Honeywell, a more than century-old industrial conglomerate that started in Indiana, is set to become the seventh Fortune 500 in the Charlotte region. The company makes everything from jet engines to home thermostats to security systems for hospitals, and its move from New Jersey will mark the latest chapter for the evolving company.
At a news conference uptown Friday, the company announced plans to relocate its corporate headquarters from Morris Plains, N.J., to Charlotte, a move expected to bring 750 jobs that pay a median of $85,000 per year.
Honeywell’s move is expected to begin right away, with hundreds of jobs to be relocated from New Jersey and Fort Mill. N.C. Gov. Roy Cooper said the move could bring more than $248 million in investment to the region.
Honeywell said that it Charlotte because it’s a “business- and family-friendly city” that happens to be close to other Honeywell businesses in the Southeast, including in Atlanta. The state is also consider possible record-setting incentives for Honeywell.
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In recent years, Honeywell has had its share of challenges. It has been pressured by investors to improve profits, spun off business units, faced an investigation from the SEC and opted to leave its longtime headquarters state despite millions in incentives it offered.
Honeywell traces its roots to Wabash, Ind., where in 1906 an engineer named Mark Honeywell started a company that made hot water heaters. Over the years, Honeywell’s expanded in large part through mergers and acquisitions. For instance, in 1970 the company merged its computer business with General Electric’s to form Honeywell Information Systems. In 1986, Honeywell bought Sperry Aerospace, a moved that it has said significantly bolstered its aerospace capabilities.
In 1999, Honeywell was acquired by AlliedSignal, a larger industrial engineering company that elected to keep the Honeywell name for the combined company given its brand recognition. The company relocated to the AlliedSignal headquarters in Morristown, NJ.
Honeywell flirted with the idea of leaving New Jersey in 2010, but decided to stay about four years ago when the state offered it up to $40 million in incentives. The company moved its headquarters a few miles from Morris Township to Morris Plains, according to NJ.com.
A spokesman for Honeywell said the company is in the fourth year of its 10-year agreement with New Jersey, and that payouts are made each year based on local employment each year. The company said roughly 1,000 employees will remain across the company’s six locations in the state.
Virginia Pellerin, a spokeswoman for the New Jersey Economic Development Authority, said the group “will continue to monitor the company’s performance against their obligations under the program on an annual basis.” Honeywell received a total of $8 million in tax credits for jobs it reported in 2015 and 2016, she added.
“Our decision does not reflect any issues with the quality of our experience in New Jersey,” CEO Darius Adamczyk added in a statement Friday. “We value the strong relationship that we have built with the state of New Jersey and with Governor Murphy. New Jersey will remain a substantial employment center for us.”
In October, Honeywell said that the Securities Exchange Commission opened an investigation recently into the company regarding its accounting of asbestos-related liabilities. The company said the investigation follows discussions it has had with the SEC that forced it to correct and restate its asbestos liabilities by about $1.1 billion more than its previous estimate, according to the Wall Street Journal.
A spokesman Friday said there’s nothing new to report as far as the investigation is concerned, and that Honeywell is complying with the commission.
The asbestos claims stem from Bendix Corp., a company that manufactures brake pads that Honeywell sold in 2002. The company has been embroiled in lawsuits ever since, however.
Amid pressure to boost profits and focus on its core business, Honeywell announced last fall plans to spin off two of its business units — its homes and global distribution business, as well as its automobile turbocharger business — into two stand-alone, publicly-traded companies.
But its restructuring decision went against the recommendation of activist investor Dan Loeb, a hedge fund manager who has advocated for major shakeups at Campbell Soup, Yahoo and Sony. Loeb had been pushing Honeywell instead to sell its biggest business, its aerospace technology operations unit, according to Bloomberg.
The aerospace business has performed well in recent months, though. In its third-quarter earnings report, Honeywell reported net income of $2.34 billion and sales of $10.76 billion, which was driven by a 10 percent rise in sales in its aerospace unit.
“I continue to be encouraged by what I see in each of our businesses and I’m excited for I know it will be a strong finish to 2018,” Adamczyk said in its third-quarter earnings call.
Scott Davis, an analyst with Melius Research, told Bloomberg in a recent interview that mergers and acquisitions are “an absolute” requirement for a CEO of an industrial conglomerate as a way to adapt to a changing industry landscape.
“One of the most important parts of being a CEO in multi-industry land is being a portfolio manager, and portfolio managers buy and sell assets,’’ Davis told Bloomberg.
To lure Honeywell, leaders in the region offered about $46 million in incentives, which includes $17 million in property tax breaks from the city, and $28 million from the county, the most generous incentives grant Mecklenburg has ever offered one company. On top of that, state lawmakers are expected to approve an additional incentives package on Monday.
The company already has a presence in the Charlotte area: Earlier this month, Honeywell completed its roughly $484 million purchase of a Fort Mill company called Transnorm, which specializes in warehouse automation products and services and became part of Honeywell’s Safety and Productivity Solutions (SPS) business group as a result of the deal.
Honeywell employs about 300 in Fort Mill, but will move about 100 positions to Charlotte as part of its relocation decision.
CEO Adamczyk also has Charlotte ties. Adamczyk, who took over as CEO in 2017, previously worked at Ingersoll-Rand, an Irish manufacturer with North American headquarters in Davidson, as well as Honeywell’s local SPS business.
“It’s an easy place to get excited about,” Adamczyk said of Charlotte on Friday. “We want to make sure our employees feel the same way.” Adamczyk told reporters that he plans to relocate to Charlotte.
The company plans to move 150-200 jobs from New Jersey over the next several months, and then gradually adding about 500 employees here over the next five years, bringing total employment count in Charlotte to about 750 by the end of 2024.
Honeywell marks the latest Fortune 500 companies with headquarters in the Charlotte region. Others include Bank of America (No. 24), Lowe’s Cos. (No. 40), Duke Energy (No. 125), Nucor (No. 151), Sonic Automotive (No. 298) and Sealed Air (No. 456).