United Technologies

United Technologies began with the commitment of Frederick Rentschler to making better airplane engines. While serving in the Army Signal Corps during the First World War, Rentschler ended up inspecting engines at the pioneering Wright-Martin Aircraft Co. (later Wright Aeronautical). He stayed on after the war and eventually worked his way up to the presidency. He grew frustrated, however, with the preoccupation of the company's directors with short-term profitability, so in 1924 he resigned and set out to form a company of his own to build powerful air-cooled engines of a type that the U.S. Navy wanted.

Rentschler was able to achieve his goal with the help of Edward Deeds, a business friend of his father, and George Mead, chief of engineering at Wright. Deeds was chairman of machine tool company Niles Bement Pond, which owned a Connecticut gun company called Pratt & Whitney. Established in 1860, P&W had prospered making arms for the Union Army during the Civil War. The two founders, Francis Pratt and Amos Whitney (a cousin of Eli Whitney), went on to become international arms merchants, but by 1901 they were getting old and decided to sell out to Niles.

The new owner pushed P&W to focus on making machine tools for manufacturing weapons rather than the weapons themselves. This strategy paid off, and by the First World War P&W was an important military contractor. After the armistice, however, the company lost most of its business and was looking for new ventures. Deeds persuaded his fellow Niles board members (who included Rentschler's brother Gordon, the president of the company) that Rentschler's engine plan made perfect sense for P&W.

Everyone agreed, and in 1925 Pratt & Whitney Aircraft was formed, half owned by P&W, which put up $250,000 for development and turned over its idle machine tool plant in Hartford to Rentschler. After only six months Pratt & Whitney turned out the first Wasp engine for the navy. The admirals were pleased and, encouraged by the recent recommendation of the presidentially-appointed Morrow Board that the military make long-term procurement commitments, they ordered 200 of the engines.

Having established Pratt & Whitney with the military, Rentschler turned to the civilian sector. The aircraft makers and carriers were starting to grow as a result of federal incentives provided by air mail contracts. Rentschler formed an alliance with William Boeing, the son of a timberman who had started building planes in 1916. The result was the Boeing 40A, which started out as a fighter but was adapted and became a popular air mail carrier. During this period Rentschler, who made extensive use of subcontractors to keep up with demand, also began to export engines.

Pratt & Whitney was a thriving operation, making a profit of some $2 million on the sale of nearly 1,000 engines. Also prospering were Boeing's operations, which included both building planes (with Pratt Wasp engines) and flying them on various air mail routes. Their mutual success encouraged Rentschler and Boeing to join forces and make even more money. In line with the financial consolidation that was spreading throughout American business at the time, they formed a holding company in 1928, which, under the name United Aircraft and Transport Corp., soon became the largest aviation company in the world.

It was also one of the most profitable companies in the world, at least for Rentschler and Boeing. They and the principals of the other firms that were brought under the umbrella, including Sikorsky Aviation and the Hamilton propeller company, exchanged stock in their own firms for the rapidly appreciating shares of the holding company and enjoyed massive gains.

United Aircraft, which in 1930 bought some additional carriers and formed United Air Lines, became an increasingly dominant force in U.S. aviation, especially after Boeing introduced its 247 in 1933. That lead, however, evaporated after Donald Douglas came out with his remarkable DC-2.

The industry was turned upside down in 1934, when the consolidation that had been encouraged by Postmaster Walter Folger Brown came under attack after the Roosevelt administration took office. The result was the passage of the Air Mail Act of 1934, which mandated both a ban (that turned out to be short lived) on private transport of airmail and a more permanent requirement that aircraft producers and air transport companies be separated from one another.

This meant that the United Aircraft behemoth had to be partially dismantled. United Air Lines and Boeing's manufacturing operation were spun off, and the United Aircraft Co. name was used as the parent firm for what remained, which included Pratt & Whitney, Hamilton-Standard, Sikorsky Aviation, and Chance Vought.

United survived a series of embarrassing Congressional hearings and controversy over its dealings with Japan to play a major role in the great airplane production push during the Second World War. Pratt & Whitney expanded its manufacturing facilities enormously in 1939 and began turning out huge numbers of engines, first for the French government and then the British. The company had more orders than it knew what to do with; still, it was slow in ending its relationships with companies in Germany, Japan and Italy.

In the United States President Roosevelt made a bold call in May 1940 for the construction of 50,000 airplanes a year--at a time when the military's total fleet was under 3,000. United's divisions, like the rest of the aircraft industry, were jolted into high gear (and high profitability). Pratt & Whitney was chosen as the primary engine maker for the navy, Hamilton-Standard had a near monopoly on propellers, and a huge contract for observation planes was granted to Vought and Sikorsky. The company was excluded from early work on jet engines, but Sikorsky was given military funding to develop helicopters.

After the end of the war, United was faced with the sudden loss of most of its revenues. Yet unlike other aviation executives who began diversifying their operations, Rentschler was confident that civilian and military demand would soon rebound. The advent of the Cold War (and later the Korean conflict) and the revival of commercial air transport bore him out. At first United depended mainly on the military, concentrating on the production of the jet engines that were rapidly replacing piston engines in the Pentagon's fleets.

