Carrier Corporation -- Growth as a public company

CNY Business Journal (1994-95), Oct 30, 1995 by Fitting, Beth

An inteniew with Loretta A. Zolkowski, director of strategic planning for North American Operations, Carrier Corporation, Syracuse, N.Y.

Q: Carrier Corporation has had a number of changes in recent years, not all of them happy ones. But in retrospect, have these forced changes contributed to your current success?

A: We're very proud of our continued level of success, which I would argue is due to a combination of things. First of all, over the last several years, Carrier has played a significant role in the restructuring of United Technologies [Carrier's parent, United Technologies Corporation]. It was a painful process, certainly in the Syracuse area, but also across the country. But I think that we, as with many U.S. corporations, have become "leaner and meaner" as a result. I've heard senior management here say that Carrier as a global leader had become soft and lazy and arrogant. We'd taken our eyes off the ball. As a result, some of the smaller and leaner competitors had begun to nip at our heels. Fortunately for us, we woke up and realized that market leadership is a responsibility, and that people demand cost leadership along with market leadership these days.

So we had to get leaner, we had to get more responsive to our customer. I think we have moved in that direction quite successfully. We have had two very successful years. Last year [1994] was a banner year, no only for Carrier but for the entire HVAC [heating, ventilating, and air-conditioning] industry. Because of low interest rates, we had one of the best years for U.S. residential housing starts. Carrier's residential group, headquartered in Indianapolis and with manufacturing facilities in Indianapolis and Collierville, Tenn., provided a substantial portion of Carrier's North American Operations revenues as well as its profitability.

Q: How about some of your other divisions, particularly those located in Syracuse?

A: Here in Syracuse we began to see a turnaround in our commercial applied business, what we call our heavy applied chillers, which are manufactured in out TR-1 plant. We have regained our focus on customer service and cost-effectiveness, particularly in our manufacturing processes. There has been significant process improvement.

Carrier's Transicold facility is part of our Syracuse campus. It is really a global operation and accounts for almost 20 percent of our global revenues. Transicold is our transport-refrigeration company, providing truck, trailer, and marine container refrigeration.

Also here on the Syracuse campus is the headquarters of our commercial unitary group--the rooftop lines, the small packaged equipment. Though this line is manufactured in Texas, Tennessee, and Arkansas, group headquarters are here in Syracuse.

We also have a replacement-components division, our factory-authorized parts and generic parts. All Carrier North American Operations are headquartered here in Syracuse. Up until 1990, our world headquarters were in Syracuse, but we moved them to Connecticut to be closer to UTC headquarters. That relocation allowed us to be more aware of synergistic opportunities among the vatious UTC divisions.

Q: What about the future? More restructuring?

A: I believe we are well positioned for future growth, particularly global growth. As far as restructuring goes, John Lord, president of the North American Operations--and now also president of Carrier world operations--and George David, president and CEO of UTC, like to talk in terms of continually restructuring. They mean that, instead of taking a single big hit as we had to do a few years ago, we should look for continuous improvement opportunities.

The strategic focus of the corporation is to keep seeking the right sizing and right costing opportunities, always to be aware of product cost and overhead. Mr. David has said that he hopes never again to have to go through the painful restructuring we were forced to do. The key is to be flexible with spect to the economy--the U.S. economy--particularly its impact on the Syracuse economy--and the global economy.

Q: Where specifilly do you see opportunities for expansion?

A: We can see an expansion of opportunities in China, where we have many joint ventures already in place. We expect a turnaround in the European economy and we see opportunities expanding there. Our Latin American operations have had a very successful year. Mexico took a downturn, but Argentina has been outstanding and Brazil has had one of its best years.

In North America, 1994 was buoyed by the increase in housing starts, a function of the lower interest rates. But also it was a very hot summer, following a very cold winter. We are very much influenced by the weather. It's interesting...I heard one of our executives say that when he came to Syracuse he heard so much about the weather that he vowed he would never use the weather as an excuse or an explanation. But it's inescapable. The weather does affect people's decisions to make HVAC replacements. Unfortunately, people do wait until the last minute to make a replacement, particularly on a furnace or some element of heating and even on an air conditioner. They may just wait until it's a little bit late for that repair or replacement. The situation in Chicago this summer, with people succumbing to the heat and an inadequate supply of air conditioners, was most unfortunate. We in the industry hope to avoid situations like that in the future.