Fortune article of 5/12/12 on Honeywell CEO Dave Cote.

2. Company
profile
Revenue:
$37.1 billion
The Man Who Profits:
$2.07 billion
Employees:
Got Honeywell’s
132,000
Total
return to
shareholders:
Groove Back
5.0%
CEO Dave Cote,
a GE veteran
and one-time cod
fisherman, has
7
rank:
led a remarkable
turnaround at the
industrial giant.
by Shawn Tully
7
GENERAL ELECTRIC: 9% S&P 500: 88% EMERSON ELECTRIC: 158% HONEYWELL: 215%
Total Shareholder Return
Jan. 1, 2003
to April 11, 2012
Under Cote, Honeywell’s
RS, 1/1/2003 stock has outperformed
almost all of its industrial
3M: 80% UNITED TECHNOLOGIES: 210% DANAHER: 229%
peers and the S&P 500. 0% 50% 100% 150% 200%
ar as CEO)
source: bloomberg
Dave Cote (left) in a New Jersey lab where Honeywell is developing a new nylon copolymer
that can be used in food packaging. Around his office he typically wears jeans instead of a suit.
HONEYWELL SALES, YEAR END 2011
Photographs by robyn twomey May 21, 2012 fortune / 177
AEROSPACE PERFORMANCE MATERIALS & TECHNOLOGIES
AUTOMATION & CONTROLS (ENGINES FOR BUSINESS JETS, ADVANCED (OLEFLEX SYSTEM FOR MAKING PLASTICS
(THERMOSTATS, MOBILE SCANNING DEVICES, GAS AND AVIONICS AND AUXILLARY POWER UNITS FROM NATURAL GAS, UNIFLEX TECHNOLOGY
FIRE DETECTION EQUIPMENT, PROTECTIVE CLOTHING) FOR BUSINESS AND COMMERCIAL AIRCRAFT) FOR PROCESSING HEAVY OIL FOR GASOLINE)

3. Dave Cote is feeling the beat. He takes a sip of Mountain Dew and bobs his
head in time to the throbbing bass of Jay-Z’s “Hard Knock Life.” The CEO of
Honeywell International, one of the world’s largest industrial conglomerates, This is
with $37.1 billion in sales, is wearing his usual work attire—a beat-up leather one of the
bomber jacket, baggy jeans, and clunky work boots. Cote’s office in the com- great CEOs
pany’s frozen-in-the-1960s headquarters in Morris County, N.J., is nothing of our time,
fancy. Boston Red Sox jerseys adorn the walls, and a 210-gallon fish tank yet he’s
he inherited gurgles in the background. But for inspiration, he turns to his
iTunes and hits shuffle. “I’ve got 10,000 songs on my server,” he says. “The
stayed
music never stops!” below the
Neither does Cote. While tunes like Billie Holiday’s “God Bless the Child” radar,”
and Neil Diamond’s “Forever in Blue Jeans” play in the background, Cote says CNBC’s
leaps from his personal history to business insights as nimbly as the music Jim Cramer.
/
178 fortune May 21, 2012

4. honeywell
Cote in an Agusta Westland AW139 helicopter. Honeywell
is one of the world’s largest manufacturers of cockpit controls.
changes genres. You can hear Cote’s New tenants alike. “I’d call him for dinner in Washington the
Hampshire upbringing in his voice as he night before a deficit commission meeting, and he’d say,
recounts his youthful adventures as a cod ‘I have eight hours of reading to prepare,’ and it would be
fisherman in Maine. Moments later he’s 6 p.m.!” recalls Tim Collins, CEO of private equity firm
explaining the technology of turbocharg- Ripplewood Holdings. In a decade Cote has relentlessly
ers. Then he veers into his service on the transformed Honeywell, making 70 acquisitions and
Simpson-Bowles deficit commission in shedding 40 businesses.
