Dear Colleague:
As shared in previous communications, Honeywell Aerospace continues to grow and has performed fairly well in a very challenging sales environment. We have done this through thoughtful investment in innovative products and services, efficiencies achieved through technology such as SAP and supply chain modernization, better execution and, of course, careful cost management.
Still, as noted for quite some time, Honeywell remains in a slow global economic growth environment. Within Aerospace, we are seeing growth in some businesses and challenges in others. For example, there are ongoing regional economic concerns in China and Russia, yet growth in other areas of the world. United States defense spending is down, but our overall High Growth Region growth is strong. There are some order postponements as buyers await forthcoming new aircraft models, but maintaining our position on existing airplanes will grow our upgrade opportunities. We are also seeing many of our main competitors announce lower earnings and/or workforce reductions. We must revisit our fixed costs and workforce resources to best position us in this slow growth economy and take advantage of the efficiencies we are achieving to ensure an appropriate cost structure for 2016 and beyond.
On a coordinated basis, each Aerospace business, function and region is addressing these needs individually to best meet their goals. Aerospace will continue with the cost saving measures announced last quarter including stopping all non-essential travel and hiring, scrutinizing third-party spending and non-essential manufacturing costs. We may also delay merit increases next year by a quarter to give us more time to assess economic conditions and forecasts. Actions will be determined on a country-by-country basis, following local laws and practices.
To specifically address these challenges for the remainder of 2015, unfortunately, Aerospace must conduct an unpaid work shut-down, or furlough in the United States. Due to business needs and customer commitments, Engineering & Technology (E&T) employees will be excluded from the furlough.
Furlough-related decisions or actions affecting certain employees will be implemented in other parts of the world, in accordance with local laws and practices. E&T employees will be excluded from these actions as well. Information regarding implementation in each country or location will follow as appropriate.
In addition, to remain competitive in 2016, Aerospace leadership is considering further cost actions in the U.S. as well as other regions. Actions will be determined on a country-by-country basis, following local laws and practices.
It is always difficult to make changes that impact employees, however, these actions will enable us to remain competitive, continue to invest and grow in a slow growth economy and address our fixed cost structure.
Bob Smith
Vice President & Chief Technology Officer
Engineering & Technology