Honeywell International

Honeywell can be traced back to 1883, when Albert Butz invented a device that lifted a furnace’s damper when a home became too cold, thus fanning the flames and bringing warmth. Butz got a patent for his “damper flapper” and set up a company in Minneapolis to exploit it, but the device did not catch on quickly. Butz sold his rights to his patent lawyers, who formed a venture that also struggled. It was not until 1907 that the firm, then known as the Electric Heat Regulator Company and controlled by Thomas Sweatt, enjoyed some success with a new version of the damper flapper that contained a timing device. The thermostat could now automatically let a house cool at night and warm it in the morning.

Over the next two decades the firm, renamed Minneapolis Heat Regulator Co., developed a device for the oil burners that replaced many coal furnaces and grew steadily, but it faced increased competition. In 1927 Minneapolis Heat Regulator merged with one of those competitors—Wabash, Indiana-based Honeywell Heating Specialties Co. The combined company—Minneapolis-Honeywell Regulator—went public and used its additional financial resources to embark on a period of growth through acquisitions. Within a decade it had, despite the Depression, tripled its size and become the dominant player in the industry, with a listing on the New York Stock Exchange. It was also beginning to do business abroad.

In 1940, as the country prepared for war, Minneapolis-Honeywell branched into military work, initially producing precision optical equipment for tank periscopes and artillery sights. It moved on to develop other devices such as the C-1 electronic autopilot, which was widely during the Second World War.

After the war, Minneapolis-Honeywell continued doing military work while expanding its commercial controls business, in part through new acquisitions. In 1955 Minneapolis-Honeywell entered the embryonic computer business by forming a joint venture called Datamatic with Raytheon. After a couple of years Raytheon dropped out, but Minneapolis-Honeywell became a significant producer of mainframes. During the 1960s, when that industry was said to consist of “IBM and the Seven Dwarfs,” it was in the latter group. The company, which in 1964 shortened its name to Honeywell Inc., purchased GE’s computer business in 1970 but still couldn’t compete effectively with IBM and newer players such as Digital Equipment. In 1986 Honeywell put most of its computer operations in a joint venture with Group Bull of France and Japan’s NEC, but by the early 1990s it was out of the business.

Meanwhile, Honeywell’s controls business and its aerospace operations grew apace. The company became a key supplier to NASA for various space missions, and in 1986 it acquired the Sperry Aerospace Group from Unisys. Soon aerospace and military business accounted for nearly half of the company’s total revenues, but the Sperry operations turned out to be highly inefficient.

In 1990 Honeywell spun off its main military business into an independent company called Alliant TechSystems. At the same time, it aggressively expanded its foreign sales of controls, which included a large joint venture with the Chinese national petroleum company Sinopec.

Yet, having suffered from disappointing earnings and a sagging stock price, Honeywell agreed to a $15 billion takeover by AlliedSignal in 1999. AlliedSignal dated back to 1920, when five chemical companies joined forces as Allied Chemical & Dye in an effort to end U.S. dependence on the big German dyestuff manufacturers. The move was instigated by financier Eugene Meyer, also publisher of the Washington Post. Allied trailed only DuPont and Union Carbide among U.S. chemical giants, but for most of its life it was never a very dynamic company. That changed in the early 1980s when it got involved in a complicated takeover battle involving aerospace company Martin Marietta, automotive parts company Bendix and conglomerate United Technologies. When the dust settled, Allied ended up with control of Bendix.

In 1985 Allied merged with Signal Companies, which started as a business that captured the gas generated during oil drilling in Southern California but developed into a conglomerate with interests ranging from truck manufacturing to broadcasting. Two years before the deal with Allied, Signal had acquired another conglomerate, Wheelabrator-Fry, but some of its properties were among the grab bag of businesses spun off by Allied into a company called Henley Group.

Perhaps wanting to distance itself from this convoluted lineage, AlliedSignal decided to take its acquisition’s name after taking over Honeywell. That name would not have survived much longer if a takeover by General Electric announced in 2000 had been allowed to go forward. However, the deal, valued at more than $40 billion, was blocked by European antitrust regulators, who feared the combined company would have too much control over the aerospace industry.

In the wake of that decision, Honeywell launched an extensive cost-cutting program that included the closure of more than 50 plants and a 12 percent reduction in its workforce. Thousands of aerospace jobs were transferred to lower-wage locations in Mexico and Asia. The company has shied away from major acquisitions since the GE episode. In 2008 Honeywell announced plans for a modest acquisition of a barcode equipment company called Metrologic Instruments as well as the $1.2 billion purchase of Norcross Safety Products, a manufacturer of personal protective equipment.