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John O'Higgins, Chief Executive
Business overview
Introduction
Spectris develops and markets precision instrumentation and controls. Our products and applications help customers to improve product quality and performance, improve core manufacturing processes, reduce downtime and wastage and reduce time to market. Our businesses are leaders in their specialised markets and work with multinational customers in a broad spread of industries, for example pulp and paper, pharmaceuticals, energy and automotive. We have a wide range of core technologies, many of which are proprietary. Working closely with customers, we apply our expertise to help them solve the production challenges they face.
Our solutions and services are increasingly being applied to help our customers use energy and resources more efficiently. This enables them to both improve their productivity and limit the impact of their products or processes on the environment.
Market drivers
The global automation, measurement and control industry comprises multiple sub-sectors. Spectris businesses participate in a number of these sub-sectors, with the unifying theme being a focus on providing productivity-enhancing instrumentation, equipment and controls for a diverse range of customer applications.
Although demand for measurement and control instrumentation is, to some extent, dependent upon the end user markets served, there are a number of general factors which drive the industry. Companies today compete in an environment where they need to bring innovative products to market as quickly as possible yet at the lowest possible unit cost. As products become increasingly complex and incorporate the latest technologies, sophisticated test and measurement equipment is required to support the new design and manufacturing processes, improve efficiency and reduce wastage of expensive materials.
Reducing the time to market is key to achieving competitive advantage and increasing revenue from new products. Many companies use measurement and control instrumentation in the design phase, as well as during the manufacturing process, to shorten development cycles and bring new products to market more quickly. This is particularly important in industries such as automotive, aerospace, pharmaceuticals and life sciences, where development costs are high.
Ensuring consistent product quality is another significant factor in the demand for measurement and control instrumentation.With companies competing for market share, they cannot afford any risk to brand reputation from poor quality goods and product recalls. Increasing regulation is also driving demand for instrumentation to monitor production processes, for example in industries such as food and pharmaceuticals, where specific quality control procedures have to be met. Tougher environmental legislation requires reductions in areas such as noise levels, emissions, and restrictions on the use of hazardous substances.
Globalisation also represents a significant opportunity for measurement and control companies as customers develop manufacturing facilities in industrialising economies such as China, Eastern Europe and Latin America. These facilities require significant investment to ensure global standards are met.
Sector overview
Spectris comprises fourteen separate operating companies which are grouped into three sectors: Process Technology, In-line Instrumentation and Electronic Controls.
The Process Technology sector comprises Brüel & Kjær Sound & Vibration, Fusion UV Systems, Malvern Instruments, PANalytical and Particle Measuring Systems. These companies primarily provide laboratory instrumentation for improving productivity during the product development process and at-line instrumentation (sampling) for quality assurance during the production process in batch process manufacturing industries, for example the semiconductor, pharmaceuticals and life sciences industries. Several companies also provide analytical instrumentation for materials testing in the metals, minerals and mining sector. The businesses in this sector generally sell directly to global end user customers and provide aftermarket services such as technical support, instrument calibration and replacement consumables.
The In-line Instrumentation sector comprises Beta LaserMike, Brüel & Kjær Vibro, BTG, Ircon, NDC Infrared Engineering and Servomex. These companies primarily provide instrumentation which is used to monitor production in continuous production processes in order to improve productivity and yield and reduce costs. Industry sectors include oil and gas, energy, petrochemicals, plastics/converting, pulp and paper, metals, and food and drink. The businesses generally sell directly to global end user customers and systems integrators and the majority of sales are for new and upgraded manufacturing facilities. All businesses provide aftermarket services.
The Electronic Controls sector comprises HBM, Microscan and Red Lion Controls. These companies supply controls for production equipment to machine builders for general manufacturing processes and to the aerospace and automotive industries. These businesses generally sell to original equipment manufacturers (OEMs), mostly through distributors, and sales tend to comprise large volumes of low average price products which do not require aftermarket services. The majority of business is repeat business as once the customer has purchased a product for one machine, the same product will be specified for all similar machines.
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