In an effort to better serve customers and streamline its operations, Honeywell’s aerospace division is planning a major restructuring that will involve the creation of three new business segments and an unknown number of job cuts.
The shakeup at Honeywell comes on the heels of the appointment of Rob Gillette as president and CEO of the company’s $9.75 billion aerospace division based in Phoenix, Arizona. Scheduled to take effect on July 5, the realignment should be completed by the end of the year, company officials said. Details on layoffs, projected by some analysts possibly to involve as many as 2,000 of the division’s 13,500 employees, will likely be announced around that time as well. Officials said it is too early to say how many job cuts will be made, whether any plants will be closed or the scope of writeoffs Honeywell will take before the end of the year.
Honeywell was beset in 2002 by a $220 million loss, but despite an improving economic picture since that time, the company’s stock price has remained flat. After Gillette took the company reins in January, he challenged his senior executive team to think about ways to improve and streamline the business, with a major focus on meeting customers’ expectations, which he said he views as a major weakness at Honeywell.
“We needed to change how we do things,” Gillette told Aviation International News. “I spent a great deal of time in the past few months talking with our customers, and they told me that Honeywell wasn’t always the easiest company to work with. Clearly that has to improve.”
After the management team studied the business in detail, it was decided that Honeywell should move away from its traditional practice of focusing on individual products and instead group the products by market sector. As a result, Honeywell’s engines, avionics and wheels and brakes divisions essentially are being wiped off the map. Units that are focused instead on the airline market, business and general aviation, and on space and defense will replace them.
The realignment also means a shuffling of senior executives within Honeywell. Russ Turner, current president of Honeywell Engines, will become head of the new Air Transport/Regional business unit; Tim Mahoney, vice president of aftermarket services, will be promoted to lead the Business and General Aviation unit; and Dean Flatt, president of the Aerospace Electronic Systems unit that oversees avionics, will become president of the Space and Defense business unit.
Wholesale divestitures of business units within Honeywell are not part of the restructuring plan, Gillette added, saying the focus of pending changes will be on cutting overhead costs and gaining operating efficiencies in the areas in which Honeywell competes. Product support activities will continue to be lumped together, but Gillette said he wants to improve the company’s ability to respond to customer needs. As a result, a single customer service organization will be given the task of improving the chain of communications to make doing business with Honeywell a less cumbersome process.
“We are committed to executing this realignment for the good of our customers and we think we have a good plan for how to do it,” Gillette said. For example, Honeywell will soon have a single telephone number customers can call, serving as the access point “that will be the single place the customer knows he can turn to for answers,” Gillette said.
Gillette’s most recent position within Honeywell was as president and CEO of the $4.3 billion Transportation Systems division, where peers regarded him as a highly effective manager. Among the division’s list of product areas is turbo technology for cars and trucks, a growing market as demand for diesel-powered vehicles increases. Under Gillette’s leadership, the division achieved compound income growth of 22 percent.