2010. “What amazed me is how bad fu- That process has shifted Honeywell’s portfolio toward
ture deficits will be even if we have strong game-changing, technologically sophisticated offerings
growth,” warns Cote. that boast high margins and rapid growth. Honeywell’s
Cote (pronounced CO-tee) is an in- biggest pillar is automation and controls, a business Cote
creasingly rare commodity in the business has recharged with acquisitions including state-of-the-art
world: an independent thinker who’s the gas-detection device makers. Ranking second is aero-
antithesis of a slick, prepackaged CEO. space. Honeywell is one of the world’s largest produc-
The 59-year-old fills a room not because ers of jet engines for business aircraft, and of advanced
he’s an imperial type who prizes pomp, avionics for every type of plane. It’s also a major innova-
but because he’s a rough-hewn leader who tor in the auto industry through a pet product of Cote’s,
demands accountability. Says Honeywell turbochargers.
director Gordon Bethune, former CEO The lineup reflects the big ideas that Cote has used to re-
of Continental Airlines: “He took us from shape Honeywell. “To run a diversified manufacturer, you
a disaster to a hell of a company. And he need unifying themes,” he says. Cote’s themes are energy
never beat his chest while he was doing it.” efficiency, energy generation, and industrial safety. “Energy
Indeed, Cote, who recently logged his is a conundrum,” says Cote. “The economy as a whole will
10th anniversary as CEO, has orchestrat- use a lot more of it, but people driving cars and owners of
ed one of the best corporate comebacks in commercial buildings and refineries will want to conserve.”
recent memory. Today Honeywell ranks Cote’s great accomplishment is unifying Honeywell’s
as a top performer among the diversi- formerly fractured, dispirited culture, and at the same
fied industrials, starting with how it has time charting a fresh strategy based on those marquee
rewarded shareholders. Since the start of ideas. Doing both required a combination of personal
2003, Honeywell’s stock has surged from magnetism and forward-looking, often contrarian think-
$24 to $60. Investors have reaped a total return, includ- ing. The Cote story is a step-by-step primer in an indus-
ing dividends, of 215%. That puts Honeywell in second trial revival that was anything but ordained, at a company
place among industrial conglomerates—just behind that on the day he arrived seemed headed for disaster.
Danaher, which returned 229%, and ahead of United
T
Technologies, which has returned 210%. Honeywell’s o gauge Cote’s accomplishment, it’s
returns wax those of Emerson Electric (158%), 3M (80%), crucial to understand the mess he
and Cote’s alma mater, GE (9.4%). In the same period the inherited. Today’s Honeywell descends
S&P returned 88%. “Cote has transformed Honeywell from a disastrous merger. In late 1999,
into a technology company with strong growth,” says Jim AlliedSignal purchased Honeywell for
Cramer, the CNBC host and former hedge fund manager $14.4 billion, taking on the latter’s more
who also happens to be Cote’s next-door neighbor in tony prestigious name. Both companies had big reputations.
Summit, N.J. “This is one of the great CEOs of our time, Honeywell was a stalwart of American manufacturing,
yet he’s stayed below the radar.” named for turn-of-the-century plumbing entrepreneur
How has Cote managed to recharge the failing insti- Mark Honeywell and famous for its iconic round thermo-
tution that was Honeywell? The first impression of a stat. AlliedSignal was a scrappy, acquisitive conglomerate
relaxed, hip-hop-loving raconteur is misleading. It masks run with ruthless efficiency by the legendary Larry
a hard-core work ethic that astounds his friends and lieu- Bossidy, the former vice chairman of GE.
