With the exception of several younger companies, the majority of analytical instrument and lab product companies in the table on page 4 recorded modest sales-per-employee growth in fiscal year 2013 (FY13). The average sales-per-employee ratio for the 18 companies grew 3.6% excluding currency to $319,284 in FY13. However, due to increased investments, acquisitions or slow revenue growth, only half of the companies recorded productivity growth above the 1.5% rate of inflation. With near-term revenue growth forecasts for most companies in a modest range, many companies are compensating with further manufacturing efficiencies, cost reductions and restructuring to drive earnings growth. IBO’s calculations are based on FY13 employment and currency-neutral sales figures in US dollars.

Four companies—Bruker, Harvard Bioscience, PerkinElmer and Thermo Fisher Scientific—implemented major initiatives in FY13 to reduce expenses and enhance operating performance, boosting productivity. Bruker, which is in the midst of a multiyear restructuring phase to expand operating margins and support future growth opportunities, reduced its headcount by 3.1% in FY13. Within Chemical & Applied Markets (CAM), it closed a GC manufacturing facility and an R&D facility in the Netherlands, affecting roughly 50 employees. In addition, the company closed a preclinical-imaging production facility, divested a power electronics business and expanded outsourced manufacturing activities for various businesses, including BioSpin and CAM. In the third quarter of FY13, the company implemented additional cost-saving measures, including facility consolidations and a reduction of 150 employees within Bruker Materials, as a result of sustained weakness in industrial markets. Restructuring costs totaled $23.0 million in FY13 and are expected to produce annual savings of $15–$20 million in FY14.

As part of Thermo’s ongoing restructuring actions and operational improvements, the company maintained its focus in FY13 on its Practical Process Improvements program, facility consolidations, global sourcing and low-cost manufacturing. Productivity improvements in FY13 resulted in roughly $250 million in savings, including $85 million from restructuring. In anticipation of the acquisition of Life Technologies (see IBO 4/15/13), Thermo cut 655 employees in the first half of FY13, including roughly 250 positions in Analytical Technologies, 220 in Laboratory Products and Services, and about 185 in Specialty Diagnostics. While the company did not provide specific severance actions for the second half of the year, restructuring activity intensified, as Thermo stated in an SEC filing that 3% of its workforce prior to the merger was affected by restructuring activity. The headcount reductions and facility consolidations resulted in $77.7 million in restructuring costs in FY13. Thermo’s pro forma FY13 productivity, including the acquisition of Life (see IBO 2/15/14) and divested product lines (see IBO 1/15/14), grew 3.6% as a result of Life’s higher sales-per-employee ratio, restructuring actions and expanded international operations.

PerkinElmer also implemented strategic initiatives to improve operating performance in FY13. The company realized restructuring activities in each quarter in FY13 for a total charge of $33.9 million. In the first quarter, the company cut 62 employees in an effort to streamline operations and allocate resources to higher-growth markets, including its Diagnostics business in China and other emerging markets. In the second quarter, 265 positions were impacted due to continued consolidation and weaker-than-expected demand in environmental and industrial markets. The company transferred manufacturing of certain product lines to China and Singapore and combined three North American facilities. It also initiated plans to consolidate back-office capabilities in Poland, and at two former Caliper Life Sciences sites. The completion of these actions, along with additional consolidation in the second half of FY13, resulted in an additional 104 layoffs. The majority of the R&D and manufacturing consolidation were attributed to the opening of a life science Center for Innovation in Hopkinton, Massachusetts, in October 2013, which added roughly 75 workers. The productivity initiatives boosted adjusted operating margins by roughly 100 basis points, or over $20 million in cost savings. The company expects to improve operating margins by over 300 basis points to more than 20% of sales by 2017. PerkinElmer also invested in growth, as it expanded its Customer Knowledge Centers focused on environmental applications and established direct operations in Israel, South Africa and Turkey. As a result, total headcount grew by 100 employees in FY13.

Harvard Biosciences experienced new management and organizational direction in FY13, including the spin-off of the HART business and restructuring efforts to curb expenditures and realign investments. In the fourth quarter of FY13, Harvard Biosciences initiated plans to reduce its workforce by roughly 13% (see IBO 12/15/13), which is expected to produce annual savings of $2.0 million, with an additional $1.0 million to be reinvested in expansion in Asia and R&D.

In FY13, Luminex and Affymetrix initiated restructuring in response to specific market factors. Both firms also made investment to grow their clinical businesses. In the third quarter of FY13, Luminex announced a restructuring plan to reduce its headcount by 5% and divest its newborn-screening business (see IBO 8/15/13). These actions are expected to produce annual savings of $5–$6 million, which may be reallocated to the molecular diagnostics and partnership businesses. Overall headcount climbed due to the addition of sales and marketing personnel for new products.

Affymetrix completed its FY12 restructuring plan in FY13 (see IBO 1/15/13), which resulted in the reduction of roughly 100 employees and is expected to produce $25 million in annual savings. The plan was partly in response to declining sales for its gene-expression business. The company also divested its Anatrace product line (see IBO 10/15/13). But it also added personnel, most likely to its growing Genetic Analysis and Clinical Applications business, resulting in a zero net change in FY 13 headcount. Due to the timing of the eBioscience acquisition (see IBO 6/30/12) and a one-time $5.3 million licensing payment from Roche, Affymetrix recorded doubled-digit sales-per-employee growth in FY13. But on a pro forma basis and excluding one-time payments, FY13 productivity would have declined.

Productivity changes in FY13 for Analytik Jena and Oxford Instruments were affected by acquisitions, as sales per employee for both fell. Analytik Jena Life Science and Analytical Instrumentation’s headcounts grew roughly 40% and 9%, respectively, as the company acquired UVP (see IBO 4/30/13). The company also expanded its marketing and sales networks in France and Thailand. However, Analytik also undertook restructuring as a result of weak Japanese sales. The company initiated cost-reduction measures at its Japanese subsidiary during the fiscal fourth quarter of 2013. Productivity for Oxford Instruments also declined in FY13, as it added 434 employees, primarily due to the acquisition of Andor Technology (see IBO 12/15/13). Oxford only provided the average number of employees at the end of the year, which grew 6.4%.

Fludigm and NanoString Technologies were the only two companies in the table that recorded double-digit productivity growth in FY13 based on organic sales growth. Robust organic sales growth for both necessitated new hires. Fluidigm’s total headcount increased 16.3% in FY13, including 22.4% and 18.3% growth for R&D, and sales and marketing personnel, respectively. NanoString also invested significant resources in product development and global expansion, as total headcount for the seven-month period from May FY13 to December FY13 climbed 20.8%. Sales and marketing personnel for the period jumped 45.7% due to the commercialization of molecular diagnostics products and an expanded sales force for its life sciences business. FY13 sales exceeded employee growth, rising 36.7% due to strong life sciences instrument revenue and demand in Asia Pacific.

Illumina also recorded strong organic growth in FY13. However, the company’s productivity gains were hindered by investments in product development, sales personnel and expansion into new markets. Illumina hired sales personnel within its clinical, cytogenetics and bioinformatics businesses. Illumina’s direct sales personnel and field staff grew 27% and 67%, respectively, including 69% and 89% growth in emerging markets, respectively. Direct sales and field staff headcount grew 20% and 65% in the Americas, respectively, and 9% and 50% in Asia Pacific, respectively, according to the company’s 2013 Analyst Meeting presentation. The acquisitions of Advanced Liquid Logic (see IBO 7/31/13) and Verinata Health (see IBO 1/15/13) further added to employee growth.