Describe Honeywell’s Life Safety and Customer Experience Center, which opened in Houston this past September.
We’ve made some very substantial investments recently. Our latest one — the one that we’re so excited about — is unique in the world. It’s the Honeywell Life Safety Customer Experience Center in Pasadena, Texas. The center is a $3-million, 10,000-square-foot facility with 40-foot-high ceilings and provides an immersive experience that enables customers and visitors to interact with Honeywell’s products. The center features state-of-the-art interactive training for customers to improve their safety using Honeywell fall protection harnesses, hardhats, self-contained breathing apparatus, portable gas detection equipment, and products for gas, fire and smoke detection.
We’re in the Houston area because we are active in the growing market for PPE in the Americas region and the global marketplace. The area hosts a major concentration of oil and gas, energy, chemical and other industries— and fire and personal safety is a mega issue.
This is a first for the industry and the world — and for us, only the first of such initiatives.
Why is it important for a PPE company like Honeywell to, in your words, “take a deep dive into education”?
Education drives safety for everyone. Safety does not happen on its own. It takes smart preparation, quality equipment, and a well-trained workforce. When you educate workers for safety, they make safer choices on their own. Technology capabilities are helping to address worker protection, and to increase the culture of safety throughout industry. Education drives implementation. Additionally, with all this, new business opportunities are created, and they permit us to invest and grow. We are already a large global presence. Life Safety has 19,000 employees. We look to expand our presence throughout the world in important vertical markets like oil and gas.
Why is a PPE company such as Honeywell interested in promoting cultures of safety?
Safety is not just our business or the industry we serve. It is what we believe in — it’s our Noble Cause. We are investing in our dedication to improve the health and safety of workers in the broadest sense. We strongly believe that we have a role to help safety managers to develop an enduring culture of safety by providing them the right equipment, advanced training, and the best PPE solutions.
Our dedication begins with our own people. It is our responsibility and our desire to take care of the health and safety of our 19,000 employees. We have 58 factories around the world and every one of them is graded every single month on safety. If there’s a lost-time incident, I personally am immediately notified. Honeywell has a great safety record. We practice what we preach, and we use our own solutions. It’s that dedication for our own worker safety that we expand and bring to the field of safety worldwide.
Honeywell‘s corporate sales projections for 2014 come in between $41 and $45 billion for the whole company, with sales up about 3 percent. (In 2012 Honeywell had global sales of $37.7 billion, 132,000 employees, and 1,300 sites in 70 countries.) How does that compare to projections for Honeywell Safety Products?
We are optimistic that we will exceed 3 percent. We’ve made substantial investments in services and systems and are improving the services that we’re providing our customers and the depth and breadth of innovation across our entire portfolio. And we hope to continue that improvement next year. As 2013 comes to a close we are seeing an acceleration in growth.
What are your safety sales, when broken out from the company’s other businesses?
We don’t disclose that as a line item, but we are a global leader and, of course, there is competition. One can say comfortably that we are well over a billion dollars.
In a Morgan Stanley presentation on September 17, Honeywell said sales outside the U.S. were up anywhere from 41 to 54 percent in the past ten years. How does that compare to safety sales outside the U.S.? Have they grown at that kind of clip in the past 10 years?
In many areas, we are growing — and growing very quickly. We have made three major acquisitions in safety: Norcross, Sperian, and King’s Safetywear. Norcross was very much focused on North America. Sperian was much more global, while King’s Safetywear was focused on Asia. With each acquisition, we have secured major product and geographic gains. As a result, we now have strong positions around the world and are focused on the fast growing areas.
Are they the BRICS (Brazil, Russia, India, China and South Africa)?
There are about ten countries that are higher-growth regions. Mexico, for instance, has an amazing track record and Mexico’s GDP and market size are quite substantial. There is also a good deal of investment activity. The international companies that are making major capital investments there, in auto manufacturing and elsewhere, use the exact same safety standards worldwide — and are creating new opportunities for the safety industry.
In the same Morgan Stanley presentation, safety products were described as a stable category, not weak, not strong, but stable. What does a stable product category mean?
