GekeVenn: ROCKWELL COLLINS

Rockwell Collins is an aerospace company based in Cedar Rapids, Iowa, one of the top five largest companies in that state. The founder of the company, Arthur Collins, was the principal supplier of radio equipment for the military during World War II. Later, his Collins Radio Company supplied communications equipment for NASA. The company was purchased by Rockwell International in 1973.

United Technologies is in the process of acquiring Rockwell Collins for $30 billion, a deal that should be completed by next month. Both United Technologies and Rockwell Collins enjoy lucrative Defense Department contracts.

The reason behind the merger is that in the last five years, Boeing and Airbus have forced cost reductions on their suppliers. The threat to parts manufacturers like United Technologies and Rockwell Collins has been, lower your costs if you want to retain business from companies like Boeing.

In fact, when United Technologies refused to lower its price on landing gear assemblies for Boeing's 777x aircraft, Boeing went with Héroux-Devtek instead. Rather than trimming, innovating, and cutting costs in a very competitive environment, United Technologies is hoping the merger will provide the company leverage.

Note that Rockwell Collins co-workers Robert Sturgell and Megan Rosia also worked together at the FAA. Below is a screen capture of the signatory of a letter from FAA Acting Administrator Robert Sturgell to Senator Patty Murray; you can access the entire letter here.

ACG = Arms Control Group
NORAD = North American Aerospace Defense Command