Hartford Business Journal

www.HartfordBusiness.com March30,2015•Hartford Business Journal 15 "We didn't have regular discussions because, like I said, they signed a five- year lease," Deller said. "We were fairly confident they were going to stay." At a time when Connecticut is stressing urban development and offering tens of mil- lions in state aid for companies to relo- cate their headquar- ters to the Nutmeg State, UTC decided to move from an expensive lease in downtown Hartford to cheaper property it already owned in Farmington, where it also has stronger ties with local offi- cials, according to a company source and Farmington town representatives. Hartford offi- cials, who have slowly witnessed UTC migrate its workforce to the suburbs, were caught unaware of the planned move, which happened only four months after UTC Chief Financial Officer Greg Hayes — a known number cruncher — took over as CEO. "It is important that political lead- ers have that regu- lar dialogue," said Oz Griebel, presi- dent and CEO of the regional business advocate Metro- Hartford Alliance. "You really want to make sure you are making that pitch about the importance of the [UTC] brand to the Capital City. It is illustrative of how you want to go about job retention and job creation." UTC had fewer than 200 employees left working downtown and didn't own property in the city, so its exit will have more of a sym- bolic impact on Hartford than an economic one, Griebel said. In fact, UTC's relocation bucks the trend of companies moving back into downtown, which has had a declining office vacancy rate in recent years. Homecare manage- ment firm CareCentrix and accounting firm CohnReznick, for example, both moved their Connecticut headquarters to Hartford. Nation- al accounting firm Grant Thornton is currently looking for space in Hartford, while the state is consolidating its office footprint into Con- necticut River Plaza on Columbus Boulevard. "There is a lot of movement into the city, much more than is leaving," Deller said. Still, UTC, a company with 211,500 employees worldwide and four subsidiaries each with billions of dollars in net sales, will no longer be putting Hartford on its press release datelines, and won't have a direct tie to the city where it was founded in 1975. "I don't think anyone doubts the brand power of UTC," Griebel said. "In a perfect world for the Capital City, it would be better to have the headquarters here." Missed opportunity Keeping UTC headquartered in Hartford was one of the many demands state government negotiators brought to the table when Connecticut and UTC struck a deal last year for the company to cash in $400 million in research & devel- opment tax credits in exchange for invest- ing $500 million to enhance its local presence. UTC balked at the Hartford head- quarters provision, ultimately agreeing to requirements like a new East Hartford headquarters for jet- engine maker Pratt & Whitney and increased UTC employment throughout the state. "Our bias is for companies to keep their downtown locations because we love hav- ing our downtowns filled up," said Cath- erine Smith, commissioner for the state Department of Economic & Community Development. "We regret that they are leav- ing the downtown area." DECD has been active with state incen- tives to keep and bring other major employ- ers to urban areas. CareCentrix received $24 million in aid to move its headquarters to Hartford; NBC Sports received $20 mil- lion to move to Stamford; Alexion Pharma- ceuticals received $20 million to expand into New Haven; and insurance provider Cigna received $21 million to call Bloom- field its headquarters. "With UTC, it is a very prudently, finan- cially driven decision," Smith said. "Do I like it? No, but I understand it." numbers game UTC's move 10 miles west to Farmington is part of a larger cost-cutting initia- tive to eliminate $100 million in cor- porate expenses over the next 12-18 months, said UTC's chief financial offi- cer Akhil Johri on a March 19 confer- ence call with inves- tors. The move will be complete by the third quarter. UTC can save significantly by leav- ing its leased space in Hartford because it owns the much more modest space on Farm Springs Road in Farmington, which was the former headquarters of Otis Elevator, said Johri. The corporate office now will be on the same campus as United Tech- nologies Building & Industrial Systems, the conglomerate's largest subsidiary with $30 billion in net sales and home to brands like Otis and Carrier Corp. Farmington officials have regular dia- logue with UTC, especially because the com- pany occupies 600,000 square feet of office space in the town, said Rose Ponte, the town's economic development direc- tor. UTC is a good corporate citizen in Farmington, she said, sponsoring local events and helping high school students obtain internships. "We love the fact that they are