everybody within UTC. The fact is what I wanna do is instill people with sense of urgency, to get things done, to move alone quickly, not to ponder decisions but make decisions, make mistakes it's ok. The thing I can do best I think, is instill that sense of urgency. [ BLANK_AUDIO ]

United Technologies Might Break Up After Closing Biggest Aerospace Deal Ever

Leadership

Splitting United Technologies could free up Pratt & Whitney jet engines, Otis elevators, and Carrier air conditioners and boost the stock.