UTC's global primer: George David has presided over a major international push. He says it's good for America

Chief Executive, The, Nov, 2004 by William J. Holstein

So you personally haven't had to surround yourself with managers who have international experience?

Five of seven division presidents for UTC today are not American. The two who are American are at two of the three aero companies--Steve Finger at Sikorsky Aircraft and Ron McKenna at Hamilton Sundstrand. Louis Chenevert, who runs Pratt & Whitney, is a French-Canadian by birth. Ari Bousbib who runs Otis, Geraud Darnis who runs Carrier and Olivier Robert who runs Chubb are all French. Jan Van Dokkum is Dutch; he runs UTC Power. So you've got three Frenchmen, a French-Canadian, a Dutchman and two Americans out of seven operating presidents. I don't think you'll find a more international group in the world.

Let's turn to the globalization debate. Where do you come down on the outsourcing flap?

It's dramatically overblown. UTC is a very good case in point. The kinds of things we do are an absolutely powerful reinforcing statement of the benefits of free trade and globalization. Frankly, we want to do what we do, which is retain the high value work at home, where the best jobs in the company are the export jobs. Half of our 27,000 people in the state of Connecticut have their paychecks written by export sales. That's where all the aerospace stuff is and all the engineering work is done.

The things we import are at the low end of the value-addition spectrum--they make our products more cost-competitive. There couldn't be a stronger statement of the way America ought to work, which is that we export products made by $25-an-hour labor and we import products made by $8-an-hour labor. That is labor arbitrage, which is what trade's all about.

Has globalization been a win for the states and communities like Syracuse?

When we closed the Syracuse plant, we put part of the work in Singapore and China. Some went to southern U.S. states.

But what not everyone noticed was that we also concentrated R & D in Syracuse. We made Syracuse one of two engineering centers of excellence in North America, and we committed to New York State to add engineering employment. The whole idea, again, was to migrate from lower value-added work to higher value-added work. That's the way to deal with this as a nation.

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Going up the ladder?

Correct. Our deal with our employees is that we will educate anybody without exception, without limitation. We have the most robust employee education program in the world. We have 16,000 people in our Employee Scholar Program. Our annual spend is over half a billion dollars.

This program is exceptional in several regards. One is we give paid time away from work on the basis that time is a scarce resource in the modern life--not money. We give three hours a week away from work--paid time--and I think more than three weeks a year. It basically doubles vacation entitlement if you go to school. We pay all the tuition and fees. Importantly, we put no limitations on course work. None. You can be an engineer and study law, or theology, or English, or whatever you choose.