Our corporate responsibility work includes our customers and our supply chain. We are committed to product quality and safety and expect flawless performance. We recognize the value of a diverse supplier base. To produce superior products in a responsible manner, we work with suppliers who will meet high standards for business practices, environmental responsibility and operational excellence. Together we focus on operational excellence to ensure we deliver world-class products and services that delight our customers.

• Continue to roll out supplier EH&S program and have all meet UTC’s EH&S expectations by 2010

2008 Performance

Key Performance Indicators

Since January 1, 2007, 1,124 key suppliers representing approximately 40 percent of UTC’s product spend completed self-assessments against baseline EH&S expectations. All but 2 percent have met those requirements. We aim to have 100 percent of corrective actions closed by the end of 2010.

Growing strategic relationships

UTC serves customers primarily in two global industries: aerospace and building systems.

• Our aerospace customers include governments, aircraft manufacturers and airlines. We serve military and civil government customers in dozens of countries. In the United States this includes all branches of the military, NASA and the Department of Homeland Security. Seventeen percent of UTC’s business comes from government contracts and we only sell military equipment as allowed by government authorities. Our building systems customers include building owners and managers, building contractors and property developers worldwide.

UTC’s supply chain includes more than 50,000 companies, and in 2008 we spent more than $30 billion on procurement. UTC actively seeks competitive small and diverse businesses. In 2008, we spent more than $950 million with diverse suppliers, up from $770 million in 2007.

• Our supplier EH&S program asks more than 1,000 key suppliers to assess themselves against five expectations: provide safe working conditions for all employees, customers and contractors; adhere to all applicable national, regional, state and local laws and regulations governing EH&S; operate in a manner that minimizes the impact on the environment; limit the use of natural resources and promote sustainable natural resource practices; and communicate expectations to their employees and suppliers.

• We value a diverse supply chain and are committed to integrating supplier diversity into the way we do business. We actively seek competitive and innovative minority business enterprises (MBE), women business enterprises (WBE) and small businesses.

UTC has a long record of partnering with suppliers to implement efficient processes to develop a world-class supply chain. Continuous improvement is a way of life at UTC, for both employees and our suppliers. This is made possible by our Achieving Competitive Excellence (ACE) operating system, launched in the 1990s, which we use every day to sustain and improve performance. We call it an operating system because it's not a program with a beginning or end, but rather a way of thinking and performing. ACE formalizes efficiency standards at our manufacturing sites and business operations worldwide to improve our products, customer satisfaction, employee engagement, and environment, health and safety (EH&S) efforts.