Sikorsky Aircraft Corp. would see a slight increase in business from the U.S. Department of Defense in the coming fiscal year, if Congress goes along with the White House”™s proposed budget.
Sikorsky is Fairfield County”™s largest employer with more than 9,000 workers at its Stratford headquarters and at satellite offices in Shelton and Bridgeport. Sikorsky”™s newest venture is located in Albuquerque, N.M., by virtue of parent United Technologies Corp.”™s acquisition this month of a minority stake in Eclipse Aerospace, a designer of so-called very light jets sold mostly for executive and recreation use. Eclipse and Sikorsky indicated plans to restart jet production at an unspecified future date.
In discussing UTC”™s yearend results, company CFO Greg Hayes told investment analysts to expect production of U.S. government Black Hawk and Naval Hawk helicopters at Sikorsky to level off, even as demand for international military helicopters increases.
At the start of February, the U.S. Department of Defense disclosed a proposed $1.6 billion contract for Sikorsky to maintain Black Hawk helicopters for Australia over a 10-year period, in partnership with Fairfield-based General Electric Co. and two other contractors.
In the Obama administration”™s budget request for the fiscal 2012 year beginning this July, the Pentagon wants to buy more than 120 Sikorsky helicopters, at a cost approaching $3.3 billion, including five to replace those lost in combat operations.
In December 2007, the U.S. government and Sikorsky signed a five-year, $8.5 billion contract for nearly 540 Black Hawk and Naval Hawk helicopters to be delivered to the U.S. Army and U.S. Navy; the contract included options for more than 260 additional aircraft and parts, with the total value potentially reaching $11.6 billion making it the largest contract in UTC and Sikorsky history.
Sikorsky shipped just over 250 large helicopters last year, generating revenue of $6.7 billion.
Hayes said Sikorsky continues negotiations with the U.S. government for a follow-on contract for as many as 500 more helicopters.
Speaking at an investment conference in Miami sponsored by Barclays Capital, Hayes reiterated UTC”™s intentions to expand Sikorsky production at sites outside of Connecticut, citing high costs of doing business here.
“Sikorsky has more than doubled its sales in the past four years, and yet our footprint in Connecticut has not grown,” Hayes said. “Our footprint has grown significantly outside of Connecticut, such that the non-Connecticut operations are now equal in size to the Connecticut operations.”
The question becomes how far UTC will go down that road. In 2010, UTC expanded its overall employee base slightly to 208,200 people, without significantly expanding the number of workers based outside the U.S.
Speaking in Mumbai, India this month, UTC CEO Louis Chênevert detailed the impact to Sikorsky if problems surface during production.
“Each Blackhawk is assembled from approximately 33,000 components and 5 million individual parts,” Chênevert said. “Each of these parts has a number that is ordered, tracked and delivered to precisely match our production schedule ”¦ If a single part doesn”™t arrive on time ”“ or fails to have the proper quality inspection certifications ”“ the entire assembly line can come to a halt. This could delay shipments, impacting both our bottom line and credibility with customers.”
