Productivity growth for 10 of 17 major publicly held analytical instrument and lab product companies (see table, page 6) declined in fiscal 2012 (FY12) due to expansion in emerging markets and acquisitions. On a currency-neutral basis, the average sales-per-employee ratio for the 17 companies fell 0.4% to $293,902 in FY12. In spite of stable sales growth and restructuring activities, most companies expanded their infrastructure along with headcount in faster growing regions, primarily China. While a number of companies consolidated manufacturing, several of the smaller companies expanded production to drive profitability. For the 17 companies, the median percentage change in total employees and currency-neutral sales increased 8.7% and 7.0%, respectively, in FY12. IBO’s calculations are based on FY12 employment and currency-neutral sales figures in US dollars. Sales growth for international companies is calculated at FY12 exchange rates.

Four of the broad-based vendors, Thermo Fisher Scientific, PerkinElmer, Bruker and Life Technologies, recorded the highest productivity growth in FY12, climbing 9.8%, 7.8%, 6.0% and 5.3%, respectively, due to restructuring and acquisition synergies. While all four companies expanded production capacity along with headcount in China, they each controlled expenses through consolidating manufacturing operations. Thermo consolidated nine manufacturing facilities in the US, Europe and Asia for the trailing 12 months ending March 31 and moved roughly $100 million in production to lower cost regions in FY12, in particular Lithuania and China. The company also opened a new manufacturing facility in China for life sciences consumables and equipment (see IBO 12/15/12), which is expected to have over 400 employees by 2015, according to a May 2012 analyst presentation.

In FY12, Thermo Analytical Technologies cut 590 employees, Laboratory Products and Services cut 290 employees, and Specialty Diagnostics cut 240 employees. However, these layoffs were partially offset by acquisitions, including Doe & Ingalls (see IBO 5/15/12) and One Lambda (see IBO 7/31/12), which had 87 and 320 employees in FY11, respectively. With a focus on developing specific product applications for emerging markets, the company also expanded in India, South Korea and Russia. Despite those investments, Thermo’s headcount declined by 400 employees in FY12, or 1.0% of its workforce. Currency-neutral sales grew 8.7%, including strong contributions from acquisitions completed in FY11.

Aside from Thermo, Life was the only other company in the table to reduce its overall headcount in FY12. The company decreased its total number of employees by 3.8% due to discontinued products, consolidated manufacturing and slow revenue growth, which was weakened by slower academic spending in the US. However, the company also invested in infrastructure and sales personnel outside the US to capitalize on demand in Asia. According to Life’s first quarter FY12 presentation, it planned to add roughly 250 employees in China in 2012. It also established a manufacturing facility in Singapore, primarily for next generation sequencing and molecular diagnostic instruments (see IBO 8/31/12), representing the company’s first instrument manufacturing facility outside the US. In fact, Life’s employee base outside the US climbed 12.6% in FY12 to make up 49% of its workforce. Overall, the company’s sales and marketing (S&M) headcount grew 19.4% to make up 37% of its workforce due to the acquisition of dealers and added personnel in emerging territories.

PerkinElmer also expanded its infrastructure and headcount in emerging markets in FY12. It opened a larger headquarters in Shanghai, China, which includes a development and learning center (see IBO 10/15/12). The company also opened an R&D and manufacturing facility for its Diagnostics business outside Shanghai (see IBO 10/15/12) and a customer training facility in Krakow, Poland (see IBO 2/15/13). Its employee base in emerging markets grew roughly 33% to 2,000 to account for 27% of its workforce in FY12. However, PerkinElmer cut 317 employees during the first half of the year due to operational synergies from acquisitions and the realignment of certain business operations. In the second half of the year, it cut 120 employees, including 75 employees from its Connecticut facility, due to consolidation from the transfer of manufacturing to lower cost regions. Overall, its workforce increased 4.2% in FY12, including a 6.0% increase in sales and service representatives to account for 47% of employees. Currency-neutral sales climbed 12.3%.

Following disappointing operating results in FY11 due to significant investments, including manufacturing, R&D and distribution, Bruker implemented restructuring efforts in FY12. The company reorganized the 10 divisions of its Bruker Scientific Instruments division into three groups (see IBO 3/15/13), divested a small thermal analysis business in Japan (see IBO 9/15/12) and began outsourcing non-core manufacturing from the Bruker BioSpin business. It also closed a Chemical & Applied Markets (CAM) R&D and manufacturing facility in Europe and transferred operations to its CAM facility in California. With roughly 150 jobs cut, Bruker slowed its employee increase to 6.7% in FY12, compared with 11.1% in FY11. The increase in personnel was primarily in R&D and S&M, which climbed 9.9% and 9.0% to account for 17% and 24% of its workforce, respectively.