May 21, 2012 fortune / 179

5. GENERAL ELECTRIC: 9% ELECTRIC: 9% 88% S&P 500: 88%
GENERAL S&P 500: EMERSON ELECTRIC: 158%
EMERSON ELECTRIC: 158%
HONEYWELL: 215%
HONEYWELL: 215%
1/1/20031/1/2003
D MANUFACTURERS,
ERS, 3M: 80% 3M: 80% UNITED TECHNOLOGIES:TECHNOLOGIES: 210% DANAHER: 229%
UNITED 210% DANAHER: 229%
0% 0% 50% 50% 100% 100% 150% 150% 200% 200%
Cote's first full year as CEO)
ear as CEO)
R)
Where
HoneywellHONEYWELL SALES, YEAR END 2011YEAR END 2011
HONEYWELL SALES,
8% makes its money & AUTOMATION & CONTROLS
AUTOMATION CONTROLS
AEROSPACE AEROSPACE
(ENGINES FOR BUSINESS JETS, ADVANCED
PERFORMANCE PERFORMANCE MATERIALS & TECHN
MATERIALS & TECHNOLOGIES
(ENGINES FOR BUSINESS JETS, ADVANCED SYSTEM FOR MAKING PLASTICS
(OLEFLEX (OLEFLEX SYSTEM FOR MAKING PLAS
%
6%
The industrial
(THERMOSTATS,(THERMOSTATS, MOBILE SCANNING DEVICES, GAS AND
Automation and controls: Honeywell’s largest AVIONICSsells AUXILLARYAND AUXILLARY unit is one of the world’s largest makers UNIFLEX TECHN
MOBILE SCANNING DEVICES, GAS AND division AND AVIONICS POWER UNITS POWER FROM NATURAL FROMUNIFLEX TECHNOLOGY
Aerospace: This UNITS GAS, NATURAL GAS,
9% giant is organized FIRE DETECTIONprotectiveCLOTHING)and portableFOR BUSINESS AND COMMERCIALlikefor business787 DreamlinerFOR avionicsFOR GASOLINE) FOR GAS
FIRE DETECTIONthermostats, EQUIPMENT, PROTECTIVE CLOTHING)
EQUIPMENT, PROTECTIVE clothing, gas-detection BUSINESS AND COMMERCIAL jets and advanced PROCESSING HEAVY OIL
devices (pictured above) for refineries and chemical plants.
FOR of engines
aircraft
AIRCRAFT)
the Boeing
FOR PROCESSING HEAVY OIL for
AIRCRAFT)
(above).
into four main
businesses. 2011 SALES: $15.5 BILLION $15.5 BILLION
2011 SALES: $11.5 BILLION $11.5 BILLION $5.7 BILLION $5.7 BILLION
$3.9 BILLION $3.9 BILLION
TRANSPORTATION SYSTEMS (TURBOCHARGERS)
TRANSPORTATION SYSTEMS (TURBOCHARGERS)
ND 2011
$11.5 BN Instead of meshing operations and paring costs, the himself as “New Hampshire cheap.” Declares his mom: “I
VANCEDAUXILLARY
S AND AVIONICS AND AUXILLARY SHAREHOLDER RETURN, RETURN,
SHAREHOLDER
new CEO, Honeywell veteran Mike Bonsignore, and 1, 11, 2012didn’t believe in allowances. When my children asked for
COMMERCIAL AIRCRAFT)
RCRAFT)
JAN 1, 2003 TO JAN 2003 TO APRIL 11, 2012
APRIL
Bossidy, by then chairman,ELECTRIC: 6.5%ELECTRIC: 6.5% was
GENERAL
mainly fought. “Larry
GENERAL
money, I’d tell them, ‘I don’t charge you kids for breakfast!’ ”
EMERSON ELECTRIC: 99% ELECTRIC: 99%
EMERSON HONEYWELL: 197%
HONEYWELL: 197
always 15 minutes early for meetings and hated to be kept After graduating from high school in 1970, Cote put
AND FIRE DETECTION
DEVICES, GAS AND FIRE DETECTION
G) waiting,” recalls an executive who is still at Honeywell. wanderlust before higher education. He bought a 1963
“Mike was always 15 minutes late. By the time the meet- apple-green Pontiac Catalina for $395 and drove to
NOLOGIES 3M: 73% 3M: 73%
ATURAL FROMUNIFLEX GAS, UNIFLEX would be steaming.”
ing started, Larry
ASTICS GAS, NATURAL Michigan, where he labored as a car washer and carpen- DANAHER: 137%
UNITED TECHNOLOGIES:TECHNOLOGIES: 207%
UNITED 207%
0% 0% 50% 50% ter’s apprentice. The next summer he signed up to join 200%
100% 100% 150% 150% 200
By mid-2000 the merger’s promise was collapsing,
SOLINE) FOR GASOLINE)
AVY OIL
$3.9 BN
along with Honeywell’s profits and share price. Out of the Navy but backed out of his pledge and decided to try
desperation the board accepted a takeover offer from GE’s college instead—talking his way into the University of
Jack Welch. GE teams swooped down on Honeywell. GE New Hampshire in Durham even though it was past the
$36.5 BN
executives took over budget planning and employee re- official admissions date.
