In 2002, David M. Cote was named Chairman and CEO of Honeywell. Under his leadership the company focuses on five key initiatives: Growth, Productivity, Cash, People and the company's Enablers - Honeywell Operating System, Velocity Product Development™ and Functional Transformation.
During Cote's tenure, Honeywell has delivered strong performance in sales growth, earnings per share, segment profit and cash flow. Today, the company has great positions in good industries globally with approximately 50% of its products and solutions providing energy efficiency benefits.
More than 125 Years of Innovation
Honeywell can trace its roots back to 1885, when an inventor named Albert Butz patented the furnace regulator and alarm. He formed the Butz Thermo-Electric Regulator Co., Minneapolis, on April 23, 1886, and a few weeks later invented a simple, yet ingenious device that he called the "damper flapper."
Here's how it worked. When a room cooled below a predetermined temperature, a thermostat closed the circuit and energized an armature. This pulled the stop from the motor gears, allowing a crank attached to the main motor shaft to turn one-half revolution. A chain connected to the crank opened the furnace's air damper to let in air. This made the fire burn hotter. When the temperature rose to the preset level, the thermostat signaled the motor to turn another half revolution, closing the damper and damping the fire. The temperature correction was automatic. Over the years, many Honeywell products have been based upon similar, but more complicated closed-loop systems.
The Consolidated Temperature Controlling Co. incorporated, acquired Butz's patents and business, and by 1893, had renamed itself Electric Heat Regulator Co. The first company ads ran in 1895 featuring the now famous thermostat. In 1898, the company was purchased by W. R. Sweatt, who, by 1916, had changed the name of the company to Minneapolis Heat Regulator Company, expanded its product line and patented the first electric motor approved by Underwriters Laboratories.
Meanwhile, in Wabash, Indiana...
In 1904, a young engineer named Mark Honeywell was perfecting the heat generator as part of his plumbing and heating business. Two years later, he formed the Honeywell Heating Specialty Co. Incorporated, specializing in hot water heat generators.
By 1912, EHR had expanded its product line and changed its name to Minneapolis Heat Regulator Company (MHR). Four years later, MHR patented the first electric motor approved by Underwriters Laboratories.
The 1927 Merger
In 1927, Minneapolis Heat Regulator Company and Honeywell Heating Specialty Co. merged to form the Minneapolis-Honeywell Regulator Co., and became the largest producer of high-quality jeweled clocks. W. R. Sweatt became Chairman and Mark Honeywell became President. The company made several acquisitions in the controls area. One of those acquisitions was the Brown Instrument Co., a worldwide leader in the field of industrial controls and indicators.
Business Around the World
Minneapolis-Honeywell Regulator Co. had long been selling its products around the world through distributors such as Yamatake Trading Company in Japan. In 1934, the company acquired Time-O-Stat Controls Corporation and began a long history of global expansion. The first office outside the U.S. was established in Toronto, Canada. Its first European subsidiary was established in the Netherlands the same year, and, within a few years, offices were opened in London and Stockholm. By 1941, The company had distributors in Chile, Panama, Trinidad, New Zealand, Argentina, and South Africa. By 1972, it operated 25 wholly-owned subsidiaries, 142 branch offices, and joint ventures in five countries outside the U.S. In 1993, the company opened affiliates in Abu Dhabi, China, Oman, Romania, and the Ukraine. By 1998, the company had operations in 95 countries through 83 wholly-owned subsidiaries and 13 joint ventures.
Products, Developments and Acquisitions
Minneapolis-Honeywell Regulator Co. leveraged its scientific and engineering talent to transform itself and adapt to changing times. Mass production was perfected and an array of aeronautical equipment broadened the company's product portfolio. In 1942, the company invented the electronic autopilot, which proved to be critically important to the U.S. war effort.
In 1953, the company introduced the T-86 "Round" thermostat, which replaced chunky, rectangular models. One of the world's most recognizable designs, it remains in production today and adorns the walls of more households around the world than any other thermostat.
In 1954, the company acquired Doelcam Corp., a maker of gyroscopes. Over the next two decades, the company constantly improved gyroscopes, making them more sensitive and precise while reducing their size and weight.