Pratt & Whitney was, however, slow in making the conversion to jets in its civilian business. One problem was that some of its customers were uncomfortable dealing with a company that was tied to a competing airframe maker, namely Chance-Vought. So in 1954 Vought was spun off (and later became part of LTV). Pratt & Whitney shot ahead when the J-57 engine it originally built for the military was enthusiastically accepted by the aircraft makers and the airlines that were entering the age of civilian jet travel. In 1958 United branched into avionics with the purchase of Norden-Ketay Corp., producer of sophisticated components for most of the Pentagon's missiles.

While continuing to expand its military activities, United also maintained its lead in the civilian engine area largely through a close association with Boeing. In the early 1960s the Seattle company introduced its 727 jet, which was powered almost exclusively by Pratt & Whitney, and later in the decade, when Boeing was prompted by Pan American to build huge planes that would become known as jumbo jets, it looked to Pratt to supply the power plants (as engines are called in the industry).

The final design of the planes turned out to be considerably heavier than Boeing originally intended, and this put much greater demands on the engine Pratt & Whitney was developing. When the 747 began flying it experienced frequent problems with engine overheating, and the jumbos often had to be taken out of service. The repair costs that had to be borne by United ran to several hundred million dollars. This, along with problems relating to work on the F-111 fighter, caused the company in 1971 to report its first net loss since 1934.

United's board brought in Harry Gray, the number three man at the Litton Industries conglomerate, to try to fix the damage. Gray's efforts were made more difficult by problems the company was having with another engine—the F100—which was being developed for a joint air force-navy program. The power plant was stalling and even exploding during tests, but the military was so eager for the engines it lowered its standards to allow Pratt & Whitney to pass. But when the problems persisted, the navy dropped out of the joint procurement plan, and the company was starting to run up major expenses in fixing the engines supplied to the air force, which gave money to Pratt & Whitney's rival General Electric to develop an alternative product.

Meanwhile, Gray was pursuing his goal of turning the company (which he arranged to rename United Technologies in 1975) into a conglomerate like Litton. His first major move in this regard was the 1975 takeover of the venerable Otis Elevator. Gray was outbid for nuclear reactor maker Babcock-Wilcox by J. Ray McDermott & Co., but in 1979 he snared Ambac, a producer of diesel fuel injection systems; Carrier Corp., a leading supplier of heating and air conditioning systems; and Mostek, which made semiconductors (which was shut down in 1985 in the face of intense competition from the Japanese).

While Gray was out shopping, Pratt & Whitney was losing ground in the commercial as well as military arena. Part of the problem was the success of Airbus in taking business away from the leading U.S. airframe makers Boeing and Douglas. Airbus, a European consortium, initially decided to get its power plants from General Electric. In 1984 the company suffered another blow when both the air force and the navy turned to GE for major fighter plane engine contracts.

Pratt & Whitney sought to stabilize itself by joining the trend toward international cooperation among engine makers. In 1974 General Electric had created a joint venture with France’s SNECMA. By the mid-1980s such partnerships were the only way new engines were being developed. The biggest combination was International Aero Engines, formed in 1983 by Pratt & Whitney, Rolls Royce, and companies from Japan, Italy, and West Germany.

International Aero stumbled in its development of engines for the Airbus A340, allowing GE-SNECMA (later known as CMF International) to fill the void. GE also shot ahead of Pratt & Whitney in their individual efforts. Starting in the mid-1980s Pratt lost its 30-year lead in the engine business as a result of poor planning and a deteriorating reputation for quality and service.

Robert Daniell, who took over United Technologies after Harry Gray reluctantly retired, set out to revive the company by cutting costs, including the elimination of thousands of jobs. He also sought to change the corporate culture from the autocratic atmosphere that prevailed under Gray to one that was said to encourage team building, "worker empowerment," and closer relationships with customers. He also got Pratt into some joint ventures with its rival GE.

Daniell’s measures could not prevent Pratt’s business from taking a nosedive in the early 1990s when its customers—the major airlines—fell into a slump themselves. Compounding the problem for the company were cutbacks in military aircraft spending by the Pentagon. On the other hand, Pratt’s losses were being counterbalanced by strong results from UTC’s other major businesses.

Daniell and his successor as chief executive, George David, dealt with Pratt’s turbulence by seeking to restructure the entire conglomerate through some 15,000 layoffs, relocation of jobs overseas, revamping manufacturing techniques and entering more joint ventures. More emphasis was also put on selling non-military products in foreign markets such as China, where Otis soon controlled 25 percent of the booming elevator market.

Although David and Daniell (who continued as chairman) ended Gray’s nonstop acquisitions binge, they did purchase Sundstrand Aerospace for about $4 billion in 1999 and merged it with Hamilton Standard. That same year UTC sold off its $2 billion automotive business. Plans for a merger with Honeywell International collapsed in 2001 when that company accepted a last-minute offer from GE (but that deal later collapsed). In two separate deals in 2005, UTC agreed to acquire Boeing’s Rocketdyne Propulsion and Power subsidiary and British fire-protection company Kidde PLC (which was combined with a similar firm, Chubb PLC acquired two years earlier). In 2007 Sikorsky received its single largest contract ever—a $7.4 billion commitment from the Pentagon to purchase 537 Black Hawk helicopters for the Army and the Navy.

Louis R. Chênevert took over as chief executive in April 2008.