Founded in 1890, the Emerson Electric Co. (NYSE: EMR) immediately began testing ways to exploit the world's newest technology, electricity. Emerson hoped to leverage electric power in creating various, functional domestic and industrial appliances. After only two years, the company was selling the first electric fans in the United States. The success of the electric fan led the company to begin attaching their electric motors to items as varied as sewing machines, power tools, dental drills and piano players. As a supplier for the U.S. Army Ordinance Department, Emerson's business was propelled during World War II, becoming the world's largest manufacturer of aircraft gun towers. W.R. "Buck" Persons was named chief executive in 1954. Immediately, he instituted initiatives to decentralize the company's manufacturing base and diversify Emerson's offerings. During Persons 20 years at the helm, Emerson grew from two plants employing 4,000 workers to 82 facilities with about 31,000 employees. Introduced as the CEO in 1973, Charles F. Knight picked up right where his predecessor left off. Knight helped Emerson become a global enterprise that manufactured innovative products for telecommunications, electronics, heating, ventilating and air conditioning. Today, the company operates more than 60 divisions in similar industries working to develop more customer-focused, solution-oriented concepts.
Through its five operating segments (Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliances and Tools), Emerson designs and manufactures a variety of electrical and electronic products and systems for commercial, industrial and consumer markets. With no segment accounting for more than a quarter of Emerson's total revenue, the company's diversified revenue base allows it to weather challenging economic times. The largest segment, Process Management, provided 25% of the company's 2007 revenue. The next largest, Network Power, accounted for 23% of sales followed by the 20% contributed by Appliances and Tools. Industrial Automation brought in about 19% of Emerson's revenue, and finally, Climate Technologies accounted for the remaining 16% of sales.
With its early pursuit of global expansion, foreign sales have continuously increased, accounting for slightly more than half of Emerson's 2007 total revenue, marking the first time international revenue surpassed domestic revenue. The global network Emerson has created allows it to service multiple markets more efficiently and effectively than its competitors. The company is expected to benefit from the growing need for power in many emerging markets.
Emerson expects to achieve its future growth objectives through management's focus on new product introductions and strategic acquisitions. Management's growth initiatives are focused primarily on eight areas they feel have high growth potential, including emerging markets, telecom solutions, services, scroll compressors, power generation, process automation technology, large retailers, and marquee accounts. In fact, new products, introduced within the last five years, accounted for 35% of Emerson's 2007 total revenue. Between 2004 and 2006, Emerson brought nearly 600 new products to market. Management expects these to add more than ten billion dollars in sales during the next five years. With regard to management's focus on making strategic acquisitions, the company is set to spend billions of dollars over the next several years.