250 250
views. But the biggest acquisition in GE history, and what He later took a break from school that wasn’t exactly
Welch viewed as his crowning achievement, wasn’t to be.
250 250
a junior year abroad: Cote and a friend bought a 33-foot
In June of 2001, Mario Monti, the European Commis- lobster boat and spent a year running trawls for cod in
sion’s competition chief and now Italy’s Prime Minister, Maine. “It taught me that you can work very hard and
effectively killed the merger. get absolutely nowhere,” he says. Around this time Cote
200 200
Bonsignore departed, and the board brought back got married and his wife became pregnant. So he sold the
Bossidy to help repair the damage. Bossidy’s priority was lobster boat, and in 1976 he finally graduated from UNH.
finding a successor who could handle the challenge. He (Cote is twice divorced and has three adult children and
took a chance on a candidate who’d excelled but hardly three grandchildren.)
proved a superstar at GE, and had served just a year as
200 200
Cote’s friends today swear he’s the same gregarious, up-
150 150
CEO of TRW, an auto parts manufacturer half the size of for-anything kid from New Hampshire outside the office.
Honeywell: Cote. The CEO tools around the New Jersey suburbs on week-
Cote’s early life is an unlikely prologue for commanding ends on a Harley-Davidson. Or, shotgun in hand, he stalks
an enterprise of 132,000 employees. He grew up in a New duck and pheasant in the Adirondacks with his friend Tim
Hampshire mill town named Suncook. His father had an Collins. “He’s an incredible shot,” marvels Collins. “Maybe
eighth-grade education and ran a garage. “I didn’t know not the best 100 ever seen, but the best for someone run-
I’ve 100
what success was, because it was hard to find anyone in ning a global corporation.”
town you’d describe as successful,” recalls Cote. He also doesn’t place too much emphasis on appear-
But his aptitude for numbers emerged early. “When ances. Cote goes to board meetings in jeans, and encour-
150 150
Dave was 12, I’d put him on the bus to Manchester with his ages the directors to dress likewise. Not all his friends
Aerosp ace: chi nafotopress—Getty images
big accordion and some cash,” says his mother, Georgette appreciate the look. “I’m a suit-and-tie guy,” says Cote’s
50 50
Cote. “After his music lesson he’d go all over town paying pal, Washington attorney Vernon Jordan. “I’d never come
all the bills, for the department store, for our insurance.” to work in jeans. I tell Dave he looks like something out
Dave invariably returned with the correct change and all of Silicon Valley.”
the receipts, Mrs. Cote notes proudly. Today Cote describes While at UNH, Cote had worked the night shift at a
nearby GE jet engine plant as an hourly laborer. In 1976
0 0
he landed a full-time job at another GE factory in Massa-
/
100 100
0 50 100 150 200 250
0 50 100 150 200 250
18 0 fortune May 21, 2012 chusetts as an internal auditor, making $13,900. Cote rose
0 20 40 60 80 100 0 20 40 60 80 100

6. RAL ELECTRIC:HONEYWELL: 215%88%
C: 158% 9% S&P 500: EMERSON ELECTRIC: 158% HONEYWELL: 215%
D TECHNOLOGIES: 210% 80%
3M: DANAHER: 229% UNITED TECHNOLOGIES: 210% DANAHER: 229%
150% 50% 200% 100% 150% 200%
R END 2011
PERFORMANCE MATERIALS & TECHNOLOGIES
AEROSPACE PERFORMANCE MATERIALS & TECHNOLOGIES
source: company filings
NCED (OLEFLEX SYSTEM FOR MAKING PLASTICS JETS, ADVANCED
(ENGINES FOR BUSINESS (OLEFLEX SYSTEM FOR MAKING PLASTICS
EVICES, GASFROM NATURAL GAS, UNIFLEX TECHNOLOGY POWER UNITS
TS AND
PerformanceAVIONICS AND AUXILLARY
materials and technologies: Its offerings range from the GAS, UNIFLEX TECHNOLOGY
FROM NATURAL Transportation systems: This business is the world’s largest maker of
CTIVE CLOTHING) PROCESSINGFOR BUSINESS AND COMMERCIALfrom crude to film for use in
CRAFT) Uniflex system for extracting extra gasoline AIRCRAFT)
FOR HEAVY OIL FOR GASOLINE) FOR PROCESSING HEAVYturbochargers, a Cote favorite. The turbines pictured above are a key
OIL FOR GASOLINE)
“blister packs” (above) that protect drug capsules from moisture. component of the devices.
