Honeywell's Strategic Leadership Shift in Industrial Automation: How Peter Lau's Proven Track Record Positions the Segment for Post-Spin-Off Outperformance

Honeywell's decision to spin off its Industrial Automation business into a standalone entity by late 2026 marks a pivotal moment in the industrial sector. The move, part of a broader strategy to create three independent companies focused on aerospace, automation, and advanced materials, is designed to unlock value by sharpening operational focus and accelerating growth in high-potential markets. At the helm of this transformation is , a leader whose career has been defined by digital reinvention and operational rigor. As Honeywell's newly appointed President and CEO of Industrial Automation, Lau's track record at FARO Technologies and Honeywell itself suggests the segment is uniquely positioned to outperform in a post-spin-off era.

A Leader Built for Disruption

Peter Lau's career is a case study in navigating industrial automation's evolving landscape. From 2018 to 2020, he led Honeywell's Security, Fire, and Electrical Products businesses, steering them through a critical shift from hardware-centric solutions to software-driven platforms. This pivot not only aligned the company with the digital transformation sweeping the sector but also expanded its global footprint and commercial capabilities. His return to Honeywell in 2025, this time as head of Industrial Automation, underscores his deep institutional knowledge and strategic vision.

Lau's most recent role as CEO of FARO Technologies (2023–2025) further solidified his reputation. Under his leadership, FARO executed a three-phase strategic transformation that boosted non-GAAP gross margins by 590 basis points year-over-year to 57.7% in Q1 2025 and drove adjusted EBITDA growth of 124% to $12.5 million. These results were achieved through supply chain localization, cost discipline, and a relentless focus on customer-driven innovation. The company's successful acquisition in 2025—a direct outcome of Lau's operational overhaul—demonstrates his ability to turn complex organizations into high-performing, market-leading entities.

Strategic Alignment with Megatrends

Honeywell's Industrial Automation segment is not just a spin-off—it's a strategic bet on the future of automation, digitalization, and energy transition. The division, which generated $18 billion in revenue in 2024, is tasked with integrating process technology, software, and AI-enabled solutions to drive productivity and sustainability. Lau's appointment aligns perfectly with this mission. His experience in transitioning businesses from legacy systems to software-first models mirrors the industry's shift toward smart manufacturing and autonomous systems.

The segment's post-spin-off roadmap includes leveraging Honeywell's Forge IoT platform and Accelerator operating system to deliver solutions that address global challenges like energy security and industrial decarbonization. Lau's emphasis on operational excellence—evidenced by his restructuring of FARO's supply chain and cost base—positions the business to capitalize on these trends while maintaining financial discipline.

Post-Spin-Off Opportunities and Risks

The separation of Industrial Automation into a standalone entity by late 2026 will grant it greater flexibility to pursue tailored growth strategies. This includes evaluating strategic alternatives for its Productivity Solutions and Services (PSS) and Warehouse and Workflow Solutions (WWS) businesses, which together contributed $2 billion in revenue in 2024. Lau's track record in portfolio optimization—such as FARO's focus on high-margin software solutions—suggests he will prioritize initiatives that enhance margins and scalability.

However, the spin-off also introduces risks. The industrial automation market is highly competitive, with rivals like Siemens and ABB investing heavily in AI and IoT. Additionally, macroeconomic headwinds, such as supply chain volatility and interest rate uncertainty, could pressure margins. That said, Lau's experience in navigating such challenges—evidenced by FARO's resilience during the 2024 tariff-driven disruptions—provides confidence in his ability to mitigate these risks.

Investment Implications

For investors, Honeywell's Industrial Automation spin-off represents a compelling opportunity. The segment's current forward P/E ratio of 21x is below the industrial sector average of 25x, suggesting potential for re-rating as the business gains clarity and operational focus. Lau's leadership, combined with Honeywell's strong balance sheet and $102.6 million in cash reserves (as seen at FARO), provides a solid foundation for reinvestment and shareholder returns.

The key question is whether the market will reward the spin-off with a premium valuation. Historical precedents, such as the 2023 spin-off of 3M's Personal Safety division, suggest that standalone entities with clear strategic direction and operational expertise often outperform. If Lau can replicate his success at FARO—where he drove a 15% EBITDA margin expansion in just two years—Honeywell's Industrial Automation could become a standout performer in the automation sector.

Conclusion

Peter Lau's appointment as CEO of Honeywell's Industrial Automation business is more than a leadership change—it's a strategic signal. His proven ability to drive digital transformation, enhance operational efficiency, and execute complex turnarounds positions the segment to thrive in a post-spin-off environment. As the industrial automation market accelerates, investors who recognize the alignment between Lau's expertise and Honeywell's strategic goals may find themselves well-positioned for long-term gains. The coming years will test whether the spin-off lives up to its promise, but with a leader like Lau at the helm, the odds are firmly in favor of outperformance.