here," Ponte said. "The last year, there has been quite a bit of dia- logue with them." Despite the strong relation- ship, Farmington officials say they never offered UTC any sort of government assistance to move its headquarters. The town tries to keep its mill rate low for all businesses; local aid like property tax breaks would impede that goal and lead to the perception of government officials picking favorites, Ponte said. Farmington's mill rate is 24.44; Hart- ford's commercial mill rate is 74.29. Ponte said she expects UTC's move to attract more companies to the town, as the Fortune 50 relocation showcases why Farm- ington is a good place to do business. "We want Farmington to be a leader eco- nomically in Connecticut," Ponte said. In Hartford, Deller said the UTC move shouldn't be as concerning to Connecticut as published but unconfirmed reports that UTC plans to potentially move hundreds of jobs to south Florida. UTC's currently occupied space in the Gold Building is expected to be refilled with new tenants shortly after UTC leaves, Deller said. "We are sorry to see them leave, but I understand corporate decisions and why they are made," Deller said. n from page 1 UTC, Hartford didn't meet regularly Since taking over as UTC CEO, Greg Hayes has launched an expense reduction initia- tive, including shaving $100 million off its corporate office costs. P H O T O | H B J F i l e Thomas Deller, development director, city of Hartford Greg Hayes, CEO, UTC Akhil Johri, chief financial officer, UTC ▶ ▶ ' It is important that political leaders have that regular dialogue … It is illustrative of how you want to go about job retention and job creation.' Oz Griebel, president and CEO, MetroHartford Alliance Pratt mining big data By Brad Kane bkane@HartfordBusiness.com M ore than just selling engines, East Hartford aerospace manufacturer Pratt & Whitney has made a business of servicing those products in the aftermar- ket. Now, the company is further expanding on that post-purchase revenue, by providing data to customers on engine performance. Timing this new service to the release of its next generation of military and commercial engines, Pratt hopes to provide customers with information that achieve goals such as extending engines' life, minimizing airlines' flight delays and cancellations due to engine problems, and determining how different environments impact engine performance. "It is going to be tremendous," said Lawrence Volz, Pratt's chief information officer. "It is going to drive real value for customers both internally and externally." For the past 10 years, Pratt has used the data it collected from engines both on-wing and at-rest to enhance its engineer- ing capabilities, by examining the struc- tural and aerodynam- ic performance of the engine systems. Early last year, the company started developing ways to use that data to provide extra services to customers. As Pratt installs its new commercial Pure- Power engines and its F135 military engines on eight different types of aircraft starting in July, the company wants to start rolling out eight to 10 different data products by the third quarter of this year, Volz said. Pratt's aftermarket division still is figuring out how to sell the data to customers, whether it will be an inclusive service as part of the engine purchase contract, or if the data will be sold as a separate revenue stream, Volz said. The concept of using large data sets to pack- age information to customers started in the early 2000s with Google, which initially used systems to analyze data on websites to enhance its search engine performance, said Ramesh Shankar, associate professor of information systems at the UConn School of Business. Over the past couple of years, major com- panies like Fairfield conglomerate General Electric have used big data to judge product performance, Shankar said. Insurance compa- nies use it to analyze customer behavior — like GPS that evaluates how safely motorists drive — to determine how to structure policies and premiums. Retailers like Target, Walmart, and Amazon use big data to make sure they have enough stock of popular products. "If companies do not adapt to big data, they are going to increasingly become obso- lete," Shankar said. In addition to packaging it for custom- ers, Pratt has started using big data to find efficiencies in its supply chain and protect against cyberattacks, Volz said. For its customers, Pratt will provide information that is predictive, so problems are resolved before they become disruptive. Eventually, Volz said, the company wants the information to be prescriptive, so any poten- tial issues can be addressed in the production and routine maintenance of an engine. "We want to expand out value offerings, and we think big data is a way to do that," Volz said. n Lawrence Volz, CIO, Pratt & Whitney

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