It's far from over. I expect ongoing riffs and cost cutting actions until profits can be made again. It's the only option Hon has. The ALT has refused to openly address the magnitude of the economic nuke that's been dropped on the entire aerospace industry. Dairyass feels its more important to address social justice issues as though that's in some way relevant to our business. Most of my co-workers are oblivious to the severity of the economic situation and fail to understand the impacts. Demand for Hon products has fallen off a cliff and the employees are going down with it. This is what it feels like to work for a company on its way out of business.
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I worked for Honeywell for 42 years and saw the writing on the wall when they started moving things to India. Our customers in the Industrial industry were sort changed as customer service went out the window. Honeywell became too top heavy with senior managers who didn't appreciate what the grass routes if the business needed.
Tired Employee is correct and provides great insight into the demise of HON. It goes further back, and begins when GE attempted to take over HON. Due to incredibly stupid moves after LB left, HON went on the block and the stock price went up to about $50 before crashing after GE was denied their prize by the EU, and in the aftermath of 9/11, pushing it down to an artificial low of $20. Great time for DC to take the reins, because after those events the stock price could only go up. The economy recovered, but HON didn't keep up. The stock price remained between $55 and $60 for over a year until the financial crash in 2008, then dropped to $25. By early 2009, DC realized his legacy was in trouble if he didn't do something. Despite a series of significant Aero "wins," the slash and burn began. Salary cuts, benefit cuts, RIFs, furloughs, and out-sourcing. Had DC been able to buy UTC, he would have stayed beyond 2017, continuing to use his "cuts and out-sourcing" strategy to show profit. Instead he left a mess for DA, a business already ravaged now in the hands of an individual who feels he has to show up his former boss by driving the stock price even higher. The only thing they knew how to do was to cut. Aero never had a chance.
Tired is right, but the root problem is actually a bit deeper and I call it the Allied Way.
Allied has been committed to buying up fat companies, rich in cash, property, capital assets, IP, market position, and well paid knowledge workers. Their market is primarily limited to industrials so they can make a portfolio of victim businesses where the formula will work.
Then, they dismantle those businesses for cash. It’s the old 1980’s model of buying a company and selling it for parts because it was worth more as pieces than the wholes future cash flow. Only, these guys do it more slowly, like corporate waterboarding, to milk every last drop they can. They steadily trim the fat off until there’s not much left, selling the hulk as down payment on the next victim. The next victim is chosen partly because it has the fat that can be used to pay off the purchase.
At the scale of the victim companies, this process takes a long time. They do this for two reasons. Primarily, it’s easier to convert fat into shareholder returns than it is to sustain or grow a healthy business. If a healthy, long term industrial makes 15% margins, that same big company can return 10% margin on sales for a long time on no investment while another 10% can come from the fat. Bang! more returns at the expense of grumpier customers, and for quite some time. The second reason is they can milk a good victim a long time before they hit bone. One of those bones is the knowledge workers - the last line to go before the IP/licensing sales start and final liquidation can commence. Knowledge workers will put up with more BS than factory or service folks. They’re usually loaded up with juicy benefits to cut too.
Allied did this to Honeywell when they bought Hon. The AlliedSignal name was trash, so they took the Honeywell name. But it’s still following the Allied Way corporate religion. This spans more than Aero. I can’t think of a single SBU that doesn’t follow this arc.
The implosion of Aero isn’t a negative outcome for the Allied Way - it was the planned, inevitable end. In fact, COVID is the perfect cover for leadership to dispose of the hulk without having to manufacture a justification for the business collapse. The Allied Way cult followers won’t be held responsible by the broader market or community. This is the perfect way to end the chapter by selling off the last of the patent and trade secret portfolio to start again with a new victim. Maybe now they will buy a big software company, rinse it off, and repeat...
Honeywell leadership larger headache has to come from the prospect of losing a weak-minded, Corporate-Lives-Matter-Most president. Dumpy would have fallen for the illusion that Hon is a great American company and is too important to fail during COVIDs fallout. The CEO even paid a downpayment for the future stimulus with the factory tour. Give him credit, he wisely paid in the correct currency - not money which Dumpy says he already has, but in public wh–eship in front of the camera for the world to see.
