Name change gives Honeywell an identity crisis

implications of a name change and the success that Groupe Bull has as

ultimate controller of the computer group's destiny will be watched

extremely closely by competitors, customers and the world's major

marketing and advertising companies at a time when the computing

industry moves into its third stage of development.

The question is why drop a name as well renowned as Honeywell which

has operated at Newhouse for the last quarter century as one of the

group's 12 computer manufacturing plants.

The answer is that Groupe Bull, which is 92% owned by the French

government, now has a 65% holding in the consortium after Honeywell in

December reduced its holding from 42.5% to under 20% with NEC of Japan

in with another 15%.

The bringing together of this new grouping and of Groupe Bull, which

is strongest in its home territory, creates probably the ninth largest

computer company in the world with all the usual benefits expected from

marketing, technology and manufacturing efficiencies.

At the beginning of this month in Boston, Massachusetts, Bull HN with

annual sales of $2000m (#1150m) announced a $20m marketing campaign to

establish its name in the US consciousness.

Its success under the Honeywell logo had been outstanding despite

Honeywell itself having moved out of computing to concentrate more on

its control business. That is exemplified by the Newhouse situation

where the site is divided so that Honeywell (controls) and Honeywell

Bull are quite separate organisations.

US Honeywell retains its holding in the new company to enable sales to

take place with the US government. General Electric Aircraft Engines of

Cincinnati has a major Honeywell computer installation which has

developed into a harmonious working relationship. GE is fairly adamant

that the relationship would continue as it had nothing but praise for

the systems although when pressed on the security side for military

applications, a company spokesman was perhaps a touch hesitant about the

longer term.

The reorganisation is taking place as computer industry customers face

the problem of being perplexed by complexity. The first phase in the

1970's was when the emphasis was on hardware and the building of bigger

and better machines. That was succeeded earlier this decade by the

greater concentration upon software and systems. But now it is the

access to data and its interpretation that matters and where the

development expenditure will take place. And it is where Bull HN reckons

it has a significant global role to play.

The Newhouse operation is the smallest of the Bull HN manufacturing

units although it is the most efficient within the group whether

measured by costs or the speed at which it can complete orders either

for its large mainframe DPS 8000 series or the smaller DPS 6 range.

At present, all product development is created in the US although

managing director George McNeil says that outside help is used to

improve efficiencies at Newhouse and cites the Times Ten factor where in

the past decade everything has been reduced by a factor of ten whether

in the size of components or the number of people required to build a

unit.

At Newhouse, labour accounts for an almost marginal 8% of production

costs so that is little problem in carrying people during the inevitable

seasonal sales and production variations. As a result, employee numbers

are stable with little disruption unlike the sometimes stormy days of

the 1970's.

Despite protestations elsewhere, Bull HN is an enthusiastic supporter

of the poll tax. By last December,there were 40 local authority

customers signed up including Stratchclyde and the Western Isles

although some of the orders will have to be met by importing #20m of

product from Groupe Bull in France. Other major customers include the

Grampian Police. That force used the AIMS action and information systems

configuration in the Piper Alpha disaster to help coordinate the rescue

services.

More recently, Lothian & Borders Police signed up for a #4.2m system

covering anything from major enquiries, to secure telex and message

switching as well as more routine matters such as firearms and shotgun

licensing.

Mr McNeil says that Newhouse has one major advantage compared with

other local manufacturers in that it is not only a build to order plant

and so there is no need to have working capital tied up in stocks but

also one with a remarkably short lead time even for the Large DPS 8000

mainframe which can be installed within eight weeks of the signing of

the sales contract.

The Scottish factory supplies the UK market and also Eire and Italy.

Inevitably it will find it aiming its production towards four defined

areas as a result of the strategic plan that has been evolving over the

last few months. These are government and local authorities,

manufacturing, finance and insurance and retail and distribution. That

way it is hoped to exploit Bull HN and Groupe Bull system technologies

globally.

But there are many severe challenges ahead. One is perhaps an internal

company matter in that there will be for some time a perceived risk that

Groupe Bull will concentrate more and more of strategic thinking and

original research and development in France -- possibly to the detriment

of Bull HN although the other minority shareholders will oppose any such

development. Another is that in the US and the UK markets, the Honeywell

name is a sellng point on its own whereas the new logo could be at times

misinterpreted.

Perhaps the most important hurdle is that the group has to establish a

particular identity which will help it stand out from the half dozen or

so not disimilarly sized companies. And to that end, it will need

continuing financial investment in cooperating with existing customers

as a selling point to increase market penetration in its chosen areas of

operation.

A proven expertise in a specialist sector should prove more beneficial

than a more broadly based approach. However, having manufacturing units

in various countries does have the benefit of appealing to local

nationalism.

Mr George McNeil