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How Honeywell plans to expand its Mexican R&D center

Bnamericas Published: Friday, September 02, 2022

Honeywell's expansion of its R&D center in Mexico is expected to open business opportunities in existing and new verticals, as well as regionally and globally, according to a company executive.

Among those opportunities is the e-commerce sector, Sebastián Carmona, CTO and general director of the center at Honeywell Technologies Solutions Mexico, told BNamericas. 

The US-based industrial technology multinational, which already services key players in this field, is betting on increasing tech demand by retail giants for the expansion and modernization of their logistics operations in Latin America.

“It’s one of our main focuses with this new phase of the center. Increasingly all companies, whether Walmart or Amazon, or regional giants like MercadoLibre, are modernizing their operations, launching and building automated warehouses, putting on technology,” Carmona said.

Honeywell has three global R&D centers: one in India, launched in the early 2000s; a center in the Czech Republic, opened in 2007; and the one in Mexico, inaugurated in 2017.

Last November the group unveiled plans to build a new R&D testing facility in the Czech Republic that will also focus on the warehouse automation business. 

In Mexico, with an initial investment of US$8mn, Honeywell said earlier this month that its R&D facility would receive a physical and headcount boost. 

Carmona said the plan is to pivot the global portfolio towards solutions that are more tailored to the needs of emerging technologies and industries in Latin America.

Headcount in Mexico has grown at an annual rate of around 40% for several years, according to the executive. From 23 employees at the launch of operations in 2017 to 350 at the start of 2021, the center ended August with 700 employees, he said. 

The strong expansion has been possible despite the challenges related to the persistent mismatch between supply and demand of tech professionals.

To circumvent the problem and attract and retain talent, the management at Honeywell's Mexican center has turned to career programs, training and higher wages, said Carmona.

The expansion is aimed at regional and global demand.

“We have two vocations here at the center. The first is that we develop global products and projects. We are based in Mexico, but we take our products all over the world. From here, this center leads the development of many global products,” he said.

According to Carmona, the development that targets Latin America is aimed at supporting the digital transformation of the mining, pulp and paper, energy and oil and gas industries.

“Our commitment with this center is to use the knowledge that we have developed in global products over the years and support and catalyze the digital transformation of companies, especially in these verticals. And then why not taking on other emerging verticals, such as agriculture, water management," he said.

DATACENTERS

Another vertical that is expected to receive special attention is datacenters.

Honeywell already provides some infrastructure and equipment to these projects, competing on different fronts with the likes of 3M, in professional protection equipment, and with Schneider Electric, Johnson Controls, Rockwell and Emerson, in building technologies.

But Carmona sees opportunities to grow Honeywell's datacenter business with the increasing number of sites being announced for hubs such as Querétaro, Guadalajara and Mexico City.

“We have more than 150 people working in the sector. [Supporting] all the conditioning that these datacenters have to undergo. We see a very important opportunity now that Mexico is introducing these development clusters. Not only Mexico but the region. It’s a vertical in which we’re investing to support clients,” he said.

PERFORMANCE

Groupwide, Honeywell reported Q2 sales up 2% year-over-year to US$8.95bn. 

Organic sales growth was 4%, or 7% when excluding impacts of lower COVID-mask volumes and the wind down of operations in Russia, according to the company’s financial report.

The Aerospace, Building Technologies and Performance Materials and Technologies segments saw Q2 sales growth of 5%, 9%, and 6%, respectively. The fourth business segment, Safety and Productivity Solutions, registered a 12% decline.

“While we recognize macro crosscurrents are clouding the global economic growth outlook, we remain confident in our demand outlook for the back half of the year, with orders up 12% year-over-year and closing backlog of US$29.5bn, up 12% year-over-year, led by our long-cycle businesses, which will help drive growth for quarters to come, chairman and CEO Darius Adamczyk told investors in July.

The message is echoed by Carmona:

"I think we’re well-positioned to continue delivering even amidst - or perhaps because of - this troubling economic scenario, with inflation, interest rates, and recession. Companies will require more and more technology for productivity and cost cuts."

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