April 1st, 2011
07:31 PM GMT
New York (CNN) - Honeywell CEO David Cote may be a fan of blues music, but he is unequivocally upbeat about the company’s prospects.
After years of battling problems related to past acquisitions, asbestos liabilities and unfunded pension obligations, Honeywell finally seems to be hitting its stride. The stock just hit a 52-week high and Cote has affirmed the industrial conglomerate is on track for sales of $35-36 billion dollars this year.
The secret? Being boring pays! Honeywell’s businesses involve energy efficiency, safety and security and engine systems to name a few. Not exactly sexy areas, but they are essential, especially in developing economies. Honeywell gets 50% of its sales outside the U.S.
With a business footprint that spans most of the world, it is encouraging to know that Cote believes that the global economy is now in the midst of a recovery that could last at least four or five years. He says the ability of the system to absorb the recent shocks is a sign of its strength.
“If the situation in North Africa and Japan had happened 9-10 months ago, we would have had a double-dip that everyone was talking about, but the global economy was able to withstand it and keep moving forward,” Cote said.
Resilience is a theme that runs deep for both Honeywell and Cote. When he took over as CEO 2002 Honeywell was struggling. Cote brought in new management, cleaned up the balance sheet and instituted a disciplined acquisition strategy. They’ve done 65 deals since, but Cote says the lessons of the past are never far from his mind.
“We're always looking in three of our businesses in particular, they're always looking, always combing and we literally go through hundreds of possibilities to do the few that we do," Cote said.
"But getting back to the fundamentals, we will not overpay. There are deals that have been done with some of our peers that we walked away from because we said, it's too much - and price is a part of strategy in getting back to the zeal for the deal," Cote said. "It's very easy to become so enamored of the brilliance of your strategy and what it's going to do that you forget price is a part of strategy.”
A New Hampshire native, Cote is pragmatic and to the point. Worried about the soaring deficit here in the U.S., Cote agreed to serve on President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform. The experience was sobering.
“Democracies seem to be uniquely suited to putting up the traffic light after the 4th accident. We've already seen the 1st accident. We shouldn't be waiting for the 2nd and 3rd," Cote said.
"We should be able to do this, but I'm convinced that the biggest thing that is going to have to occur here is the American people have to start telling Congress and the politicians do something, for God’s sake," Cote said.
" Even we can see what's going on we don't have all the data…that you have to do something and I don't see it," Cote fumes. "I wish politicians would have a much more honest argument and discussion with the people of the country then they do today."
It is a staggering problem, but Dave Cote is not a man who gives up easily.
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