note: Honeywell’s 2011 revenue also includes
BILLION $5.7 BILLION $11.5 BILLION
$3.9 BILLION $5.7 BILLION $3.9 BILLION $530 million from discontinued operations.
ORTATION SYSTEMS (TURBOCHARGERS) TRANSPORTATION SYSTEMS (TURBOCHARGERS)
by delivering avionics equipment way behind schedule.
to join the GE audit staff, then spent the mid-1980s as a
N, JAN 1, 2003 TO APRIL 11, 2012 at headquarters in Fairfield, Conn.
financial analyst Blue stood for the former AlliedSignal. Its ethos was in-
%
TRIC: 99%
It was a chance encounter with ELECTRIC: 99%Jack Welch
HONEYWELL: 197%
EMERSON
chairman your-face confrontation, with an emphasis on “making the
HONEYWELL: 197%
in 1985 that propelled Cote’s career. Welch heard that the numbers” at all costs.
company was dispatching exhaustive questionnaires about To make matters worse, a third wayward culture needed
GE’s business metrics to obscure corners of the world like taming. Around the time of the merger, Honeywell ab-
3M: 73%UNITED TECHNOLOGIES: 207% DANAHER: 137% UNITED TECHNOLOGIES: 207% DANAHER: 137%
Mauritania. Regarding this as a colossal waste of time, a sorbed a maker of fire and safety systems named Pittway.
50% 150%
furious Welch started calling everyone from 150%CFO on
100% 200%
the 200%
Its managers were staunchly independent folks who’d
down, getting madder and madder when he found the started their own businesses and considered the red and
brass were absent, until he finally reached the wonk who blue factions too incompetent to give them orders.
was handling the project—Cote. Cote kept his cool, ex- The feuding red, blue, and Pittway camps all bristled at
plaining he was doing his best at a job he’d been assigned,
250 taking direction from a new CEO. “I held a town hall meet-
then called his wife and said, “I think I’m going to get fired.” ing in Brussels for the heads of the businesses in Europe,”
But Welch was impressed with Cote’s air of authority and says Cote, “and about one-third of the people I’d invited
his refusal to bad-mouth his superiors—especially when he didn’t show up.” Pittway, meanwhile, had its own credit
later learned that Cote himself had argued against the proj- cards and initially refused to switch to the brand used by
ect. Cote became a Welch favorite. “At GE, if you moved up
200
the other employees.
two levels it was great,” says Cote. “Jack promoted me three Early on Cote made two pivotal decisions that an-
levels, which was incredible.” nounced a new kind of leader. First, he ended a long-
In 1996, Cote was put in charge of one of GE’s major standing tradition, inherited from both the former Honey-
businesses—appliances. “Prices were falling, and the appli- well and AlliedSignal, of aggressive accounting, a practice
ance field was brutally competitive,” recalls Cote. To wring highly in vogue at the time. Honeywell was capitalizing
150
savings in labor, Cote moved some manufacturing jobs to the cash spent on providing free brakes, wheels, and
Mexico and threatened to move more. The tactics didn’t other parts to airlines to win orders. It was also capital-
endear him to the unions. Asked about Cote, Charlie Smith, izing much of its outlays on aerospace R&D. “The system
then head of the Electronic Workers local, wrote to Fortune encouraged executives to give away a lot of equipment and
in an e-mail, “My father used to tell me that if you can’t say do research for its own sake, because those costs looked
100
anything nice about someone, don’t say anything at all.” ‘free,’ ” says Tim Mahoney, chief of the aerospace business.
