United Technologies tests the wind
Could alternative energy be United Technologies Corpâ€™s next strategic push?
Chief Executive Louis Chenevert wonâ€™t go that far, but he doesnâ€™t rule it out either.
The worldâ€™s biggest maker of elevators and air conditioners in July spent about $271 million for a 49.5 percent stake in Clipper Windpower, a Carpinteria, California-based maker of electricity-producing wind turbines. In a sign of the diversified U.S. manufacturerâ€™s clear influence on Clipperâ€™s future, this week that company said United Tech veteran Mauricio Quintana would take the reins at Clipper following Doug Pertzâ€™s resignation from the post.
United Tech got interested in turbines both because of the growth potential â€“ last year the United States put up enough wind turbines to power about 2.7 million homes — and because the turbines draw on a lot of the technology the company uses in its jet engines and helicopters.
â€śThe skill set that weâ€™ve developed over decades because of our base of businesses applies to wind turbines,â€ť Chenevert told reporters in New York, where United Tech updated investors on its 2010 targets. â€śSo weâ€™re pretty excited about following closely the evolution of that company.â€ť
It faces some deep-pocketed competitors, including General Electric Co â€“ already a United Tech rival in jet engines â€“ and Germanâ€™s Siemens.
Hartford, Connecticut-based United Tech has a history of building divisions through acquisition â€“ it assembled its Fire and Security unit, which last year generated $5.5 billion in revenue, about 10 percent of the corporate total â€“ through a series of 58 takeovers, most recently a $1.8 billion purchase of General Electric Coâ€™s security equipment arm.
But the need to digest that deal, which took more than half the companyâ€™s 2010 acquisition budget, may be one factor prompting United Tech to move carefully on alternative energy. Chenevert repeatedly told investors that he does not expect the company to do another large-scale takeover in the near future.
But back to our original question â€“ could the new United Tech chairman have an alternative energy division on his mind? His response was careful.
â€śThereâ€™s a lot of pieces in UTC that are operating in isolation scattered around the divisions that at some point you look at it and you create a business,â€ť Chenevert said. â€śBut I donâ€™t see that happening any time soon. We just made this strategic investment, weâ€™re going to look at it for the next two years. Thatâ€™s probably a good question to ask me a few years from now.â€ť