On the Record with
MIKE SMITH, PRESIDENT & CEO, HONEYWELL AEROSPACE ELECTRONIC SYSTEMS

"The idea," says Mike Smith, "is to own the information backbone of the airplane." As president and CEO of the Aerospace Electronic Systems unit (AES) of the "new Honeywell" company, Smith is confident that the fusion of Honeywell and AlliedSignal aerospace businesses is, and will continue to be a positive and productive development, expanding the company's influence over every aspect of design and operations.

"This one is going to work," says Smith. Even now, he told Show News, "It's literally hard to tell where people came from." Smith himself is from the Honeywell side.

AES is a $4 billion enterprise, one of five businesses within Honeywell Aerospace: the others comprise services, engines, and landing systems, and a unit which provides nuclear-related technology to the U.S. government.

To manage its complex range of products and customers, Honeywell Aerospace has a parallel marketing organization in three groups, covering air transport and regional customers, business and general aviation customers, and defense and space business. These marketing groups, says Smith, "are our quarterbacks, presenting a single point of contact to the customer." They work in concert with the sales and marketing teams inside the business units.

The merger created an avionics organization with two main centers of gravity: the former Bendix/King brand, located in Olathe, Kansas, and the Honeywell avionics business headquartered in Phoenix. "We started with an allied strategy," says Smith. "We brought 400 people into Phoenix for what we affectionately called a 'lock-down.'" People from different parts of the company had a chance to work together and assess each other's strengths.

Smith summarizes the differences between the two companies. "Honeywell had an OEM (original equipment manufacturer) focus; AlliedSignal had an airline/operator focus." In turn, that meant that Honeywell worked more closely with aircraft manufacturers in defining and developing new products, while AlliedSignal focused on developing affordable, reliable products that appealed to the end user. Smith calls it "the perfect marriage," because the two approaches are complementary.

AES leaders are working to blend the original companies' strengths. "We've moved things and moved people. We've taken systems people out of Phoenix and moved them to places where they didn't have such strong systems experience," says Smith.

Honeywell, says Smith, "is forced to look at new spaces, new areas to be involved in. We need to develop top-line growth without a lot of new airplanes." The company's long-term goal is to be increasingly involved in the integration and operation of the entire air transport system.

"We're going to be a big player in CNS/ATM (communications, navigation, surveillance and air traffic management). There's going to be more and more activity in air-to-ground communications and connectivity, and we're going to be involved in all of that. We've already moved from the flight-deck to the back end of the airplane, and we've moved into airports."

"I feel good about our systems and our product businesses," Smith says.

In pursuit of its new strategy, AES has launched two potentially very important projects: a new division known as Avient Technologies, aimed at meeting the airlines' emerging need for technology that links the airplane and the ground and streamlines their operations, and Project Echo, designed to provide small corporate and private aircraft with the kind of fully integrated avionics system now found on larger jets.

Smith also expects to see more integration within the company and the industry. "We're going to have to look at what we're good at, what we need to be good at, and what there is outside the company that can help us. We'll have people within the four walls of the companies that we deal with, and we'll have suppliers within our four walls. There will be more consolidation and U.S. companies will become more like European businesses-at times, we'll compete, and at times we'll be in bed with one another."

By Bill Sweetman