Though Welch prized Cote, it was clear by 1999 that Cote Cote adopted conservative bookkeeping by expensing both
didn’t have a shot to be Welch’s successor. “Dave wasn’t re- types of spending in the current quarter, even though the
ally in contention; he was a ways back,” says Welch. So Cote practice pounded short-term earnings.
joined TRW as heir apparent, serving briefly as CEO before Second, Cote introduced a new strategy for tackling
taking the far bigger job at Honeywell in February of 2002.
50 Honeywell’s destructive legacy—giant asbestos and envi-
For Cote, job one at Honeywell was halting a raging ronmental liabilities. The former AlliedSignal had taken
clash of cultures. Employees called it the “red” and “blue” a stubbornly hard line on asbestos suits, and investors
wars, taken from the traditional logo colors of the two dreaded what the future expense would be. “Dave real-
companies. Red represented the old Honeywell. Its folks ized we couldn’t litigate our way out,” says general counsel
were courtly and prided themselves on pleasing the cus-
0
tomer. But in practice that meant promising the custom-
/
150 200 250
ers anything, then, say, infuriating aircraft manufacturers May 21, 2012 fortune 181

7. Advertisement
honeywell
Have a financial
Kate Adams. “He decided to take a is so often the case, he surprised me
cooperative approach.” Honeywell by saying, ‘We need to preserve our
question? is establishing a trust for the claims
and is working to scrub the soil at old
industrial base for the recovery, and
huge layoffs will destroy it.’ ” So Cote
chemical plants. “The key change is required that Honeywell’s employees
We have the answer. that the future expense is now predict- take unpaid furloughs of between
able,” says Susan Kempler, a portfolio two and five weeks during 2008 and
manager at TIAA-CREF, which holds 2009. “There was lots of complain-
1.5% of Honeywell’s shares. Today the ing,” says James, “but it worked.”
asbestos-plus-environmental expense Cote also introduced a disciplined
consistently runs around $150 million blueprint for M&A. The old Honey-
a year after-tax. That’s a highly man- well and especially AlliedSignal had
ageable number given last year’s free made a number of poor acquisitions,
cash flow of $3.7 billion. and Cote pledged to avoid the same
To unite the company’s warring fac- errors. “We studied every deal from
tions Cote also introduced a series of 1992 to 2002,” says Anne Madden,
disciplines covering every business. A who directs M&A for the company.
Send Your Questions to: prime target was manufacturing. Cote “We found that half the mergers
helpdesk@CNNMoney.com saw that labor costs for everything failed, usually because we overpaid
from aircraft power generators to fire or didn’t integrate the acquisitions.”
Watch The Help Desk, alarms were far higher than those of Today every acquisition must meet
where CNN’s experts answer competitors—a situation he couldn’t Cote’s highly specific checklist. Forget
your financial questions. abide. He added an extra dimen- mega-deals. Of the 70 acquisitions,
sion to create what’s now the revered none costs more than $1.4 billion. “I
Tuesdays & Fridays Honeywell Operating System, or believe in placing lots of bets on lots
Noon ET HOS. Cote demanded that his troops of businesses,” says Cote. “A big deal
replicate Toyota’s manufacturing prac- that goes bad can ruin a company.”
Find Answers at:
tices—in Cote’s mind, the best in the Honeywell’s shopping spree has been
CNNMoney.com/helpdesk world. He dispatched 70 managers to wildly successful. On average, Honey-
and every issue of MONEY Toyota’s plant in Georgetown, Ky., to well paid around 12 times earnings for
master techniques for speeding output the 70 acquired companies and tripled
with the leanest workforce possible. their profits. That improvement owes
The rewards have been spectacular. a great deal to the CEO’s relentless
Since 2002, Honeywell has increased focus on integration. For all deals over
its headcount just 21%, vs. an increase $50 million he reviews the integra-
in sales of 72%. By keeping fixed costs tion plan’s progress after closing for
like labor relatively flat, Cote gener- the following 30, 60, and 90 days, and
ates “operating leverage” that magni- quarterly thereafter for at least a year.