In 1955, a joint venture called Datamatic Corporation was established with Raytheon Corp. marking Honeywell's entry into the computer business. The company's first computer system, the D-1000, weighed 25 tons, took up 6,000 square feet, and cost $1.5 million.
In 1957, Minneapolis-Honeywell Regulator Co. purchased a fire detection and alarm firm, the first of many acquisitions that would build its security business into today's global leader. In many North American cities, the red and black "Protected by Honeywell" window stickers and placards became nearly as recognizable as the “Round” thermostat.
Raytheon's interest in the computer venture was bought out in 1960 and the business name changed to Electronic Data Processing (EDP). The company's name was officially changed to Honeywell Inc. in 1963, even though it had been casually referred to as such for nearly 40 years. Six years later, Honeywell instruments helped U.S. astronauts Neil Armstrong and Edwin "Buzz" Aldrin land on the moon.
In 1970, Honeywell merged its computer business with General Electric's to form Honeywell Information Systems, which performed well in mainframe markets. In 1986, the personal computer emerged and the company formed Honeywell Bull, a global joint venture with Compagnie des Machines Bull of France and NEC Corporation of Japan. Its ownership level was gradually decreased until, in 1991, Honeywell was no longer in the computer business. The company’s digital computer knowledge was then applied to its traditional field of automation control, integrating sensors, and activators.
In 1986, Honeywell significantly enhanced its position in the aerospace industry with the purchase of Sperry Aerospace, making Honeywell the world's leading integrator of avionics systems. Sperry contributed flight controls, space vehicles, and the first FAA-certified wind shear warning system.
The AlliedSignal Connection
During World War I, Germany controlled much of the world's chemical industry, causing shortages of such commodities as dyes and drugs. In response, in 1920 Washington Post publisher Eugene Meyer and scientist William Nichols formed the Allied Chemical & Dye Corporation as an amalgamation of five American chemical companies.
In 1928, Allied opened a synthetic ammonia plant near Hopewell, Virginia, becoming the world's leading producer
This was the company's earliest venture into new markets. After World War II, Allied began manufacturing other new products, including nylon 6 (used in manufacturing everything from tires to clothes) and refrigerants. In 1958, the company became Allied Chemical Corp. and moved its current corporate headquarters to Morristown, New Jersey.
In 1962, Allied bought Union Texas Natural Gas, which owned oil and gas properties throughout the Americas. Allied regarded it mainly as a supplier of raw materials for its chemical products, but this changed in the early 1970s when CEO John Connor (secretary of commerce under Lyndon Johnson) sold many of Allied's unprofitable businesses and invested in oil and gas exploration. By 1979, when Edward Hennessy Jr. became CEO, Union Texas produced 80% of Allied's income.
Under its new name, Allied Corp. (1981), the company went on to purchase the Bendix Corp., an aerospace and automotive company, in 1983. By 1984, Bendix generated 50% of Allied's income, while oil and gas generated 38%.
In 1985, Allied merged with the Signal Companies, adding critical mass to its aerospace, automotive and engineered materials businesses. Founded by Sam Mosher in 1922 as the Signal Gasoline Company, Signal was originally a California company that produced gasoline from natural gas. In 1928, the company changed its name to Signal Oil & Gas, entering into oil production the same year. Signal merged with the Garrett Corporation, a Los Angeles-based aerospace company, and in 1968 adopted the Signal Companies as its corporate name.
The addition of Signal's Garrett division to Bendix made aerospace Allied-Signal's largest business sector. In 1985, the company sold 50% of Union Texas, and in 1986 it divested 35 non-strategic businesses through the formation and spin-off of The Henley Group, Inc.
In mid-1991, with a new CEO, Lawrence A. Bossidy, and new leadership in many key businesses, Allied-Signal began a comprehensive program of transformation. Bold actions were taken to improve cash flow and operating margins, to increase productivity, and to position the company as a global competitive force for the years ahead. The Allied-Signal name was changed to AlliedSignal in 1993 to reinforce a one-company image and signify the full integration of all of its businesses.
In 1992, the company sold its remaining interest in Union Texas through a public offering for $940 million in net proceeds.
Throughout the 1990s, Lawrence A. Bossidy led a growth and productivity transformation that quintupled the market value of AlliedSignal shares and significantly outperformed the Dow Jones Industrial Average and the S&P 500.