Edward Curry, Principal of Curry & Hurd and a former chairman of the Measurement, Control & Automation Association (MCAA), offered his insight into the 2017 Operating Benchmarks Report published by the MCAA. The webinar, open only to those companies which participated in the study, provided insight into how companies weathered the difficult market conditions in 2016 when depressed oil prices severely affected business in this industry.
A review of information on the largest public companies in the industry mirrored the results of the largest companies in the MCAA’s report showing decreases for both in the year-over-year revenue growth (down 5.6 percent for the industry’s large public companies and down 13.1 percent for the MCAA members) as well as operating income (down 13.1 percent for public companies and 52.4 percent for the MCAA population).
The midsize companies ($10-100 million) found ways to weather the market storm. Companies $10-30 million in size, while down 5.4 percent in revenue growth, had an operating income increase of 29.6 percent over 2015 and companies $30-100 million in size were down 3.4 percent 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 from 15 to 20 percent.
Curry 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 had a 16 percent operating income growth and a more than 10 percent growth in revenue. The report also found that international companies had much lower growth results than US-based companies.
Spending for R&D was up over 2015 for all company size groups except the smallest companies under $10 million. The $30-100 million companies increased their spending on R&D by nearly 25 percent.
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 MCAA 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. This year’s results showed the downturn from the high in 2014 through 2016.
All MCAA members are able to contribute their standard financial data to the survey during the first three months of every year and receive the final aggregated and averaged results at no cost. Nonmembers are eligible to participate in the program for a fee.