Guiding PrinciplesGuiding Principles

David Eherts PhD VP and Chief Safety OfficerSikorsky Aircraft CorporationEEI Contractor Safety Summit 2009

Overview

• Safety is Safety• Safety is Safety• Management Systems are

M t S tManagement Systems• Strong Leadership is

Strong Leadership• Safety is Valuey• Culture and Risk Management

Save the MostSave the Most

SAFETY MANAGEMENT SYSTEMSLeadershipLeadershipEmployee EngagementRisk Management

2006 WATERFALL CHART FOR 2010 GOALS

4(TRIR - Worldwide)

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MANAGEMENT COMMITMENT

There are two things that must happen every day. First, every Sikorsky aircraft ever manufactured must land at the time and place of choosing of the pilot. Second, every employee must go h tl th i b tt W ’home exactly as they came in, or better. We’re much better at the first than the second. We must be perfect in both casesmust be perfect in both cases.

Jeff Pino PresidentJeff Pino, President

VISIBLE MANAGEMENT COMMITMENT

“There are two things that must happen every day.”

VISIBLE MANAGEMENT COMMITMENT

“There are two things that must happen every day.”

STEP CHANGE

Creative Excitement

Cheerful Cooperation

Heartfelt Commitment

When Alone

Willing Compliance

Cheerful Cooperation

Rebel or Quit

Malicious Obedience When Watched

Rebel or QuitNever

STEP CHANGE

Creative Excitement Compel Others

Cheerful Cooperation

Heartfelt Commitment

When Alone

Willing Compliance

Cheerful Cooperation

Rebel or Quit

Malicious Obedience When Watched

Rebel or QuitNever

EMPLOYEE ENGAGEMENT“Hey brother, I don’t want you to get hurt. Put your

safety glasses on. Teamsters take care of each other ”other.

SIKORSKY AIRCRAFT

UTC EMPLOYEE SURVEY Most improved – top 5

Chg %FavHow would you rate your work group’s

Most improved top 5

How would you rate your work group s performance in……safety +37% 79%…quality +30% 74%…keeping talent +29% 50%…customer service +24% 72%

WHAT’S GOING TO HAPPEN AND WHEN ?WHEN ?40

25

30

35

10

15

20

Eye/Face

Hearing Head Other

86%0

5

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Ergonomic Ergonomic

Employee59%

EmployeeSafety

NIOSH PROSPECTIVE ERGONOMICS STUDY

Injury Injury Data Data

AnalysisAnalysis

SymptomsSymptomsSurveysSurveys

ImplementImplementSolutionsSolutions

Determine Determine AppropriateAppropriate

InterventionsInterventions

Injury Injury Data Data

AnalysisAnalysis

SymptomsSymptomsSurveysSurveys

Cost Cost Benefit Benefit AnalysisAnalysisAnalysisAnalysis yy InterventionsInterventions AnalysisAnalysis

CommunicateCommunicateHighHigh--RiskRiskHEGsHEGs

Allow InterventionsAllow InterventionsTo WorkTo Work

AnalysisAnalysis

Avg Intervention Cost: $19,000Avg Intervention Cost: $19,000Avg NPV: $244,000Avg DPP: 2.1 years

LEADERSHIP THAT GETS IT…

And there is an absolute competitiveadvantage in keeping injury rates down, Pino insisted. “We have reduced workers’ compensation rates by $200 per US employee

i th U it d St t I d ’t lik d iper year in the United States. I don’t like doingmath in public, but that’s $2 million per year”

WORKERS’ COMPENSATION

Sikorsky

Incurred cost per employee($)

Claims per 100 employees

UTC WORKERS’ COMP RESERVES

12/31/08 WC data is in and the favorable WC $ trend continues to develop! UTC WC overall is trending down again. Another $4.4M in improvement through 12/31/08 is being seen since the 9/30/08 monitoring report for WC was published.

The 12/31/08 quarterly and full year analysis can be summarized as follows: Qt l I t 9/30/08 12/31/08 T t l I t 12/31/07 12/31/08Qtrly Improvement: 9/30/08 vs 12/31/08 Total Improvement: 12/31/07 vs 12/31/08Carrier down another $1.7M $3.9M improvement vs ultimate - all policy yearsSikorsky down another $1.7M $3.3M improvement vs ultimate - all policy yearsOtis down another $0.5M $3.4M improvement vs ultimate - all policy yearsHS down another $0.4M $1.2M improvement vs ultimate - all policy yearsUTC FS down another $0 2M $0 8M improvement vs ultimate - all policy yearsUTC FS down another $0.2M $0.8M improvement vs ultimate - all policy yearsPratt flat vs 9/30/08 <$0.4M deterioration vs ultimate - all policy years>Total down in qrtr: $4.4M $12.2M improvement vs ultimate - all policy years

In aggregate since the finalization of the last complete Cost Forecast / Reforecast (as of 12/31/07 core data) we are seeing $12.2M improvement vs the last full actuarial forecast of ultimate WC costs across all BU's - all policy years.

Embedded in this quick snapshot is the raw data that will be used by D&T in updating their actuarial analysis in the next few months…so this should translate into a roughly equivalent improvement in ultimate loss costs by BU if all else is held constant.