Productivity for several companies, such as Fluidigm and FEI, were affected by expanded production capabilities due to growing demand and insourcing. Fluidigm’s sales-per-employee ratio improved 3.3% in FY12, but slowed from 10.1% in FY11 due to expanded infrastructure in both the US and internationally. With strong revenue growth of 20.1% in FY12 and increasing demand for single-cell genomics products, the company expanded production capabilities. In FY12, Fluidigm grew its manufacturing, and general and administrative workforce by 28.4% and 30.0% to make up 31% and 19% of total employees, respectively. The company also opened a subsidiary in China. Overall, total headcount increased 16.3%.

FEI also significantly increased manufacturing personnel last fiscal year, as the company transitioned outsourced production back to the US and expanded manufacturing for dual beam and SEM products in the Czech Republic. As a result, manufacturing headcount grew 20.7% to make up 27% of employees. The company’s R&D and S&M headcount also expanded drastically, climbing 23.6% and 28.8% to account for 20% and 17% of its workforce, respectively, but this was largely due to acquisitions. With a total workforce increase of 21.4% and currency-neutral sales growth of 10.2%, FEI’s productivity fell 9.3%

Among the nine other companies in the table that recorded lower sales-per-employee ratios in FY12, Illumina and Luminex declined from double-digit productivity growth in FY11 due to R&D investments and expansion of their diagnostics businesses. In FY12, Illumina acquired BlueGnome (see IBO 9/30/12), which added roughly 50 employees. In addition, Illumina recorded sales growth of 8.8%, its slowest growth since its initial launch of genotyping products in 2001. Despite a 0.3% decline in productivity, Illumina recorded the highest sales-to-employee ratio of $478,548 among US firms in the table. The significant sales-per-employee ratio is attributed to the high-priced sequencing instruments and related HiSeq2500 upgrade, maintenance contracts and consumable pull-through rates.

Like Illumina, Luminex also recorded slower sales growth in FY12 compared with the last several years and also invested in its diagnostics business, leading productivity down 3.8%. In FY12, revenues grew 9.9%, including 5.1% growth from the acquisition of GenturaDx (see IBO 7/15/12). However, the acquisition, along with an added direct sales force for its molecular diagnostics products and new R&D personnel, drove the total number of employees up 14.3% in FY12. Total selling, general and administrative headcount climbed 13.9% to make up 38% of employees. These added positions were primarily due to the expansion of facilities within the Technology and Strategic Partnerships segment. R&D headcount for the Assays and Related Products segment climbed 16.0% to 116 employees due to the acquisition and the development of biodefense products.

Similar to Luminex, slower organic sales affected sales-per-employee ratios for Affymetrix and Tecan, which declined 11.4% and 4.9%, respectively. Affymetrix successfully realigned its portfolio in the area of cytogenetics, but was unable to stabilize its core business, as demand for gene expression products remained weak. As a result, currency-neutral sales grew 11.3% in FY12 but declined organically. In contrast, the company’s workforce grew by 25.7%, primarily due to the acquisition of eBioscience (see IBO 11/30/11) and the launch of a direct sales force in Japan for these products. The company also increased operations in China and Brazil. To help contain expenses, Affymetrix consolidated production in Singapore and announced plans to reduce its workforce by 100 employees, or 8%, in 2013 (see IBO 2/15/13).

Tecan’s currency-neutral sales grew only 1.9% in FY12 due to slower growth in the Life Sciences business. However, the company expanded its diagnostics business and R&D personnel for next-generation liquid handing platforms. R&D and S&M headcount increased by 13.9% and 12.9% to make up 25% and 18% of its workforce, respectively. Overall, the total number of employees grew 7.0%, with the largest change in headcount in Asia, where it climbed roughly 40% to account for 8% of its workforce.

Like Tecan, productivity for Eppendorf and Biotage declined due to personnel expansion in Asia. Eppendorf’s headcount in Asia/Pacific/Africa climbed 11.9% in FY12 to account for 18% of its workforce and was primarily added in services and S&M. However, its domestic headcount in Germany expanded mainly due to the purchase of DASGIP Information and Process Technology (see IBO 1/15/12). In FY12, productivity fell 4.8% as the company’s workforce climbed 9.2% and sales grew 4.0% excluding currency.

Productivity for Biotage slipped 1.6% in FY12 due to a 7.4% increase in headcount. The company doubled the size of its operations in China in the fourth quarter FY12, which grew from 1 employee to 11 for the year. The company also increased S&M efforts for its new industrial resins. FY12 sales grew 5.7% excluding currency.