Interview: Honeywell's CEO Michael Bonsignore

60 MINUTES: MICHAEL BONSIGNORE, CEO, HONEYWELL'S
"We Will Not Miss Any Opportunity
In India"

Created in 1999, post the merger of Allied Signal Inc. and Honeywell Inc., the new Honeywell is a $24-billion conglomerate that operates in businesses ranging from aircraft engines to chemicals, and from industrial control equipment to transportation products. In India to chart out a gameplan for the merged entity-both Allied Signal and Honeywell had Indian operations of their own-Honeywell's CEO Michael Bonsignore, who plans to use India as an R&D hub for the company, spoke to BT's Ashutosh Sinha. Excerpts from an exclusive interview:

Q. You have said that India may emerge as the R&D hub for Honeywell in the near future. Could you explain your plans in this context?

A. We have a number of R&D centres around the world. And the reason I brought (along) Barry Johnson, our Chief Technology Officer, was to look at India as an extension of our global R&D capabilities. We already have a world-class facility in software development here. The question is, are there other aspects of R&D that we should be doing in India as well? That is why we are here. We have R&D in steel-making, and we use the same process control for steel-making that has been developed in India, the world over.

How important are the software operations of Honeywell India Software Operations (HISO), for the company from the global standpoint?

Extremely important, for a number of reasons. First, the software quality in HISO is the highest we have anywhere in Honeywell. What I would like to do is to have some of the HISO developers take these software quality skills to other Honeywell software operations. Secondly, we have a pool of highly educated, highly motivated, English-speaking software development engineers, at a time when software development engineers are in short supply... certainly in North America. Rather than bringing software engineers physically to the United States, we now have an opportunity to do business via the Net. Thirdly, the cost of software development in India is much lower than in the United States. So, I would say that the three factors-creativity, availability of manpower, and lower costs-are what make the software centre unique.

When will HISO be ready to serve a market outside Honeywell? And what kind of patents are you generating at HISO?

HISO has traditionally worked with the former Honeywell, not the former Allied Signal. Over the next two years, there would be ample opportunity for HISO to work with the expanded Honeywell. We have been ensuring that we get the communication system in place, to make sure that the former Allied Signal businesses understand what HISO has to offer. Secondly, I don't know if I can speak specifically about those patents. Those patents tend to be mission critical applications that HISO is writing, so that we round off our portfolio of advance control and optimisation-applications that we sell to companies in the refining, petrochemical, pulp and paper, power, and cement sectors. Some of these applications have intellectual property rights protection. Some do not.

Hasn't this emphasis on HISO come a bit late?

No, I don't think so. We put together HISO five years ago. We were actually quite entrepreneurial in taking advantage of India's software capabilities. We were one of the first significant software operations here. All we are trying to do now is to make sure that we are integrating HISO into our global strategic planning. We recognise that the talent (in HISO) is huge and has been growing dramatically in the last three or four years. However, there is a lot of work to be done in the basic service that Honeywell provides. We tend to conserve energy; we tend to have a positive effect on the environment. This is a big issue in India, where there is a supply and demand problem-there is an environment pollution problem which needs to be resolved. We make processes more productive and safe, and product qualities higher. So, I would think that our base business in India should continue to grow at around 20 per cent per annum.

You have also articulated a desire to acquire companies in India. What kind of acquisitions are you looking at? Are you already talking to some companies?

We have a number of potential candidates identified. I think we would like to expand our services business in India, so that we can serve our customers more extensively across the country. The Net will carry a lot of services that we give to our customers. There are several applications being developed in India. If (some of the companies developing) these make a good acquisition for us, we will consider it. As we move across industries to other segments like food processing, beverages, and that type of thing, maybe an acquisition could help us diversify.

What markets in India is Honeywell betting on?

Building controls will be a growth area. In five years time, there will be more hotels, more airports... things like that. And we also expect to be able to leverage the Net for several applications and service provider benefits-like intellectual property we can put on the Net to help customers manage their supply chains.

We think of Asia as the developed markets of Japan, Korea, and Taiwan and developing countries like China and India, in particular. And because our resources are not unlimited, our emphasis is moving towards China and India. The Chinese market will be enhanced by the country entering the World Trade Organisation. That is going to make it easier for Western companies to do business there. And I hope, in turn, that will stimulate more reform in India.

You've said that Honeywell is keen to enter the automotive business in India. What are the areas you are looking at?

The thrust area for Honeywell in the automotive business is primarily turbo-chargers for diesel passenger cars. The market for this is primarily Europe. One of the questions for us is whether there is a market for passenger car turbo-charging in India. We have had some preliminary discussions with the Tatas. Another business for us is braking systems. And there we are making sure that we do not miss any opportunity in India.

There have also been reports of Honeywell's interest in the power sector...

We have a micro-turbine generator that was developed a few years back and is now in production for the first time. We believe that this micro-turbine generator has applications in all countries, as a source of stand-by power for emergencies. We have brought the micro-turbine to India. One of them is outside our office in Gurgaon. Because of the supply and demand imbalance in India and because of the integrity of the transmission network, there can be an application of these generators in critical infrastructure like hotels, hospitals, computer facilities, and other such places.

How soon will your Indian operations make a significant contribution to your global turnover, say, 10 per cent?

Well, at the moment, that's about the level of our total Asia sales. So, it is going to be a while. But there is nothing intrinsic to prevent that from happening.

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