Good afternoon. I’m happy to have this opportunity to talk to you about United Technologies Corporation and what we’re doing in Vietnam. My plan for today is to give you a brief overview of UTC and then talk a little about some of our exciting new products. I also want to leave plenty of time to answer any questions and to have an open dialogue.
Before I get started I know there are a few issues that are of particular interest to this group: permanent normal trade relations for Vietnam, Vietnam’s WTO accession; and the upcoming Asia-Pacific Economic Cooperation Forum. UTC strongly supports permanent normal trade relations for Vietnam. Our team in Washington has been a strong advocate in urging Congress to take action granting this status. We think this is overdue.
UTC is also a founding member of the U.S.- Vietnam WTO Coalition and strongly supports Vietnam’s WTO accession. The economic reforms this country has undertaken to gain entry to the WTO will make Vietnam a more competitive economy and a more attractive place for UTC to do business.
UTC supports APEC and the constructive role it plays in liberalizing trade and regional economic development. Vietnam’s role as host next month of the APEC Leaders Summit should make the leaders and people of Vietnam very proud. It signals Vietnam’s emergence as an important country in this area.
Now, a little about UTC: We are a diverse, balanced and global company made up of seven major operating units. Our products make 21st century life possible, including elevators, air conditioners and jet engines. I’ll talk about each division in detail later on in my presentation.
A few facts about UTC: Revenues for 2005 were $43 billion on our way to $47 billion for 2006. We employ over 220,000 people. We have more than 4,000 sites in 70 different countries, and we conduct business in almost 200 countries. Last year more than 60 percent of our total revenue was generated outside of the United States – up dramatically in the past 25 years.
We expect international markets will continue to play an increasingly important role in future growth. As I said before, UTC is a very diverse company, our revenue sources are well balanced between the U.S, Europe and Asia. Last year: about 40 percent of our revenue was related to sales in the U.S., about 30 percent from sales in Europe, and 20 percent from sales in Asia.
UTC’s Asia revenues were $8 billion last year. Compared with some other countries in Asia, Vietnam is still very much an emerging or developing market for UTC. Last year our revenues from Vietnam were less than 1 percent of our total Asian revenues. As Vietnam’s economy continues to grow and the rate of urbanization increases, we see great market opportunities for many of our products.
I’d like to talk a little more on the impact of urbanization in Asia. Urbanization is one of the most powerful forces of change in Asia today. In 2000 32 percent of Asia residents lived in urban areas. This is projected to grow to 52 percent by 2030. To put that in perspective, China, for example, is expected to urbanize at a rate equivalent to adding a New York and Los Angeles every year for at least the next decade.
Urbanization will also be a key force in Vietnam. Vietnam’s urban population is expected to more than double in the next 25 years. Urbanization usually occurs with growth in GDP. In Vietnam, GDP growth has been averaging about 7 percent a year and is projected to continue at that pace or better for the foreseeable future. This means greater demand for products used in the construction industry like elevators and HVAC systems.
This is good news for a company like UTC. Our Carrier division is the world’s largest producer of heating, ventilating and air conditioning equipment. In the U.S., Carrier produces a residential air conditioning unit every six seconds. Today, Carrier has a little under one-third of the Vietnamese HVAC market. While the market in Vietnam is relatively small by global standards we see a great potential for future demand driven by urbanization.
New construction also presents great opportunities for our Otis elevator business.
Otis is the world’s largest manufacturer of elevators and escalators. Today, Otis’ 1.8 million elevators and 115,000 escalators move the equivalent of the Earth’s entire population every nine days.
As the economy grows, we also expect growth in commercial airline traffic to continue, which is good news for our aerospace divisions. Pratt & Whitney is a world leader in the design, manufacture, and support of turbine engines for commercial and military applications. A Pratt & Whitney-powered aircraft takes off every second of every day. Pratt & Whitney also powers the world's most advanced fighter jets.
In addition, Pratt & Whitney is the leading engine supplier for very light jets, an exciting new segment with the potential to revolutionize passenger travel by opening up thousands of small airports. Pratt & Whitney has a strong relationship with Vietnam Airlines, providing the power for a number of their aircraft.
