UTX United Technologies Corporation

By Ted Mann 

Workers at jet-engine maker Pratt & Whitney ratified a five-year contract Sunday, avoiding a potential labor dispute when the company is trying to increase production of new engines for commercial airliners.

The contract was approved by members of two locals of the International Association of Machinists and Aerospace Workers, which represents about 2,600 workers at Pratt's engine plants in East Hartford and Middletown, Conn.

A potential strike would have come at a tricky time for Pratt and its corporate parent, United Technologies Corp., whose labor relations have been in the national spotlight. The conglomerate struck a deal last week with the incoming administration of President-elect Donald Trump to preserve 800 jobs in an Indiana factory of its Carrier air-conditioning and heating business while shipping 1,300 workers to Monterrey, Mexico.

The company is under pressure from investors and customers to meet its goal of delivering about 150 units of its newest jet engine this year. The engine has a complex design known as the geared turbofan, which the company says will improve fuel efficiency significantly and reduce noise compared with previous models.

Pratt cut its engine-delivery target in September from 200 to 150, disappointing investors, because of delays related to engine parts, including the engine's fan blades. The problems have delayed deliveries of planes made by Airbus Group SE.

United Technologies Chief Executive Gregory Hayes has said the company will still meet an ambitious schedule for increasing output, with production more than doubling next year, to "probably north of 300 and 350 units."

"This contract rewards our employees for their skill, dedication and hard work, while also positioning the company for long-term success," said Terry Nolan, the company's lead negotiator, in a statement.

The deal will provide 2.5% wage increases for Pratt workers in each year, enhances some pension terms for existing workers, and moves the contract expiration date to the spring -- a reversion to a contract schedule that the union lost in 1960.

In a win for management, new workers hired after Jan. 1 will be enrolled in defined-contribution retirement plans, not traditional defined-benefit pension plans. Pratt expects to hire thousands of new workers, including in Connecticut, as it lifts engine production.

The contract, which takes effect Monday, was approved by 86% of voting members, said Lori Pelletier, president of the Connecticut AFL-CIO. "Members clearly felt this was worth voting for."

Write to Ted Mann at ted.mann@wsj.com

(END) Dow Jones Newswires

December 04, 2016 14:44 ET (19:44 GMT)

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