Honeywell 2008 Annual Report Download - page 17

International Operations
We are engaged in manufacturing, sales, service and research and development mainly in the United States,
Europe, Canada, Asia and Latin America. U.S. exports and foreign manufactured products are significant to our
operations. U.S. exports comprised 10, 10 and 11 percent of our total sales in 2008, 2007 and 2006,
respectively. Foreign manufactured products and services, mainly in Europe, were 39, 39 and 37 percent of our
total sales in 2008, 2007 and 2006, respectively.
Approximately 19 percent of total 2008 sales of Aerospace-related products and services were exports of
U.S. manufactured products and systems and performance of services such as aircraft repair and overhaul.
Exports were principally made to Europe, Canada, Asia and Latin America. Foreign manufactured products and
systems and performance of services comprised approximately 14 percent of total 2008 Aerospace sales. The
principal manufacturing facilities outside the U.S. are in Europe, with less significant operations in Canada and
Asia.
Approximately 2 percent of total 2008 sales of Automation and Control Solutions products were exports of
U.S. manufactured products. Foreign manufactured products and performance of services accounted for 57
percent of total 2008 Automation and Control Solutions sales. The principal manufacturing facilities outside the
U.S. are in Europe with less significant operations in Asia and Canada.
Approximately 14 percent of total 2008 sales of Specialty Materials products and services were exports of
U.S. manufactured products. Exports were principally made to Asia and Latin America. Foreign manufactured
products and performance of services comprised 24 percent of total 2008 Specialty Materials sales. The principal
manufacturing facilities outside the U.S. are in Europe, with less significant operations in Asia and Canada.
Exports of U.S. manufactured products comprised 1 percent of total 2008 sales of Transportation Systems
products. Foreign manufactured products accounted for 71 percent of total 2008 sales of Transportation
Systems. The principal manufacturing facilities outside the U.S. are in Europe, with less significant operations in
Asia and Latin America.
Financial information including net sales and long-lived assets related to geographic areas is included in
Note 24 of Notes to Financial Statements in "Item 8. Financial Statements and Supplementary Data". Information
regarding the economic, political, regulatory and other risks associated with international operations is included in
"Item 1A. Risk Factors."
Raw Materials
The principal raw materials used in our operations are generally readily available. We experienced no
significant problems in the purchase of key raw materials and commodities in 2008. We are not dependent on
any one supplier for a material amount of our raw materials, except related to phenol, a raw material used in our
Specialty Materials segment. We purchase phenol under a supply agreement with one supplier. We have no
reason to believe there is any material risk to this supply.
The costs of certain key raw materials, including natural gas, benzene (the key component in phenol),
ethylene, fluorspar and sulfur in our Specialty Materials business, steel, nickel, other metals and ethylene glycol
in our Transportation Systems business, and nickel, titanium and other metals in our Aerospace business, are
expected to remain volatile. In addition, in 2008 certain large long-term fixed supplier price agreements expired,
primarily relating to components used by our Aerospace business, which in the aggregate, subjected us to higher
volatility in certain component costs. We will continue to attempt to offset raw material cost increases with formula
or long-term supply agreements, price increases and hedging activities where feasible. We have no reason to
believe a shortage of raw materials will cause any material adverse impact during 2009. See "Item 1A. Risk
Factors" for further discussion.
We are highly dependent on our suppliers and subcontractors in order to meet commitments to our
customers. In addition, many major components and product equipment items are procured or subcontracted on
a single-source basis with a number of domestic and foreign companies. We maintain a qualification and
performance surveillance process to control risk associated with such reliance on third parties. While we believe
that sources of supply for raw materials and components are
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