Honeywell Embracing Growth through Innovation

Charles Goulding and Tyler Gianchetta of R&D Tax Savers discuss Honeywell’s 3D printing initiatives.

In the realm of international corporations specializing in a wide array of areas, the phrase “brilliance in simplicity” can often seem like a radical concept; a concept that, even if explored, is often considered unviable when the entity is so complex. However, Honeywell International Inc. appears to have embraced this mentality, demonstrated through its recent bold decisions over the course of the past year. These decisions include two major spinoffs, namely Garrett Motion Inc. and Resideo Technologies Inc.

The Research & Development Tax Credit

Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

• New or improved products, processes, or software

• Technological in nature

• Elimination of uncertainty

• Process of experimentation

Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 18, 2015, President Obama signed the bill making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum Tax and startup businesses can utilize the credit against $250,000 per year in payroll taxes.

Honeywell’s 3D Printing Initiatives

At its large aerospace segment which will remain a core retained business, Honeywell is at the forefront of integrating 3D printing to bolster their expertise in manufacturing. In order to achieve this goal, Honeywell has been implementing additive manufacturing and 3D printing in a variety of methods to shorten their production cycle, as speed and efficiency have become increasingly paramount. Honeywell has enlisted the services of the metal additive manufacturing company Sintavia to manufacture components for a variety of applications in their aerospace division. This integration of 3D printing has already paid dividends for Honeywell, yielding substantial benefits including shorter lead times, greater customization, more complex geometries, less material waste, and greater energy efficiency. Additionally, R&D tax incentives are available for all future 3D printing initiatives.

Traditionally, when an airplane part goes into production, a custom mold is made from a CAD file and then sent off to a foundry for casting. It can take weeks or months for the parts to come back. With additive manufacturing, suppliers are now able to upload that same CAD file directly to a machine and have the parts printed out in a matter of hours or days. To further protect the employees, some machines came equipped with mats that are installed in front of the machines and grounded to the machine itself and the machine is grounded to the building structure. This combination of efficiency, cost-effectiveness, and safety make 3D printing an invaluable asset to Honeywell’s production cycle, as it is objectively superior to conventional manufacturing methods in every aspect.

On the aerospace front, Honeywell is currently working on new designs that would normally be too expensive to manufacture using traditional methods because of their intricate or complicated nature. Clearly, the advent of 3D printing has opened up bold new possibilities for the company to explore with regards to their aerospace manufacturing division.

The same can be said for Honeywell Federal Manufacturing & Technologies (FM&T), which operates a national security facility in Kansas City for the United States Department of Energy. There, a new method called topology optimization is being utilized to manufacture tools in a more efficient way. Engineers simply input the functional and physical requirements of a tool, and the computer algorithm works with the 3D printer to create a design that is optimized to be lighter and stronger than a component made using traditional methods.

Honeywell International Inc. has been a Fortune 100 software-industrial company that delivers industry-specific solutions that include aerospace and automotive products and services. It affects control technologies for buildings, homes, and industry, as well as performance materials globally. That said, while the firm has achieved notoriety for its success in a variety of different aspects of manufacturing, they have taken significant strides in the last calendar year to simplify their operations by introducing plans to effectuate spinoffs that will focus on their major business sectors. Hopefully the spinoffs will leverage their exposure to 3D printing applications to aid in their standalone business restructuring.

The New Independent Companies

Garrett Motion, Inc. is disposed to take over the automotive division in a matter of days, and Resideo Technologies Inc. is projected to launch before year’s end. Once independent, both new companies should consider benchmarking their 3D printing capabilities in order to optimize their utilization of quickly improving technologies.

Garrett Motion, Inc. Spinoff

Last month, the corporate juggernaut declared that a pro rata dividend of Garrett Motion Inc. common stock effective as of October 1, 2018 to Honeywell’s shareowners of record as of 5:00 p.m. EDT on the date of record, September 18, 2018. This transaction marks a significant transition for Honeywell as the spinoff will officially house their transportation systems division, including turbochargers, compressors, and other aspects of their car and truck manufacturing specialization. Garrett is expected to distinguish itself as a broad market and technology leader in the rapidly expanding turbocharger industry across power train platforms, boasting decades of expertise in the development of innovative, cutting-edge technologies for the automotive industry, as well as an experienced leadership core and growth-centered capital deployment strategy. With proposed tariffs on Chinese auto parts, Garrett may have the opportunity to utilize 3D printing applications to capture new markets.

Resideo Technologies Inc. Spinoff

Honeywell initially announced the spinoff of its Honeywell Homes and ADI Global Distribution businesses into a standalone, publicly traded company in October 2017. The new firm, Resideo, will focus on the production of household equipment such as thermostats, water heaters, sensors, and security control devices, and establish itself as a leading global provider of crucial comfort and security solutions. With a presence of over 150 million homes around the world, Honeywell’s ADI Global Distribution business is already the leading wholesale distributor of security and low-voltage products.

Conclusion

Honeywell International Inc. has incorporated innovative technologies to further their growth, both through the integration of additive manufacturing into their day-to-day operations and by embracing a simplified approach through developing spinoffs. While the long-term effects of these strategies remain to be seen, they are projected to help the corporate giant continue to evolve into the foreseeable future as both of their spinoffs, Garrett Motion and Resideo Technologies, are expected to quickly become global leaders in their respective fields.