fies brisk revenue growth into outsize The integration sessions provide a
Brought to you by: earnings. Since 2003, Honeywell has window on the Cote style. “If there is
lifted sales 7% a year, while operating a loose thread in a presentation, Dave
profits have grown by 12%. will find it, and keep pulling until the
During the recession, Cote de- whole thing unravels,” says James.
manded that Honeywell unite behind The Cote approach is to pepper his
a highly unorthodox campaign to lieutenants with endless detailed
save labor costs. He was unwilling to questions, bordering on interrogation.
allybank.com simply slash the workforce. “Dave was He’s incredibly focused on headcount,
pacing in my office, trying to decide circling the figure with a red pen if he
what to do,” recalls Mark James, deems it too high. Many of his com-
© 2011 Cable News Network, Inc. CNN, CNNMoney, and the logos,
TM & © 2011 Cable News Network, Inc., a Time Warner Company. head of human resources. “Then, as ments are cloaked in icy humor. “You
All rights reserved. MONEY is a registered trademark of Time Inc., a
Time Warner Company. All rights reserved.

8. honeywell
i don’t do relaxation,” says cote.
must have been a lot busier than I was if you didn’t think freeze—and poured some of the proceeds into enhancing
I’d ask that question” is a typical line. Honeywell’s turbo technology.
Cote felt that the strict fuel standards being imposed in
E
very few months, Cote sets aside a day the U.S., China, Russia, and other major markets would
to sit alone in his office reflecting on Big make turbo the global industry’s technology of choice. “I
Ideas. He turns up the iTunes and always thought that improving the old internal combus-
doesn’t take phone calls. It was during tion engine was the only way to meet those standards,”
these solitary sessions that he decided says Cote. That could create a go-go growth industry
to concentrate on the three grand inside the mature auto business: Even if auto sales rose
themes of energy efficiency, energy conservation, and slowly, turbo sales would explode as they were installed in
safety. He also brainstorms about products that best fit more and more cars. That’s precisely what’s happening.
each strategy. One of his favorites is turbochargers. As the world’s largest producer of turbochargers, Honey­
A turbocharger is a device that resembles a metal pipe well now stands to benefit handsomely. Today it’s generat-
coiled into the shape of a snail. This surprisingly small ing around $3.2 billion in turbo sales. But that figure could
machine, no bigger than 18 inches in diameter, attaches rise sharply. Using data assembled with Global Insight,
to an internal combustion engine and operates much like Honeywell predicts that turbo penetration in the U.S. will
a jet engine. It captures the auto’s exhaust and uses that jump from around 20% today to more than 80% by 2020,
energy to force air into the cylinders at extremely high and quadruple in China to 60%. All told, two-thirds of the
pressure. The process enormously enhances the engine’s world’s new cars would carry turbochargers in just eight
power without a big increase in fuel consumption. Put- years, compared with around 33% today.
ting a turbocharger on a four-cylinder gasoline engine Back in his office, Cote is riffing on another energy-
generates six-cylinder horsepower, while raising miles per themed product idea: auto and jet fuel made from harvest-
gallon by as much as 20%. ing and refining algae. “We’re partners in a plant in Hawaii
Despite its obvious advantages, until recently turbo that’s making it right now,” he says enthusiastically. “The
gained little traction in passenger cars except in Europe. U.S. military even used it to fly an F-18 Green Hornet!”
In the U.S., the reliability problems with the Chrysler Then he turns his attention from algae to the bubbling
K-cars of the 1980s had left turbo with a poor image. But fish tank, filled with exotic species Cote can’t name. “It’s
when Cote arrived, he calculated that a global revolu- supposed to be relaxing,” he says. “Except that I don’t do
B:8.75”
tion was brewing. He later sold Honeywell’s slow-growth relaxation.” John Coltrane’s “Giant Steps” comes over the
consumer auto businesses—such as spark plugs and anti- T:7.75”speakers. Dave Cote is planning his next mighty stride.
S:7”
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