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Honeywell Co. Ltd. Grows Into Korea

The Honeywell affiliate in Korea experiences consistent growth by seizing challenges

To tell the story of Honeywell in Korea, one must first tell the story behind the story.

Honeywell, a provider of automatic control solutions, was begun in 1886 in the United States. In 1984 in Korea, it entered into a 50-50 joint venture with LG Group and became LG Honeywell. In 1999, LG sold its shares to Honeywell and the company became 100 percent owned by the latter. This company has two names in Korea - Hankuk Honeywell (phonetic spelling of the Korean name) and its English name, Honeywell Co. Ltd.

But there is another Honeywell - one that came into being globally at the same time Honeywell Co. Ltd. did, in 1999. Honeywell was acquired by the aerospace/automotive/engineering company AlliedSignal, retained its name and delineated four business groups - automation control solution (ACS), the aerospace business, the specialty material business and the power & transportation business. ACS is of the original Honeywell legacy and, in Korea, part of Honeywell Co. Ltd. The other three business groups are of the Honeywell/AlliedSignal legacy, the Korea affiliate of which is called Honeywell Korea.

This is the story of Honeywell Co. Ltd. - a story of success that CEO Park Seong-ho credits in part to the company’s LG roots.

“LG was aggressively investing in the beginning stage and they built up the plant, the factory,” said Park, who has been with the company for 16 years.

Honeywell Co. Ltd. has five business units - two solution businesses, three product businesses. Honeywell Processor Solution (HPS) is the company’s major business and provides automatic control systems and solutions to the industrial sector. The security business is the company’s second largest.

The five businesses combined generate annual revenue of $300 million. Customers are mainly in the industrial sectors, such as refinery, petrochemical, power, pulp & paper and Korean engineering, procurement and construction (EPC) companies. Honeywell Co. Ltd. has about 600 employees, 400 of whom work out of the Sangam-dong headquarters, six branches nationwide and a factory in Cheonan.

Products manufactured in this factory include cameras, CCTVs, sensing and control sensors and the Distributed Control System, a computer system that equips the operation panel in the central operation room of any plant.

Honeywell has a presence in 110 countries. The total business volume of Honeywell in Korea, including that of the other Honeywell entity, Honeywell Korea, ranks among the highest of Honeywell’s global operations.

Honeywell Co. Ltd. has achieved a double digit constant average growth rate almost every year and seen its revenue double roughly every five years. The company took on challenges in new areas annually. If it hadn’t, or if it had stuck with Honeywell’s core business, it might not have experienced such dramatic growth, Park said. “But we kept trying [to take on] challenges for the new vertical market,” he said. “New solutions to penetrate a market we never experienced.”

Like the LNG carrier market. Immediately after its inception in 1999, Honeywell Co. Ltd. embarked on what turned out to be a year-and-a-half challenge to develop its own system, an Integrated Automation Solution (IAS), for LNG carriers. No Honeywell affiliates had developed one. But with Korea’s strong and ever-growing shipbuilding industry, Park was confident that investing in an LNG carrier solution would be worth it.

The company developed an IAS with Daewoo Shipbuilding & Marine Engineering Co., Ltd. It is a system tailored for the marine environment, as LNG carriers sail around the world in various weathers. Today, Honeywell Co. Ltd. has defeated its Japanese and Norwegian shipbuilding competitors and is number one by market share.

“Global Honeywell tells us that Hankuk Honeywell is the center of excellence of LNG carriers,” Park said.

As LNG consumption increases with rising oil prices, Honeywell Co. Ltd. continues to discover opportunities and support other regions, including China, which is now building up its LNG carriers.

The company is also the center of excellence for the power business, particularly in the hydrocarbon industry. HPS, Honeywell Co. Ltd.’s major business, is strong in the refinery and petrochemical industries. It wasn’t always this way, but in 2004, Park decided to penetrate the market. Today it is a $10 million business.

“It’s still not a big business, but considering our competitor, I think the $10 million business is a very valuable number,” said Park, formerly the manager of POSCO’s process automation department.

Of course, Honeywell Co. Ltd.’s years in Korea haven’t all been smooth. It experienced a reduction in revenue and head count two years ago due to the global economic crisis.

“But through those difficult periods, we just built up our foundation more solidly,” Park said.

His staff has learned how to function as a multinational company with a horizontal management style among local companies with a hierarchical management system. They “think globally, act locally.” Park also urges his staff to have a “global nomad spirit” - to pursue a vision and that which is new. As far as the CEO is concerned, “everybody has capability.”

“My role is [to see] how we can maximize their capability and make a synergy for the company,” he said.