United Technologies raises Goodrich merger synergies goal

Washington DC
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Bowing to pressure from investors, United Technologies has raised its target by 25% on cost reductions or operating improvements created by merging Hamilton Sundstrand and newly-acquired Goodrich into the same operating unit.

United Technologies closed a $16.5 billion acquisition of Goodrich in July, but faced criticism from some market analysts that considered the price too high and the target for synergies too low.

But UTC Propulsion and Aerospace Systems has now raised its target for synergies from $400 million to $500 million over the next four years.

"There was a lot of pressure on us to do better," says Alain Bellemare, president and chief executive of the segment. "We wanted to take our time to see where the opportunities were. We now feel confident to take it up $100 million."

The additional amount will be harvested by reduced spending on selling, general and administrative expenses, general procurement and global facilities, Bellemare says.

The restructuring projects in 2013 alone should produce synergies of $200 million, UTC says. That includes plans to reduce indirect staff by 1,800 and closing 111,000m2 (1.2 million square feet) of high-cost factory space.