Oligopoly profile: United Technologies
United Technologies Corporation, the parent of Otis Elevator, Carrier Air conditioning and other top brands, may be considered the little GE. Like General Electric., the company is more like a conglomerate than most major corporations these days, and also like GE it is primarily engineering-oriented, competing with GE in areas like airplane engines and security systems. Like GE, United Technologies has a strong culture of quality improvement. And it is a very successful company, with over $30 billion in revenue and high profits.
As a recent Business Week article "Unsung CEO", 10/25/2004) UTC's CEO George David "has embraced a corporate structure that many had written off, the industrial conglomerate." In fact, the strategy seems more and more to be aimed at two areas: aerospace and building services, so that the targeted sales groups overlap from division to division. UTC has been careful to buy only industry leaders and quick to drop non-performers. So while it is something of a self-admitted conglomerate, it really is more like a new oligopoly in several business segments.
In fact, as the Business Week article points out that "what he [CEO David] gets rid of is as important as what he buys." Among recent discards was be UT Automotive, sold to Lear Corp. in 1999, as the company got out of a peripheral, less profitable business.
The article also notes that the company in all its areas works on incremental improvements to stay at or near the top in each industry. Like GE, the company is focused on process improvement at all levels, and works in areas where process improvement really counts.
Divisions
Carrier is the world's largest manufacturer of heating, ventilation and air conditioning equipment (HVAC). It is also a big player in the refrigeration industry, and makes air conditioning equipment for airplanes, ships, trains, and buses.
Otis, whose roots go back to 1858, is the world's leading elevator company, with over 1/4 million elevators, escalators, and moving walkways.
Pratt & Whitney is a maker of engines for both commercial and military aircraft, where it is #3, behind General Electric and Rolls Royce. The company also makes rocket engines as well as gas turbines.
Sikorsky is a maker of military and commercial helicopters. Military models include the Black Hawk and Seahawk helicopters.
Hamilton Sunstrand makes aerospace component systems, including propellers, airplane fuel pumps, electrical systems, and film controls systems. It works with NASA, the US military, and commercial airlines.
UTC Power makes onsite power generation systems. Its subdivision, UTC Fuel Cells (formerly International Fuel Cells) makes, as the name implies, fuel cells for space, military and commercial use. One of the areas it is getting involved in, with federal support, is hydrogen fuel cells. It is developing systems for auto models and buildings as well.
And UTC acquired the Chubb Group in 2003, which makes a wide range of security subsystems, including intrusion and fire systems, along with closed-circuit TV... It also provides human security services.
Right now, United Technologies is bidding to acquire the UK's Kidde PLC, the world leader in fire and explosion suppression technology. The company has a major market in furnish infrastructure for commercial buildings and factories, exactly those areas served by its Carrier, Otis, and Chubb divisions. Kidde itself has an interesting M&A background... It is, as Chubb was, a result of the demerger of the UK's Williams PLC in 2000. In 2004, Kidde acquired British fire extinguisher maker SPI Engineering and German portable fire extinguisher maker Gloria to increase its lock on the market.