Thi f bl l d t bi d ith f bl di t t ( th $9M f f bl th t D&TThis favorable loss data combined with a favorable discount rate move (another approx $9M of favorable news that D&T will be considering) will almost certainly mean material good news for each BU at a time when it is really needed.

UTC WORKERS’ COMP RESERVES

12/31/08 WC data is in and the favorable WC $ trend continues to develop! UTC WC overall is trending down again. Another $4.4M in improvement through 12/31/08 is being seen since the 9/30/08 monitoring report for WC was published.

The 12/31/08 quarterly and full year analysis can be summarized as follows: Qt l I t 9/30/08 12/31/08 T t l I t 12/31/07 12/31/08Qtrly Improvement: 9/30/08 vs 12/31/08 Total Improvement: 12/31/07 vs 12/31/08Carrier down another $1.7M $3.9M improvement vs ultimate - all policy yearsSikorsky down another $1.7M $3.3M improvement vs ultimate - all policy yearsOtis down another $0.5M $3.4M improvement vs ultimate - all policy yearsHS down another $0.4M $1.2M improvement vs ultimate - all policy yearsUTC FS down another $0 2M $0 8M improvement vs ultimate - all policy years

This favorable loss data combined with a favorable discount rate move (another approx $9M of UTC FS down another $0.2M $0.8M improvement vs ultimate - all policy years

Pratt flat vs 9/30/08 <$0.4M deterioration vs ultimate - all policy years>Total down in qrtr: $4.4M $12.2M improvement vs ultimate - all policy years

In aggregate since the finalization of the last complete Cost Forecast / Reforecast (as of 12/31/07 core data) we are seeing $12.2M improvement vs the last full actuarial forecast of ultimate WC costs across all BU's - all policy years.

( ppfavorable news that D&T will be considering) will almost certainly mean material good news for each

Embedded in this quick snapshot is the raw data that will be used by D&T in updating their actuarial analysis in the next few months…so this should translate into a roughly equivalent improvement in ultimate loss costs by BU if all else is held constant.

Thi f bl l d t bi d ith f bl di t t ( th $9M f f bl th t D&T

BU at a time when it is really needed.

This favorable loss data combined with a favorable discount rate move (another approx $9M of favorable news that D&T will be considering) will almost certainly mean material good news for each BU at a time when it is really needed.

EMPLOYEE SAFETY

• Safe work area • Labor working safely• Labor working safely • Lowest accident rate in history

3 00

4.00Total Recordable Incident Rate

Goal 2007 -2010

2.00

3.00

1.00

0.002004 2005 2006 2007 2008 2009 2010

WHAT’S GOING TO HAPPEN WHEN, AND WHAT CAN WE DOAND WHAT CAN WE DO…

Hearing EHSEye/Face

Hearing Head Other

Ergonomic

86% theory of multiple causes

EHS

ErgonomicErgonomic

59% AviationSafety

MAINTENANCE

MATERIALOTHER

Safety

HUMANMAINTENANCE

INTERNATIONAL HELICOPTER SAFETY TEAM

• What’s going to happen and when?– JHSATJHSAT

• What can we do to prevent it?JHSIT– JHSIT

SAFETY = VALUEReturn on Investment (ROI): This is calculated by dividing the net present value by the present value of the project costs. The net present value is calculated by subtracting the present value of p j p y g pproject costs from the present value of project benefits. The model calculates ROI based on costs, benefits, and the discount rate that are entered by the user.

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ENVIRONMENT, HEALTH & SAFETY ,2010 EH&S Goals

Factory & Operations MetricsNon

Supplier MetricsNon

Greenhouse Gas

Emissions

GreenhouseGases

(CO2 equiv.) Waste

Industrial Non-Recycled

Critical Suppliers

100%Water

Consumption Chemicals

R l t Assurance

20% 12% 10%Process

30%100%

meet UTC EH&Sexpectations10% 10%

Discharged

Regulatory

Notice of Violation

Permit Exceedances

0 0

Assurance Review Score

>_70%

Product Metrics

Minimum requirements for Passport and design review certification

Materials of Concern0 0 70%

10%i d t

10%f b li

Packaging EnergyEfficiency

100%eliminated in

d t

Concern

Worldwide Lost Worldwide Total

Safety

in productpackaging

from baselineproduct

new productsDay Incidence Rate

Recordable Incidence Rate

Target = .17

Target = .64

THE BUSINESS CASE FOR EH&S

Sik k i illi t i t th ti d t k l tiSikorsky is willing to invest the time and money to seek solutionsto problems that might not manifest for years. By protecting its employees and remaining dedicated to “doing the right thing”,Sikorsky has reduced its accident rates workers’ comp costsSikorsky has reduced its accident rates, workers comp costsand carbon footprint to become a company synonymous with

strong leadership, safety and environmental responsibility.

UTC RANKED AS MOST SUSTAINABLE

As a strong proxy for managementAs a strong proxy for management quality, environmental, health and

f t f i t tlsafety performance consistently correlates well with stock price pperformance. 8

Revenues ($ billions)

4

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Innovest 2005 2

000 01 02 03 04 05 06 07 08 09E

Questions?Questions?

David Eherts PhDVP and Chief Safety OfficerSikorsky Aircraft Corporationdeherts@sikorsky.com203 386 8666203 386 8666