- Associated Press - Friday, June 5, 2015

HARTFORD, Conn. (AP) - As United Technologies Corp. considers the future of helicopter subsidiary Sikorsky Aircraft Corp., Connecticut’s economic development commissioner says she’s “relatively comfortable” the state protected itself in last year’s deal providing incentives for manufacturing and research upgrades.

Catherine Smith, commissioner of the Department of Economic and Community Development, said in an interview Thursday that the state “tried to cover all the downside potential” of major changes. United Technologies has said it may sell or spin off the Stratford helicopter maker because it may no longer fit with the conglomerate’s portfolio. A decision will be announced in a few months, Chief Financial Officer Akhil Johri told analysts Thursday.

Gov. Dannel P. Malloy signed legislation last year allowing United Technologies to use tax credits for the millions it’s spending for manufacturing and research upgrades.

The deal calls for United Technologies to spend up to $500 million to upgrade and expand facilities at jet engine manufacturer Pratt & Whitney and its research lab, both in East Hartford; build engineering labs and a training center at its aerospace business in Windsor Locks; and improve engineering and design labs and manufacturing at Sikorsky in Stratford.

The state will offset up to $400 million in sales and income taxes over 14 years using research and development tax credits earned by United Technologies. To take full advantage of the tax benefits, the company must hire more engineers and other workers and boost its payroll.

If the company fails to meet any of its obligations, the tax benefits will be significantly reduced or eliminated.

United Technologies also promised to maintain its Pratt & Whitney headquarters for 15 years and Sikorsky headquarters for at least five years.

“We’re relatively comfortable we have pretty good protections there,” Smith said. “We tried to cover all the downside potential.”

Assuming favorable program decisions, Sikorsky is expected to invest up to $125 million over five years. Representatives of United Technologies and Sikorsky did not immediately respond to requests for information on the investments so far.

Citing a fall in oil prices that have led to fewer orders for helicopters shuttling oil workers to offshore platforms, Sikorsky on Tuesday announced cuts of 1,400 jobs in the coming year, with 180 in Connecticut.

The cuts aren’t related to a possible sale or spinoff and have no impact on its agreement with the state, Sikorsky spokesman Paul Jackson said. Sikorsky’s 8,000 workers in Connecticut are more than half its global labor force.

Smith said soon after the announcement that the agreement with UTC provides Sikorsky with incentives to keep as many jobs as possible and make “new strategic investments.”

The state was cautious as it negotiated the agreement, Smith said. Some staff at the former Hamilton Sundstrand aerospace components manufacturer had recently been transferred from Connecticut to Charlotte, North Carolina, when the company became part of UTC Aerospace Systems with United Technologies’ purchase of Goodrich Corp.

“We saw that happen and we did not want a repeat,” Smith said.

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Follow Stephen Singer on Twitter at https://twitter.com/SteveSinger10

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