EU harmony is key to its industry’s future

Date: 26/09/1996

By Simon Coss

“SOMETIMES we have an impossible task in Europe,” protests Giannantonio Ferrari, president of Honeywell Europe. He is responsible for 25 companies, but would prefer to be in charge of one.

“We want the possibility of having just one company in Europe, as opposed to being obliged to have operations in each country,” he explains. Ferrari says the 1970 proposal for a European Companies Statute seemed a step in the right direction. But he is exasperated that no real progress has been made on the issue in the intervening 26 years.

“The 1970 document was a very important starting point, but we need to move faster,” he complains.

Honeywell was once the world's number two manufacturer of mainframe computers, second only to the mighty IBM.

But in 1987, the company embarked on a dramatic change of tack, pulling out of computer manufacturing in order to concentrate its energies on so-called 'control systems'.

These are computerised systems designed to run entire buildings or factories, from controlling production lines and heating systems to turning off the lights at the end of the day.

The US-based company employs 53,000 people in 95 countries on six continents. It has affiliates in 12 EU member states and operations in Central and Eastern Europe and the former Soviet Union.

Honeywell is currently in the final stages of negotiations with the European Bank for Reconstruction and Development (EBRD) centred on a 20 million ecu injection into its affiliate in the Czech Republic.

Ferrari is confident that the deal will be approved and says it will enable Honeywell to install energy-saving heating systems in office and apartment buildings across the country.

The firm plans to use a system of 'performance contracts' in its work in the Czech Republic. Under this scheme, the company calculates the potential savings its systems can offer in a particular building. A contract is then drawn up under which the customer pays for the work with the savings made. There is no need to pay any money up front.

The concept was first used in Honeywell's US operations, and late last year the company signed its first performance contract in an EU member state - a series of building management systems installed for the Havering Hospitals Trust near the UK capital.

Honeywell has since made similar deals with car manufacturers Ford at their plant in Valencia, Spain, a Belgian cigar factory, a Danish school and a German university.

A firm advocate of the Euro, Honeywell Europe's president is worried that having to work with 15 different currencies within the EU is blunting his firm's competitive edge.

“For us, if we could have a single currency yesterday it would be great,” he says.

“When you have people employed to record invoices which are in many currencies and convert them into local currency, then you have a system which is re-converting them to a unique currency, it is costing money.”

Ferrari is also concerned about the current dispute between the US and the Union over the so-called Helms-Burton legislation targeted at companies with dealings in Cuba.

“It is a worry,” he admits. “The culture of our company is against everything which gets in the way of free trade and free competition.

“We are voicing our point of view both in Washington and here at the European Commission.”

Ferrari feels a solution to the current impasse is vital if Europe and the US are to have any chance of facing up to competition from Japan and the Asia-Pacific states.

“We are pushing to make better business relations between the two - I am not saying blocs - the two entities,” he says.

On the issue of European integration, Ferrari feels closer union is essential if companies such as Honeywell are to realise their full potential within the EU.

“Having just one currency, harmonised taxation, one board of directors and not 25, doing only one audit instead of 25 - all of these are things which will allow us to move resources from the complex situation we have today to more productive areas such as research and development,” he argues.

Ferrari has no illusions about the challenge of progressing towards a truly integrated EU, but cautions against losing momentum.

“I realise how hard it is to harmonise these things, but we have to start somewhere. If you never start, or if you move very slowly, then you will be run by events instead of leading them,” he warns.

But Honeywell Europe's president appears optimistic about the future.

“I am absolutely confident that one day there will be a single European company. Where my level of confidence is shaky is on the speed. The sense of urgency is not there yet.”