If you’ve entered the building automation space in the last decade, you’ve joined a fledgling, but booming industry. So firstly, congratulations on the career choice!
The market has never been a more exciting place to be than today, and as we’ve seen building automation and systems integration demand more and more attention from global giants, we’ve recently seen companies re-position to take advantage of that.
A trend for the larger multinational corporates which is set to continue is for them to move toward becoming a systems integrator – a one-stop-shop for all things building management.
Here’s my take on how 3 of the biggest companies in the building automation market have adjusted, setting us up for an incredibly exciting and competitive 2019.
Johnson Controls’ $30B merger with Tyco in 2016 saw them become a force in the building automation sector, as Tyco’s fire and security solutions complimented their existing portfolio perfectly, instantly creating a major systems integrator.
Their specialism in this area was further compounded in November of last year, when they sold off their Power Solutions business for $13.2B to Brookfield Business Partners. At the time, CEO George Oliver said that this sale would allow them to streamline their portfolio, enabling them to “create optionality in our Buildings business”.
So what we’ve seen with Johnson Controls has been a huge merger, seeing them balloon in size before carefully trimming away less relevant businesses, enabling them to double down and focus on the building automation market, and becoming a leading systems integrator.
The result? A leaner Johnson Controls with cash in the bank, better placed to capitalise and focus on the building automation market. Necessary, as competition is hotting up elsewhere.
After experiencing a difficult couple of years compared with some of the other companies I’ve mentioned, Honeywell have been getting leaner in the past couple of years in an attempt to focus on key areas such as, you guessed it, building automation.
This cycle first started in 2016 with the spinning off of their resin and chemical business, AdvanSix and was followed in 2017 with the creation of Resideo and Garrett, formerly their home automation and transportation businesses respectively.
Of course Honeywell are still a giant business and active in a massive range of markets, but their decisions to offload other business units in order to focus on systems integration is yet another endorsement for the potential of the market.
Perhaps the biggest change of all was announced by United Technologies following their acquisition of aerospace and defence solution provider Rockwell Collins. In November last year they announced that they were splitting the whole business into : UTC, Carrier and Otis.
Incorporating the Rockwell acquisition, United Technologies will focus on the aerospace market. Otis is already an established brand in elevators, escalators and moving walkways, which leaves Carrier – focused on systems integration. Carrier will be a global provider of HVAC, refrigeration, building automation, fire safety and security. These business units had a collective turnover of around $17.8 billion in 2017.
Notice a theme? Another highly focused, one stop shop for building automation. And having released more than 200 products since 2016, Carrier are sure to be a market leading business to look out for.
The common denominator between these 3 businesses is that they’ve all shed other business units in order to have a laser sharp focus on being a complete systems integrator for building automation.
Whilst I’ve focused on these 3 giants, divestment is a running theme across the market. Siemens, for example, recently announced their 2020+ plans, to cut their industrial divisions from 5 to 3. They’ve also been making a lot of acquisitions in the analytical software space, enhancing their energy services business units.
But what does it all mean for building automation? Well, in short, it’s good news for innovation, and shows a great degree of confidence in the market. When the collective attention of some of the biggest companies in the world turns to one industry or market like this one, it leads to innovation, progress and exciting times.
As the dust settles after a period of readjustment for these global giants, 2019 could be the year that we see the market roar into life on an even more unprecedented scale than we’ve seen so far.
What do you think the re-positioning of global companies means for the building automation market? Is systems integration the only way forward? Are there other companies who will eventually follow suit? Get involved in the conversation and let me know what you think!