How Bonsignore Is Leading Honeywell to 10% Sales Growth
When Chairman and Chief Executive Michael Bonsignore enters his spacious office at Honeywell Inc., he doesn’t have to switch on the lights. They come on automatically whenever someone enters the room.
Bonsignore also doesn’t have to worry about dry winter air damaging his totem pole or tribal masks carved by natives of British Columbia and Alaska. The corporate offices are humidity controlled.
The water in his 130-gallon office aquarium--a constant reminder of Bonsignore’s passion for diving and photographing the world’s coral reefs--is kept at a constant temperature for the colorful fish he loves.
The man pumping new life into the 111-year-old controls manufacturer is never far from Honeywell products, whether he’s in his Minneapolis office or jetting around the world to visit company plants.
Honeywell products control the temperature at home, the printer that produces the morning newspaper, the sensor that monitors a car’s engine, the refinery that produces gasoline, the systems that keep airplanes flying safely.
Despite the ubiquitous nature of Honeywell’s controls, the company had been stagnant for about a decade when Bonsignore was selected to head it in 1993.
The controversial munitions business that had sparked regular anti-war protests during the Vietnam era was gone. So was the mainframe computer business. Honeywell had settled into making controls for buildings, industry and aviation.
It was a comfortable niche with annual sales of about $6 billion. Too comfortable to fit with Honeywell’s goals of double digit earnings.
“By the late ‘80s and early ‘90s, the transformation was winding down. The company needed focus and a vision of what we wanted to accomplish,” said Bonsignore, who succeeded James Renier as head of Honeywell.
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The U.S. Naval Academy engineering graduate had been climbing through management ranks since 1969 and knew the company inside and out. For the previous three years, he had headed Honeywell’s international, home- and building-control businesses.
Since then, Bonsignore, now 55, and his management team have set the company on track to 10% annual sales growth. He aims at boosting sales to $10 billion by the end of the decade.
Revenue in 1995 was more than $6.7 billion. Sales for 1996 will have topped $7 billion when all the figures are tallied, he said.
“When I set that goal, people wondered what I’d been smoking. Now they’re thinking, is $10 billion enough,” Bonsignore said.
Analyst Nicholas P. Heymann of NatWest Securities Corp. in New York, calls the 10% annual growth goal “a layup.”
“People have significantly understated the potential of this company,” Heymann said. “I wouldn’t be surprised if it was significantly more than 10%.”
Bonsignore said Honeywell, with about 53,000 employees in 95 countries, faced three main problems when he took over. The company was not growing, employee confidence was lagging and earnings were inconsistent.
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If growth could be stimulated, Bonsignore figured, employee confidence would return and earnings would stabilize. So he looked for areas with growth potential.
“Clearly Asia is where the action is right now. Our biggest challenge right now at Honeywell is to make sure we’re adequately invested in the Asian market,” Bonsignore said.
Along that line, in 1993 Honeywell launched Honeywell-Sinopec, a joint venture with China National Petrochemical, the world’s third-largest petroleum refiner. Honeywell now generates about $250 million in revenue in China and expects sales of at least $500 million by the end of the decade.
Honeywell also has ventures in Japan, South Korea, Malaysia, Hong Kong, Singapore, Taiwan and Thailand. And with the breakup of the former Soviet Union, Eastern and Central Europe also looked like smart places to put Honeywell’s energies.
“They are very energy inefficient with high levels of air and water pollution. These are all great candidates for Honeywell controls,” Bonsignore said.
Heymann said the company is also well-positioned in the aircraft industry.
“Honeywell has reinvented the front end of a plane,” he said, referring to the company’s contract to design the instrumentation for the new Boeing 777 jumbo jet. “As a result of this success, they will own the front end of all Boeing aircraft.”
The company also is likely to grab a large chunk of the business as the nation upgrades its air traffic control system, Heymann said.
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One problem, however, that has dogged Honeywell since 1990 isn’t likely to disappear soon. Bonsignore said litigation with Litton Industries could drag on for several more years.
In 1990, Litton charged Honeywell with patent infringement and anticompetitive practices in production of navigational gyroscopes. A federal court last summer overturned a jury award of $234 million to Litton, and Honeywell believes the award is likely to be much lower next time.
The litigation is the only downside Heymann sees for the company.
“If Honeywell can put that behind, the stock has an exceptionally strong future. If it remains, the stock will still have a decently strong future,” Heymann said.
The company’s heavy commitment outside the United States keeps Bonsignore--who is married and has three grown children--away from the Minneapolis headquarters about 40% of the time.
“I spend a lot of time in Honeywell factories meeting employees. I think it’s extremely important that factory employees have as much contact with the CEO as management does.”
Bonsignore, who comes across in a conversation as low-key but earnest, also addresses company employees by videotape.
“It makes me into a real person. I think employees should understand I’m a living, breathing human being just like they are.”
Bonsignore, who keeps dried mango and papaya in his briefcase to munch on when he’s on the go, does have one cherished escape--diving deep in the sea to explore coral reefs with his camera.
“That’s the only place nobody can get a hold of me. I think it’s important for senior executives of large companies to have a hiding place somewhere. For me, there’s no better place than underwater.”
