OMA: Wars In Iraq, Afghanistan Drove Dramatic Gains At Sikorsky

Wars In Iraq, Afghanistan Drove Dramatic Gains At Sikorsky
 
By Mara Lee
The Hartford Courant
September 12, 2011
 
As Old Helicopters Wore Out, Orders For Black Hawks, Seahawks Poured In
 
The benefit of the wars in Afghanistan and Iraq to Sikorsky Aircraft and its many suppliers in Connecticut was slow in coming, but profound.
 
Even though U.S. soldiers invaded Afghanistan in October 2001, and Iraq in March 2003, Sikorsky was laying off engineers and production workers in 2004 with the cancellation of the Comanche program. Revenues were flat in 2002 and 2003 and grew moderately in 2004, 2005 and 2006.
 
Employment in the state fell from 7,300 in 2002 to 7,000 in 2006.
 
But eventually, all those Black Hawk and Seahawk missions meant helicopters were wearing out, and the Pentagon needed to increase its orders from the 35 to 40 a year it had done for years. By 2005, Sikorsky delivered 84 Black Hawks.
 
Sales at the United Technologies Corp. division exploded from 2006 to 2007, growing 50 percent, from $3.2 billion to $4.8 billion. Then, at the end of 2007, the Pentagon ordered at least 537 Black Hawks and Seahawks, with options for as many as 800, to be built from 2008 to 2012.
 
"I hate to put it in these terms but 9/11 has provided the biggest stimulus to Sikorsky's business in two generations," said Loren Thompson, a defense analyst at the Lexington Institute in Virginia.
 
"It's not just their signature UH-60 [Black Hawk] helicopter, but basically every helicopter they make."
 
Harvey Jackson, a business representative for Teamsters workers at Sikorsky plants in three states, said the production workers are mindful that these helicopters are being used to move soldiers in war zones. "They are acutely aware of the need to make sure we build them the right way and keep the men and women of the armed forces safely transported from where they're going," he said. "It's a specialized workforce, there's nobody out there that can do what we do, and I think our members take a lot of pride in providing protection and safety for the United States of America."
 
The huge order for Black Hawks meant there was no recession at Sikorsky. Company President Jeff Pino told stock analysts in early 2010: "We've nearly tripled the amount of direct production labor hours from 2006 to 2009."
 
The need for more workers was strong everywhere Sikorsky operates, but more outside Connecticut than in the home state. Where once all the helicopters Sikorsky built were assembled in Stratford, now they're put together in Pennsylvania, Florida and Poland. (The Polish helicopters are Black Hawks for foreign militaries.) Repair work has expanded in Alabama and Texas.
 
In 2002, there were 8,100 Sikorsky workers worldwide, and 7,300 in Connecticut. Seven years later, there were 17,457 Sikorsky workers around the globe, and 9,321 in Connecticut. This year, there are 18,000 worldwide, and 9,176 in the state, split almost exactly 50/50 between production and engineering or administration.
 
Economist Don Klepper-Smith said the addition of about 2,200 high-paying positions at Sikorsky is significant, even in a state with more than 1.5 million jobs.
 
"Every job counts in this economy," he said. Manufacturing jobs are particularly powerful for the economy not only because they pay well, but also they tend to drive jobs at local suppliers, and most of the money for the products comes from out of state.
 
Defense manufacturing jobs connected to jet engines and submarines have not been as affected by the post-9/11 wars. There was no added demand for submarines, Thompson said.
 
There was more need for replacement parts for Pratt & Whitney engines but other changes in the work mix drove down the number of production workers. Machinist employment at Pratt has steadily shrunk from 5,200 in 2001 to less than 3,000 today.
 
Overall employment in Connecticut at UTC, which does far more than defense, has fallen from 27,000 in 2002 to 25,000 this year.
 
As the war in Iraq winds down, so, too, does the economic benefit to Sikorsky.
 
Bob Ross, executive director of the Connecticut office of military affairs, said: "What we have to be concerned about is that there are cuts coming. Relative to other states, the projection is right now that Connecticut will fare pretty well."
 
UTC Chief Financial Officer Greg Hayes told analysts in March there should be growth at Pratt from Joint Strike Fighter engine manufacturing, but Sikorsky will have very low growth for the next few years, and all the growth will be from foreign Black Hawks and parts.
 
Hayes said the United States and Europe can't afford to spend what they've been spending on their militaries. "So, I'm a little negative on defense," he said.
 
But Thompson is upbeat about the Pentagon sticking to its long-term plans to buy jet engines and submarines. He said submarines are vital for spy work they were used in the Libyan conflict and for nuclear deterrence.
 
"I think the rest of the country doesn't realize how much of the nation's defense posture and industrial might still depends on Connecticut," he said.
 

 




Content Last Modified on 9/12/2011 3:13:58 PM