By : Jim Pinto,
By : Jim Pinto,
Emerson is one of the world's leading global manufacturing companies. Emerson Process Management is a leader in process control and automation. With an achievement-oriented culture, the company seems to attract and retain some of the best people in the industry.
Automation.com, February 2006
Emerson has been in business for 115 years. Now with 115,000 employees, the company is one of the world's leading manufacturing companies with operations around the globe. Emerson Process Management is a leader in process control and automation. Emerson is an achievement-oriented culture, which seems to attract some of the best people in the industry.
BackgroundChuck Knight ran Emerson for 27 years. He joined his father as a management consultant and became CEO in 1973, when he was just 37 years old. With consistent, tough-minded management, he led Emerson’s revenue growth from under $1 billion to $15 billion.
Chuck Knight is legendary for his tough management style. He was known to grill top managers mercilessly, often using harsh language that strikes terror into managers who are not prepared; he admits to being "carried away" sometimes. But he was most admired for his leadership in maintaining Emerson's remarkable record of 43 straight years of earnings increases, until 2002, when Emerson’s string was finally broken by that year’s devastating economic plunge.
At 69, Knight remains as Chairman Emeritus, and he has handed over the Chairman & CEO reins to David Farr, aged 51, previously COO. Farr has been with Emerson for 24 years. The transition from Knight to Farr was seamless. The basic strategies and corporate process continued, and all the key managers stayed to contribute.
The Chuck Knight culture remains and is still one of the key things that differentiates Emerson. For all their companies, as well as acquired businesses, Emerson’s management simply does not accept poor profitability. It acts very quickly to keep and expand profitability when markets decline, and when changes or problems arise.
Emerson is the quintessential management-driven company. Key people always have direct operating background and hands-on experience. Chairman and CEO David Farr has been VP planning & development, group VP for the industrial components and equipment business, president of the Asia-Pacific group and executive VP for the process control business. He's known as a good manager, not just a bean counter. John Berra, president of Emerson Process, has spent 36 years working in the process automation industry, first at Monsanto as an end user and then as a supplier. He is well known and respected in the instrumentation business for his strong involvement and consistent contributions.
The primary segments of Emerson's $17.3 billion business (Fiscal year 2005) are:
Emerson Process ManagementEmerson Process Management was formed with the combination of Fisher Controls (leader in the valves business – flow controls) and Rosemount (best known for its differential pressure transducers and flow measurement products). Both these significant industry leaders were acquired by Emerson and were operating until just a few years ago with the name Fisher-Rosemount.
With sales of about $4.2 billion in 2005 and about 21,000 employees and 55 global manufacturing facilities, Emerson Process Management includes several other Emerson-owned companies related to process control. Together they offer virtually all of the devices, systems, software, and services that process end-users need to automate their plants. Products segments are: Measurement Instruments (44%); Systems, Solutions & Services (26%); Valves and Regulators (30%). The best know systems are PlantWeb and DeltaV, generating leading market-share for distributed controls.
One of the key recent Emerson initiatives has been to manufacture products in China and completely handle project management there. The Chinese engineering center there has the capability to stage and test systems, giving them a significant advantage in China and for many Far East projects.
Like others who have seen no growth in the products business, Emerson Process is working to transform from a components to a solutions supplier. Emerson is well suited to doing this, because it has always been involved with systems integration through its involvement in control system and its history with the “Fisher Reps”.
Emerson has never been interested in growth for its own sake. It divests when profit is poor. For example, when HMI software leader Intellution became unprofitable, visionary founder Steve Rubin exited, a new turnaround CEO was installed, and the company was sold to GE Fanuc. Emerson doesn’t buy or keep declining businesses. In addition, it only acquires pieces that represent a strategic fit in target markets.
What does it mean to be Emerson?This is the title of the latest Emerson annual report. It's a good lead in to this description of the key points of the corporate culture, "The Emerson difference":
Chuck Knight's new book: "Performance without Compromise"In August 2005, Chuck Knight published a significant new book: "Performance without compromise - How Emerson Consistently Achieves Winning Results".
The former Emerson Chairman and CEO offers detailed insights into the management process that achieved legendary performance over several decades. His book was co-authored by Davis Dyer, and includes back cover kudos from the likes of Louis Gerstner, Clayton Christensen and August Busch III.
Several specific topics are covered in depth:
Appendix B1 is valuable – the template for Emerson's famed "President's Report", used monthly to assess the reasonableness of each Division's quarterly and annual expectations.
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