Integration - a Critical Market Force Causing Change
Flow Research (www.flowresearch.com)
has released the Worldflow Market Barometer, the first in a series
of monthly reports published as part of the Worldflow Monitoring Service.
The Barometer identifies integration as the most critical
issue for process control companies today.
Analysis of process control companies finds that those companies
that integrate their diverse divisions and acquired companies with the
rest of the company will be in a more favorable competitive position.
By contrast, companies that fail to absorb newly acquired companies
or divisions into the company as a whole will struggle to compete in
today’s globalized marketplace.
As a result of globalization, larger companies with a
worldwide reach are outpacing smaller companies that compete in only one
market, or have distribution channels mainly within their own country or
geographic region. Companies
such as Emerson Process, Invensys, Honeywell, Yokogawa, Endress &
Hauser, and Danfoss are companies that benefit in this environment.
Many smaller, single-technology companies will be forced to allow
themselves to be acquired in order to compete effectively in this new
globalized world. Here’s a partial list of companies acquired in the
past ten years: Daniel Industries, Dieterich Standard,
Eckardt, Elsag Bailey, EMCO, Fischer & Porter, Hartmann & Braun,
Intellution, Measurex, Milltronics, Moore Products, Water Specialties.
For more companies in this list, go to http://www.flowresearch.com/vanishedcompanies/vanishedcompanies.htm.
The concept of integration refers to the extent to which
the components of a company and organization are playing the same tune, or
on the same page. Our
analysis finds that companies who are in the business of expanding by
acquiring companies run the risk of creating a collection of inconsistent
and in some cases incompatible product lines.
Until they can rationalize their product lines by finding a single
perspective in terms of which these products can be viewed, they will
continue to struggle in the flow and process control environment.
How to deal with the brand names of an acquired company is
an important decision for a company that acquires an existing product
line. Some companies choose
to eliminate brand names that customers have developed loyalty to.
While customers may eventually develop loyalty to a new brand, this
is a process that can take years. Companies
that keep the brand names of acquired product lines have been more
successful in retaining market share than companies that do away with
existing brand names.
One article in the Worldflow Market Barometer is entitled
“Will the ultrasonic flowmeter market consolidate?” This article analyzes the relative situations of Panametrics,
Controlotron, and Krohne in the ultrasonic flowmeter market.
Of the three, Krohne is clearly the company of the future, with
multiple product lines and worldwide distribution system.
Panametrics and Controlotron are essentially single-technology
companies whose leadership role is being threatened by the twin waves of
globalization and integration. Instromet
and Daniel clearly also belong in the “company of the future”
The Worldflow Market Barometer is part of a series of monthly reports published by Flow Research, Inc. The Barometer provides a detailed analysis of events in the flowmeter industry. It provides an update on events in ten different flow technologies, and also reports on important developments within flowmeter companies. Other publications in the series include Process Industry Monitor and User Perspective. The service is intended for suppliers and end-users of flowmeters and process control equipment. More information is available at www.flowresearch.com.