You and I employee, we don’t even register. Tight credit, no buyers for the burned out hulk, an all-in bet on a presidential loser, and a business environment which requires work to navigate - worse nightmare ever for leadership right now.
Agree Tired Employee is spot on, on many points. 39 year retiree here 1975 to 2014. I also started with Airesearch and my father started in 1952 retiring in the mid 80s. Such a fantastic company to work at. We made great bank, had outstanding benefits and had FUN for the most part. For many years People would beg me to help them get hired on. Allied Signal thinking was pay and benefits would never be a reason a person would choose not to work there. If the market typically paid XX Allied would offer XX +10 to 15 % more. 401K match 4 to 6% was market Allied of course back then offered 8% As TE mentioned by mid 90s Allied started changing all kinds process and expectations of employees. Come about 2005/2006 time frame Honeywell started slowly reducing/eliminating benefits and pretty much never stopped. Like I mentioned in a different post the last few years I worked there it was a challenge to get motivated to put up with the HOS daily BS and to deal with all the subs that many were flipping burgers last week. But the company loved paying the SC firms they worked for about 1/2 of what it was paying for experienced workers. Said to read where it has gotten even more dreadful. GL all with your job search.
The "perm" number was called your Life Number in Honeywell Red. The EID replaced that later.
I remember well the "a good manager can manage anything" tripe.
Tired Employee - One of the best and most accurate posts I've ever read on this board
Tired employee nailed it!
I think HON stopped being a key player back in the early 2000s. There were many decisions made to cut costs which severely impacted AERO to be successful such as closing down the manufacturing of parts in Phoenix and moving it out of country. HON has survived on what I call type cert sales which is essentially operators of aircraft are forced to buy HON parts for HON installed equipment because it's too expensive to recertify another manufacturer of avionics or APU. Now that the airlines aren't flying and aircraft retirements are way up, customers do not need to come to HON for parts; and they aren't and they won't.
For years, the ALT took actions which negatively affected the end customers but helped the bottom line of HON and they undoubtedly enjoyed large bonuses for their "outstanding leadership" and "courage" but we're actually planting the seeds for what is happening right now. Angering customers with poor customer service after cutting all the US based CSRs and moving it to India via Infosys. That transition was a total failure and it's so obvious that Mad Dog once said anyone caught blaming problems on Infosys would immediately terminated. OTTR slipped continuously because the supplier base could not be relied upon and when you add in a little "just in time" manufacturing, you get huge shortages of material. Combine that with the horrible treatment of our customers and you get this:
Honeywell is difficult to deal with, their products frequently have quality issues, and their OTTR s—s.
Boeing was so fed up with dealing with Honeywell that they decided to produce their own avionics and APUs which would effectively remove Honeywell from Boeing airframes forever. Boeing was also planning on marketing these systems which had the potential to cut into other markets which Honeywell was selling in.
Now add in the COVID pandemic which has knocked the bottom out of the Aerospace industry. The "guaranteed" income Honeywell always counted on is gone and now the ALT has no idea how to fix it or how to make money without depending on those "forced" sales. So, it's cuts. Addition by subtraction. They will keep cutting the workforce, other discretionary spend and sell real estate to keep the stock price as high as they can but much like the Titanic after striking that iceberg, the damage is done and its now just a matter of time. With all these cuts, Honeywell will be completely unable to take advantage of any market resurgence because there just won't be enough people remaining and those who are likely don't have the breadth of knowledge which their RIFd co-workers had and to some extent, the gumption to even worry about it.
My final thought is, I hope that people study the failure and demise of Honeywell AERO in the scholastic world moving forward. It's my opinion that these ivy league schools don't teach how to build and grow a successful business, but rather how to extract and k–l a business for your own personal gain while sacrificing all the employees under you. Truly despicable.
We used to make products with high global demand. I remember the good ole days at the cluster bomb factory in mn.