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Electronic Design

Top 50 Employers 2012: Leaders In Electronic Design Innovate To Define Their Markets

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See which companies are ranked the highest by their employees.

Even though it started out as a promising year, 2011 was thrown into uncertainty as the European sovereign debt crisis, first brought to light in late 2009, intensified in October and still troubles us today. The electronics industry felt these aftershocks as it tried to build on the growth it enjoyed in 2010.

Some companies in the industry fared better than others as evidenced by this year’s edition of the Top 50 Employers in Electronic Design Just as we have with previous editions, we based our results on a formula using public financial data with bonus points awarded using the results of our annual Electronic Design Reader Profile Survey.

Meager Growth

According to the International Monetary Fund (IMF), global GDP grew 4.4% in 2011, with the U.S. up 2.8%, China up 9.6%, and Europe up 1.6%. China has now replaced Japan as the second largest economic power behind the U.S. Their July 2012 forecast says that global GDP growth will slow to 3.5%, with the U.S. up 2%, China up 8%, and Europe down 0.3%.

According to the Kiplinger U.S. economic business economic outlook, the U.S. economy will improve a bit in the second half of 2012, but it will be another disappointing year of slow GDP growth, capping the worst three years of economic growth, outside of a recession, since records began in 1930. It’s evidence that the U.S. is still struggling to leave behind the effects of the biggest financial crisis since the Great Crash of 1929.

The U.S. economy should expand at an annual rate of about 2.2% in the second half, after a springtime malaise that abruptly slowed growth in jobs, consumer spending, capital investment, and manufacturing from a rebound in late 2011. A global economic slowdown earlier in the year tied to the Euro Zone’s financial problems should stabilize as the situation in Europe does, leading consumers and corporate managers in the U.S. to spend and hire more in the latter part of 2012, albeit cautiously.

The U.S. should be able to avert another recession, provided progress continues in Europe and a new war or natural disaster doesn’t derail the U.S. economy. Without such a shock, the U.S. economy should strengthen in 2013 to around 2.5% GDP growth. It’s an improvement, but still well below the 4% long-term average annual growth rate typically seen after recessions.

What About Jobs?

Job creation will accelerate in the second half of 2012 at an average of 150,000 net new jobs a month, but not enough to improve on last year’s mediocre 1.8 million total, reflecting an economy that lost momentum in the spring and is struggling to regain it. That’s still too slow, however, to significantly lower the unemployment rate—8.2% in June and around 8% by year-end 2012.

Progress in halting the financial crisis in the Euro Zone would help ease the worries of corporate managers, who slowed hiring and investment earlier this year as Europe’s problems threatened to sap global economic growth. The somewhat more improved outlook in Europe won’t be enough to give employment gains the big boost necessary. Global growth that is slower than last year’s will continue to curb U.S. export gains and slow new hiring by manufacturers, who provided an outsized share of job creation in 2010 and 2011 after decades of steady job cutting.

Most of the employment gain is likely to come in “business and professional services,” which includes engineering. The recent pause in job creation has taken pressure off private employers to raise wages, and pay increases will get even smaller.

In the 12 months ending June 2012, average wages for all workers rose 2%, a little faster than consumer inflation, but wage increases are expected go back to lagging inflation. This will make most of us feel worse off and hinder growth in consumer spending, which accounts for most economic growth.

Three years after the end of the Great Recession, the number of workers unemployed for more than 27 weeks is 5.4 million, or 42% of the jobless. Though down from 2011, that share is much higher than it ever was before 2009.

Companies will pick up their investment in facilities and new equipment in the second half of 2012, as job creation and economic growth recover from the first-half pause. Real growth of 8% is expected from July through December, after roughly 3% in the first half.

Companies took a breather early this year, following the 2011 expiration of a tax credit for new investment that boosted capital spending last year. Also, labor productivity will be flat or negative for the second year in a row so any increases will have to come through new capital investment.

The increase in capital investment won’t be anything special—around 6% for the year, slower than the 8% increase in 2011. Annual business investment will still end 2012 below the level reached before the Great Recession. At that rate, capital investment will play a smaller role in economic growth this year, after accounting for about 40% of growth in 2011.

For fiscal 2011, the pool of 99 companies that we analyzed collectively showed employee growth of 3%, sales growth of almost 10%, and pretax income growth of 8%.


In fiscal 2010, the comparisons were 1.5%, almost 10%, and 83%. Companies continued to cautiously add staff and were able to collectively replicate the previous year’s sales growth, but were not able to replicate the pretax income gains, although roughly 80% of the sales increase flowed through at the pretax level.

In fiscal 2010, companies significantly improved pretax profit margins by 5 points and debt-to-equity ratios by 9 points. This is extremely hard to duplicate once a company has pared its expenses down to the bone. In fiscal 2011, pretax margins were down slightly by 0.2 points and debt-to-equity ratios deteriorated by 3.5 points, not unexpected given the huge gains in these areas last year. Research and development continued to grow by almost 9% versus a 3% increase in 2010, a very positive development.


Our percentage of companies reporting growth in key categories for fiscal 2011 showed a decline from the high levels achieved in fiscal 2010 as 79% reported increases in sales while 54% reported increases in profits. In 2010, these percentages were 89% and 90% respectively. Again, one can see the difficulty companies are having with continuing to reduce expenses and maintain margins over multiple years—not an easy task.

In fiscal 2011, 68% reported increases in their employee count and 78% reported increased R&D investment. These numbers are very favorable versus the levels achieved in fiscal 2010 of 62% and 67% respectively.


Employment and R&D investment continued to climb back up in fiscal 2011. Companies were able to replicate sales increases but found it difficult to replicate the pretax income and margin increases or the balance sheet improvements achieved last year. It’s always difficult when the base one is comparing to improves so much. Progress has been made in 2010 and 2011, but there is still much to be done.

On the bright side, let’s not forget how gloomy the situation was back in 2009 and that the Lehman Brothers demise occurred in fall 2008, which wasn’t that long ago. Looking ahead, cautious investments in staff, capital, and R&D along with a laser focus on controlling expenses and managing the balance sheet will be vital for success, as the long-term economic rebound slowly continues.


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