Honeywell International Inc. has announced plans to separate its automation and aerospace businesses in addition to the previously announced separation of its advanced materials business.
The plans result from a yearlong comprehensive business portfolio evaluation and will create three individual businesses.
"With Honeywell's recent restructuring, two of its three newly independent businesses — Aerospace and Advanced Materials — will continue to have a presence in the plastics industry," said Peter Schmitt of Montesino Associates LLC, a packaging and plastics consulting firm in Wilmington, Del.
"According to [Honeywell Chairman and CEO] Vimur Kapur, capital will be allocated toward 'bolt-on acquisition targets,' but a key question remains: How much of that capital will be directed toward innovation in plastics?" Schmitt said.
At its 2024 annual meeting, Charlotte, N.C.-based Honeywell reported R&D spending at approximately 4-5 percent of sales. Schmitt speculated whether that's enough.
"The plastics industry faces growing challenges, from sustainability pressures to advanced materials development, requiring substantial investment in research and innovation.
"For comparison, leading Silicon Valley companies allocate far more of their revenue to R&D: Microsoft (13 percent), Alphabet (14 percent) and Meta (27 percent) — percentages applied to significantly larger revenue bases. With plastics manufacturers under increasing pressure to innovate, the question remains: Can the industry meet its challenges with current R&D investment levels?" Schmitt said.
"The need for greater capital deployment in innovation and R&D is clear. Whether Honeywell's restructuring will drive the plastics industry forward remains to be seen," he added.
Honeywell Automation will be a pure-play specialist in the automation field, while Honeywell Aerospace will provide technology and systems to the aviation sector.
The advanced materials business offers a range of materials and specialty chemicals with a sustainability focus, including its Solstice HFO polyurethane blowing agents.
The separation of the automation and aerospace businesses will be completed in the second half of 2026. The spinout of the advanced materials business is expected to be completed by the end of 2025 or early in 2026.
"The formation of three independent, industry-leading companies builds on the powerful foundation we have created, positioning each to pursue tailored growth strategies and unlock significant value for shareholders and customers," Kapur said.
"Our simplification of Honeywell has rapidly advanced over the past year, and we will continue to shape our portfolio to create further shareholder value. We have a rich pipeline of strategic bolt-on acquisition targets, and we plan to continue deploying capital to further enhance each business as we prepare them to become leading, independent public companies," Kapur added.
Historically, Honeywell has well-known plastics brands — some of which came with the 1999 merger with Allied Signal Inc. — but Honeywell spun off its nylon 6 and chemicals business to AdvanSix in 2017.