Innovative Deals and Inspired Leadership Characterize Louis Chenevert
An investment in the latest technology can give a company a competitive edge, and both Louis Chenevert, the former CEO of United Technologies Corporation, as well as current CEO Gregory Hayes, firmly believe in it. They laud businesses that have the foresight and acumen to invest in the future with the most advanced equipment possible. By providing leadership for a company, they accept the obligation to implement the stewardship role that the position requires.
Providing a Legacy of Stewardship
For United Technologies, stewardship means “making a commitment to investing in innovation as well as people.” Hayes wants his legacy to show that his work provided improvements for the company and made it better than it was when he started. At the same time, he acknowledges that “investments in technology only take you so far.” He emphasizes a theory that he enjoys sharing with others: “Companies do not innovate – people do.”
To illustrate UTC’s philosophy of investing in its employees and promoting lifelong learning, he cites the Employee Scholar Program which pays the bill for workers to earn degrees in their choice of fields. Proof of the efficacy of the program appears in the granting of 39,000 degrees by UTC worldwide employees since 1996. The company’s investment in educational pursuits of more than $1 billion primarily in the United States provides a beneficial outcome all around.
Focusing on a Star
Pratt and Whitney’s development of the GTF engine, the star of the show according to Chenevert, required an investment of $10 billion and more than 20 years by the United Technologies business unit. He has ample reason to take pride in the company’s products, many of which do not carry the UTC logo. Since Chenevert joined the UTC Pratt & Whitney engine business in 1993, he guided the way to make gains in market share for the parent company, according to Forbes. Appointed CEO in 2006, at one of the lowest points in the American economy during the subprime recession, Chenevert led the manufacturing company to significant achievements. Once-powerful leaders of American industry like Zenith and Philco, RCA and Bethlehem steel no longer appear on the landscape, but United Technologies Corporation does.
Built upon the foundation of Chenevert's leadership, UTC assembles the world’s most advanced jet engines, dominates the heating, refrigeration and air conditioning market and builds more helicopters at its Sikorsky unit than any other U.S. company. The Aerospace Systems unit produces a range of equipment that includes actuators, brakes, flight controls, sensors, landing gears and much more. Of all the marvels that UTC creates, the Geared Turbofan (GTF) engine especially pleases Chenevert.
Appreciating the Amazing GTF
As a major technological leap forward, the GTF engine represents a huge breakthrough for the aviation industry. Fortune reports that tests reveal its fuel efficiency that is 16 percent better than existing engines. The engine’s noise level is 75 percent less than current engines, and it reduces emissions by 50 percent. Such remarkable achievements validate Chenevert’s giving it his stellar praise when he led UTC. A display of the engine on Capitol Hill allowed amazed observers to see and admire the technological feat. Airlines have welcomed its entry into the market, and 14 of them are using it on 72 aircraft, a notable achievement for the former CEO who spent nearly two decades championing and nurturing the project.
Hayes noted that pursuing innovation is not only good for the company, but for its suppliers who have a critical role in helping deliver products to customers. Pratt & Whitney outsources approximately 80 percent of the parts for the GTF, and many of the suppliers are in the U.S. He estimates that UTC has spent nearly $40 billion with national companies in just three years.
Following a Strong Leader
An imposing figure at 6’5”, Chenevert presents an impressive image. His accomplishments as Chairman and Chief Executive Officer of United Technologies Corporation and 14 years at General Motors where he was Production General Manager of its St. Therese operation earlier in his career match his size. French-Canadian Louis R. Chenevert graduated with a bachelor of commerce degree from the Université de Montréal, École des Hautes études commerciales (HEC), majoring in production management.
During Chenevert's six years leading the $100 billion conglomerate, he accomplished some amazing feats. In one year alone, he did more than some other corporate executives do in an entire career. Acquiring Goodrich was a goal that he focused on, spending more than a year in negotiations with the company’s CEO before arriving at an $18.4 billion deal. Pratt & Whitney won a lobbying battle when General Electric and Rolls-Royce decided not to try to make the U.S. Air Force fund a “second alternate engine” for the Joint Strike Fighter. The outcome of the decision allowed Pratt to become the only supplier of the F-35 engine.
By restructuring a venture with International Aero Engines and entering into a joint venture with Rolls-Royce, UTC forged an agreement that awarded Pratt full commercial control of the existing alliance and other options as well. Recognition of a Sikorsky team by the Collier Trophy for developing the technology for the demonstrator on the X2 high-speed helicopter marked a high achievement in aeronautics. Chenevert’s pet project, the GTF, was chosen as an option for the Airbus, and it established Pratt & Whitney as a major player in the narrow-body jet engine market, a position that UTC had not held since the 1980s.
Putting Achievements into Historical Perspective
In a career that has many high points and very few lows, Chenevert has enjoyed a near charmed existence. His successful pursuit and completion of the Goodrich acquisition may stand as his signature deal that represents extraordinary patience and business acumen, but his pet project ranks high on the list of accomplishments as well.
The design of the GTF allows the fan to turn slowly while the turbine turns fast by decoupling it from the low-pressure turbine. Even in 2011, the year of great accomplishment, Chenevert anticipated the development of advanced materials that let the engine burn hotter. He believed that the concept of decoupling the fan had the potential for a payoff in newer and larger engine designs. Under his leadership, UTC met a commitment to invest in technology that still drives growth for the company today, as well as manufacturing jobs and the overall U.S. economy.
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