The 2017 Operating Benchmarks Report published by the Measurement, Control & Automation Association (MCAA) has provided some insight into how companies have fared during the difficult market conditions in 2016 when depressed oil prices severely affected business in the UK.
A review of information on the largest public companies in the industry mirrored the results of the largest companies in MCAA’s report showing decreases for both in the year-over-year revenue growth (down 5.6% for the industry’s large public companies and down 13.1% for the MCAA members) as well as operating income (down 13.1% for public companies and 52.4% for the MCAA population).
Interestingly, the mid-size companies ($10-100m) found ways to weather the market storm. Companies $10-30m in size, while down 5.4% in revenue growth, had an operating income increase of 29.6% over 2015 and companies $30-100m in size were down 3.4% in revenue with a rise in operating income of 11.9%. Data in the report shows that these companies were able to reduce their general and administrative costs by 15-20% in order to achieve those better results despite the drop in revenues.
Edward J. Curry, Principal of Curry & Hurd and a former Chairman of MCAA, noted that a significant issue for all companies is the impact of a limited employee talent pool - many companies retained their skilled workers despite the revenue downturn because of the difficulty of finding replacements.
Of the large public companies, Danaher and Ametek continued to have high growth and good operating income results. Honeywell did very well with 16% operating income growth and over ten percent growth in revenue. Although down in revenue growth, Emerson was able to maintain their traditional good operating income results. The international companies had much lower growth results than US-based companies.
Another interesting result was the spending for R&D which was up over 2015 for all company size groups except the smallest companies (under $10m). The $30-100m companies increased their spending on R&D by nearly 25%.
For channel firms, the downturn spelled lower revenue and an inability to reduce administrative costs, resulting in a significant downturn in operating income as with the manufacturing population. Results for channel companies are reported separately from manufacturers in the MCAA report.
The operating benchmarks report is an annual survey project of the association which represents 175 manufacturers and channel partners who supply instrumentation, systems and software to the process industries around the world. Fifty-five companies participated in the 2017 study. The report includes results over five years for manufacturers and three years for channel firms. This year’s results showed the downturn from the high in 2014 through 2016.