Already a Bloomberg.com user?
Sign in with the same account.
International -- Cover Story
IN CONNECTICUT, THE HUMAN COST OF GOING GLOBAL (int'l edition)
You don't have to look far to see just how the changes at United Technologies Corp. have shaken the people and economy of Connecticut. Once the state's largest employer, UTC provided more than 51,000 jobs in 1990. Today, that number has fallen to less than 32,000--a 38% drop.
The victims are everywhere. Unemployed factory workers at Pratt & Whitney jet engines. Engineers who took early retirement at Sikorsky Aircraft helicopters. Middle managers laid off at Hamilton Standard, maker of environmental controls and propellers.
EMPTY STORES. Then there are people such as Frank Porto. Porto owns the Aircraft Package Store in North Haven, directly across the street from a Pratt factory. He has watched the workers come and go--now, it's mostly go--for a quarter century. "From 8,200 to 1,000," he says, reciting the employment numbers. On a recent Friday afternoon, the store was empty. "It used to be really bustling at this hour," says Porto.
All along Washington Avenue, the main drag of North Haven, the story is the same: abandoned storefronts, "for lease" signs. And it isn't just UTC that has drawn the knife. Throughout the state once known as the arsenal of the world, one company after another has pared its payroll-- Xerox, U.S. Surgical, Electric Boat, Aetna, Travelers, and others.
In part, Connecticut shows how the promise of globalization--that new markets overseas would ultimately boost the U.S. economy--is sometimes an empty one. "While you can make a strong case that we are net beneficiaries as a country from free trade, oftentimes the gainers and losers are different people," says Shawmut Bank economist Nicholas Perna. For aerospace workers in particular, the loss of jobs to foreign labor markets comes at a time when the overall industry has shrunk because of Pentagon cutbacks and the recession in the commercial airline business. "In past cycles, people were laid off and then called back," says Perna. "But many of these latest jobs are gone forever."
Somehow, retraining hasn't worked. In mid-1993, the state offered UTC $3 million to teach workers about productivity, increasing their chances of keeping their jobs. But UTC never took the money. And while there have been some worker-training and outplacement efforts throughout UTC, the vast majority of laid-off workers either got jobs elsewhere at lesser wages, took early retirement, or just left the state.
Altogether, Connecticut has lost about 200,000 jobs since the peak of employment in early 1989. While some industries have been adding jobs, especially pharmaceutical research, the only significant new source of employment has been the Foxwoods casino complex in Ledyard, Conn. But salaries average about half the $13 to $15 an hour earned in defense factories.
UNDER SIEGE. Those that survive at UTC are under increasing pressure to cut costs through higher productivity and flexible manufacturing. "One of the things we old-time machinists wonder about is that the people running the company now are the bean- counters," says James Flanagan, president of Flanagan Brothers, a sheet-metal shop that supplies Pratt. Indeed, the whole relationship between UTC and the community of workers, suppliers, and politicians seems under siege. A 1994 survey of employee morale at Pratt found that while 78% of those surveyed had pride in their work, less than half said they felt a strong sense of loyalty to the company. "We tore up the social contract here," acknowledges Pratt President Karl J. Krapek, one of the new breed of UTC managers, whose goal is to get Pratt's costs in line with those of archrival General Electric Co.
What's more, unionists see UTC boasting to Wall Street that its earnings have improved--yet continuing to cut jobs and shift work to lower-cost locales. "Right now, the only reason they are having more layoffs is for the greed," says Andrew Romegialli, labor representative at District 91 of the International Association of Machinists. Greed or survival. It's a matter of perspective. But as U.S. companies forge into new markets, the shouting over lost jobs and wages will only grow louder.By Tim Smart in North Haven