Ralph Waldo Emerson's adage, "Make yourself necessary to somebody," holds true for Emerson Electric. The company makes a slew of electrical, electromechanical, and electronic products, many of which are used to control gases, liquids, and electricity. Its InSinkErator is the largest maker of food waste disposers and hot water dispensers. Emerson pursues an aggressive acquisition strategy coupled with select divestitures in building up its global presence. The company gathers its 80 business units and divisions under five business segments. It has more than 235 manufacturing locations, with about 155 outside of the US. International markets make up more than half of Emerson's sales.
The company operates through five primary segments. Process management provides products and services for precision measurement, control, monitoring, and other functions for oil and gas reservoirs, power plants, and plants for processing products that include food and paper. Its network power segment serves power and telecommunications networks and data centers with products that include embedded power supplies, control devices, and inbound power systems.
Emerson's industrial automation operations provide products that aid the manufacturing process, including motors, fluid controls, and materials joining equipment. Climate technologies offers products and services for residential heating and cooling, commercial air conditioning, and commercial and industrial refrigeration. Finally, tool and storage, its smallest segment, sells professional tools, commercial storage products, food waste disposers, and appliances such as ceiling fans and compact electric water heaters.
Year-over-year net sales and gross profit both rose 15% in 2011. Backed by successful acquisitions and favorable foreign currency exchanges, all of the company's segments reported healthy sales growth that year.
Process management (accounting for 28% of revenue) spiked 16% on the back of strong demand in the oil and gas, chemical, power, and refining markets for the company's offerings in measurement and flow, valves, and systems. Network power (27% of sales) went up about 17% supported in part by major acquisitions made in 2010.
Industrial automation (21% of revenue) surged 23% as the capital goods end markets picked up speed. Especially strong for this segment were sales of power generating alternators, fluid automation, electrical drives, and power transmission. Climate technologies (16%) increased 5% with strong demand in its compressor and North American refrigeration and air conditioning businesses. Tool and storage (8% of revenue) also went up about 5% on healthy sales.
In early 2011 Emerson purchased Turbine Control Service Associates, a producer of generator excitation systems that regulate generators powered by turbines of all sorts. Turbine Control Service tucks in with process management's Power & Water Solutions unit, notably enhancing its power-industry capabilities with a digital generator controller system, used on generators at nuclear, fossil, and hydroelectric power plants.
Emerson in 2011 also sold the heating elements unit of its tools and storage segment to European heating company NIBE Industrier. After closing about 20 sites and cutting some 2,800 jobs in 2011, the company has now earmarked about $100 million for building or expanding offices and manufacturing plants in Houston and McKinney, Texas, Nanjing, China, and Sorocaba, Brazil.
In 2010 Emerson made a strong move to expand its network power segment through the $1.5 billion purchase of UK-based Chloride Group. Chloride's product line of power backup systems ensures uninterrupted power in nuclear, data center, emergency, and hospital applications. The acquisition complemented Emerson's offerings in a strategically critical sector and deepened its presence in Europe. On its heels, Emerson obtained Avocent Corp., a network equipment technology provider, for about $1.2 billion. Avocent beefed up Emerson's hardware and software expertise in managing the temperature and energy consumption of large data centers for healthcare, telecom and industrial operations. – less