Published April 25, 2013
Justin Danhof took the floor at Honeywell International Inc.'s (HON) annual meeting in Morris Township, N.J., on Monday to ask about the company's taxpayer-funded biofuels demonstration project in Hawaii.
Chief Executive David Cote's response was that he was "comfortable" with what the company has done with a $25 million green-energy grant it received from the Obama administration.
Mr. Danhof is general counsel for the National Center for Public Policy Research, a conservative, free-market think tank in Washington D.C.
Mr. Cote, who heads a well-known manufacturing company with $38 billion in annual revenue, personally has advised President Barack Obama on the nation's debt load as it piles up to the $20 trillion mark.
President Obama appointed Mr. Cote to the Simpson-Bowles commission, which proposed an all-American slashing that would have bled just about everyone to save the nation.
Mr. Cote now sits on the steering committee at Fix The Debt, a campaign by Erskine Bowles, a former member of the Clinton administration, and Alan Simpson, a former Republican U.S. Senator from Wyoming.
Mr. Cote also has ranted and raved about the debt on national TV.
In a 2012 interview with CBS News, he called the national debt "ridiculous." He said Medicare would "crush the system." He complained America soon will have more than $1 trillion a year to pay in debt service alone (watch the interview here).
Mr. Cote also warned debt would condemn the U.S. economy to years of anemic growth and high unemployment. And he promised he wasn't going to create jobs in this miserable environment.
"I wish I'd made up this phrase," he said in the CBS interview, "because it's so good. But it's, "capital is a coward." So when it comes to hiring, I let people attrite, they retire, they leave for a variety of reasons, and I'm just not going to backfill those jobs."
Mr. Cote is probably right about the cowardice of capital and the dangers of a mounting national debt. And his financial results at Honeywell speak for themselves. He's running a company with tepid sales growth but laudable earnings thanks to continuing cost-cutting efforts. Honeywell's first-quarter earnings were up 17% to $966 million, while sales grew a meager 0.2% to $9.33 billion.
The question Mr. Danhof raised is why a company that makes billions has to beg the federal government for millions. And all the while, its CEO is on TV with a Chicken Little act about ballooning government debt.
"He's sorely out of touch with reality and definitely out of touch with the average American," Mr. Danhof said in a telephone interview.
Honeywell's UOP subsidiary received the $25 million grant in 2010 as part of the $787 billion American Recovery and Reinvestment Act of 2009--you know, that bill that was supposed to put everyone back to work. The Department of Energy anticipated Honeywell's plant would create 85 construction jobs at its peak and 40 permanent jobs during its duration.
Last year, Hawaiian news website Honolulu Civil Beat reported the project peaked at about 60 construction jobs and created only 10 permanent jobs.
"This CEO simply doesn't care that he wasted that much money," Mr. Danhof said. "It doesn't bother him in the least."
When I contacted Honeywell, I received a prepared statement from Jim Rekoske, vice president and general manager of the Renewable Energy and Chemicals business unit at Honeywell's UOP.
"The claims made by the National Center for Public Policy Research are off the mark," he wrote. "The main goal of the project has always been to demonstrate the feasibility of cutting-edge technology to covert biomass into green transportation fuels to spur investment and job creation in the future.
"Honeywell's UOP has invested at least $10 million into the project and met all of the technology deliverables of this project to date.
"The project has created at least 85 jobs during its construction phase," Mr. Rekoske wrote. "Once successfully proven, a commercial-scale facility using the same technology could create as many as 800 new construction jobs and 1,000 new jobs in biomass production and refinery operations."
Maybe it will. Maybe it won't. In any case, a $25 million federal grant is pocket change compared to government-funded debacles such as the failed solar company Solyndra or the still-struggling Fisker Automotive, which each received hundreds of millions in government funding.
Or how about Tesla, the more successful government-funded electric car maker that is now building toys for millionaires? "They made a car for Matt Damon. Yay!" Mr. Danhof scoffed.
"People like Cote go sit on the Simpson-Bowles commission for a reason," Mr. Danhof said. "He was on this commission so he could get a seat next to President Obama at the lunch table, and then to get some perks for his company.
"And what did we get out of the Simpson-Bowles commission? A decent idea that went nowhere.
"We need serious leaders to come up with serious solutions and make hard decisions," he continued. "What we don't need is grant-seeking companies with their hands out."
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. The column is published each Tuesday and Thursday at 9 a.m. ET. Contact Al at firstname.lastname@example.org or tellittoal.com)