The stability in the safety category has several sources. One is the GDP growth itself — which is more or less stable, at least in the U.S. and Europe. Meanwhile, there are also drivers. Increasing regulations, with the ongoing risk of liability lawsuits, are forcing companies to greater safety compliance. New workplace risks, such as biohazards, are inspiring new PPE solutions. The industry has also responded to an increase in natural disasters, including severe storms, such as Hurricane Sandy, and disease epidemics, such as SARS.
OSHA has become less of a driver for safety sales in past 10-15 years, with many customers in compliance and few new standards issued. What is driving the safety products business today?
In addition to what I have already mentioned, I think there’s a drive for safety that is more internal — and that resonates from within companies. I know this firsthand, as I’ve said, in our own company, our workers’ health and safety is a major priority. We are a manufacturer, so the need for safety is self-generating. For our customers, our training facility in Houston is a critical resource to realize their internal commitment to safety.
No one in business wants to suffer a fatality. Today, safety programs are self-directed; companies are not waiting for the government to act. One example that I can share involves a major customer in the scaffolding business. They had an incident last year and as a result initiated a high-end safety process. They know that another incident will be a serious blow to their business. They are not investing in safety because of OSHA. They are smart people running a business realizing it’s up to them to improve their situation.
Honeywell in the past decade has made 70-some acquisitions, you’ve been very aggressive. What’s your thinking on acquisitions in 2014?
We will continue to evaluate opportunities to bring new and innovative products and services to our customers everywhere around the world. We have a very disciplined approach. We are always mindful of those that we admire in our industry. It could be due to technology or geography. If there is an opportunity which we view that could be a nice addition to an element of our business, we will do the evaluation. We have some very small strategic candidates that we are pursuing. We also have some large companies of interest as well.
What does the recent RAE Systems acquisition bring to the party?
RAE is a terrific, terrific company. They were the last substantial size independent, so to speak, in gas detection. They have tremendous wireless capabilities. They are global, around $100-million, and 90 percent of what they do is complementary to Honeywell Analytics. We had already created a large enterprise for portable and fixed gas detection, so the acquisition was a great fit. With our distribution and global reach, and their technologies, the combination makes for both great sales synergies and great technical synergies.
Describe Honeywell’s “Safety Community” product. I gather that it is a service, software-oriented, that brings together asset management, safety management and procurement, and it is modular and scalable. Where did this idea come from?
We are a smart-technology company. We have many thousands of engineers in Honeywell. In addition to our products, our focus on smart technology includes large enterprise-wide software solutions for fire protection and security. We have this different capability as a company.
We have developed a technology solution called the Safety Community to address a major issue that’s affecting very large global companies in the management of their safety programs. The demands on the safety managers in these companies are not only increasing but are forcing a shift in their focus. They are spending much more time gathering data and information and writing reports. This leaves them less time to focus on actually solving large safety issues, such as qualifications and training, for their employees as well as their subcontractors.
We designed the Safety Community for sophisticated global companies — oil companies, mining companies, global engineering companies — that must have automated systems. Many safety processes are still very manual and very local — with individuals writing logs and processing cards. There is no way to tie everything together, to track all their activities.
Our Safety Community can interface with a payroll system. Thus, whether an individual is a temporary worker or a full-time worker, their safety training and access privileges can be monitored. A safety director for a large oil company anywhere in the world can gain awareness of anything or anyone anywhere else in the world. She can access employee records, and make inquiries, gather any level of detail she needs.
We have been in full beta site deployment with Safety Community for over a year. We are ready and are negotiating with a number of global companies to trial Safety Community — at first in a few locations — and then to scale it according to their needs. There is a very real “Oh wow” factor. There is nothing else like it anywhere. And based on what we have seen so far, Safety Community will be a dramatic leap ahead in helping companies to improve their safety management.
Looking at all the categories of PPE, what area do you see most ripe for innovation?
We see every category as ripe for innovation. Hearing protection, as one, is advancing very quickly with high-end, very technically advanced solutions. And certainly there are major potential advancement opportunities in systems and software. This includes the management and tracking of PPE inventory with our Safety Enabled Products which utilize RFID tags.
It is also our Safety Community which is truly breakthrough innovation that will meet a growing, universal need. And the Safety Community is not just for Honeywell customers. But helping companies better manage their safety systems, supporting cultures of safety, investing and introducing innovative technologies, and driving safety education — all complement our global dedication to worker safety and to providing the best PPE in the world.