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http://www.ctnow.com/business/hc-pratt1010.artoct10,0,4196597.story?coll=hc%2Dheadlines%2Dbusiness The Hartford Courant October 10, 2002 Pratt Gets Presence In Poland Union Fears A Big Shift In Workload Overseas -Poland joined NATO three years ago and is privatizing its defense industry. Contractors from around the world have been eager to buy Polish firms and win government contracts as Poland brings its military up to Western standards. -Rejean Bournival, president of Canadian Auto Workers local that represents 2,300 employees at Pratt's small-engine operation in Longueil, Quebec, worries that when orders pick up, Pratt will expand in places like Poland rather than in North America. October 10, 2002 By BARBARA NAGY, Courant Staff Writer Pratt & Whitney's purchase of a Polish company with 5,000 employees and more than a million square feet of manufacturing space has unnerved Pratt's local suppliers - and angered unions that represent Pratt workers. The jet-engine company quietly bought an 85 percent stake in PZL Rzeszow, an aerospace manufacturer in southern Poland, for $70 million in March. As part of the deal, Pratt promised the Polish government it would invest another $70 million to update the formerly state-run plant. The purchase boosts Pratt's global employment 16 percent, to 35,000. Pratt will want to use the lower-wage Polish workforce and the huge plant, Connecticut suppliers reason. They suspect the company will "ratchet up" its efforts to send work overseas. "This is an awfully bold step. It's a big step for them to buy this plant," said one supplier speaking on condition of anonymity for fear of jeopardizing his relationship with Pratt. "The chat in the industry is that they want to make everything there - everything." The unions say some in-house work is already going to Poland, and Pratt says it might use the Rzeszow plant to assemble engines for 48 F-16 fighters the Polish government is considering buying. That work would normally be done at Pratt's Middletown plant. But industry observers point out that if the assembly weren't done in Poland, Pratt probably wouldn't get the contract. Such "offset" arrangements are common in aerospace, and some industry observers said fears of a dramatic shift in workload might be overblown - just as worries about a wholesale shift to China proved unfounded when Pratt expanded there 10 years ago. Industry consultant Mark A. Bobbi believes Pratt will move work on many parts there, but said it's too early to know the impact. The Polish plant isn't able to do the most sophisticated machining work, so the plant might not be as competitive as some people think, he said. After signing a deal with Pratt, Polish Treasury Minister Wieslaw Kaczmarek told reporters that the company agreed to double sales and invest $70 million in the plant over five years, according to Reuters. A Pratt memo prepared before the sale went through shows that the East Hartford company planned to reach the sales goal in part by moving its own work to Poland. Pratt spokesman Mark Sullivan said the company does intend to move more work to the Rzeszow plant because costs there are low and quality is high. "We do hope to see the sales of that plant grow," Sullivan said. The factory in southeastern Poland was built in the 1930s. During the Cold War, it produced engines for Russian MiG fighters. In the late 1970s, the government began developing alliances with western companies, including Pratt, Honeywell International Inc. and Volvo. Poland joined NATO three years ago and is privatizing its defense industry. Contractors from around the world have been eager to buy Polish firms and win government contracts as Poland brings its military up to Western standards. Pratt's main rival in bidding for the Rzeszow plant, pronounced ZHEH-zhoff, was Italy's Fiatavio. Pratt's investment in Poland comes at the same time that a downturn in the aerospace industry has cost jobs and contracts. Rejean Bournival, president of Canadian Auto Workers local that represents 2,300 employees at Pratt's small-engine operation in Longueil, Quebec, worries that when orders pick up, Pratt will expand in places like Poland rather than in North America. "Our big fight long-term is the plan for Pratt & Whitney Canada," he said. "The way we see it, it's getting smaller and smaller all the time." John Lavieri, president of Sterling Engineering in Barkhamstead, said manufacturers in all industries are under enormous pressure to cut costs by moving work overseas. "Pratt's not alone," he said. But aerospace suppliers here worry that the Rzeszow acquisition will exacerbate the downturn in their business, he said. Doug Rose, president of Aero Gear Inc. in Windsor, said Connecticut suppliers believe they can compete for high-precision work when the total cost of doing a job overseas is taken into account. Companies like Aero Gear might act as intermediaries that take orders for components, are responsible for completing them, and manufacture parts that can't be made overseas, Rose said. "We want to be active in the transition rather than be left out," he said. "We're trying to be proactive." __________________________________________________ Do you Yahoo!? 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