Management Case Study

FMC Technologies Inc. is a public company on the New York Stock Exchange with over $4 billion in annual revenue.    

In 2001, FMC Technologies' executive management appointed Jeff Simoneau president of a $270 million operating division that consisted of 5 industrial food processing equipment businesses acquired through acquisition.  Executive management gave Jeff the mandate to create a global business under a common brand platform.  At the time, the businesses were underperforming in the midst of an economic downturn.  Ted Baldwin, global Director of Marketing and Research & Development, reported directly to Jeff Simoneau. 

We implemented the following strategy to turnaround the business performance:

• integrate and right-size the business operations;
• raise the level of execution in all aspects of the business;
• differentiate further the core business; and
• grow profitability through new product development, geographic expansion, and bolt-on acquisitions.

As a result, we sustained our global market leadership in each core product line, strengthened the sources of competitive advantage, increased the level of recurring revenue streams, and materially improved the enterprise value of the business. 

The business achieved superior financial returns.  From 2001 to 2007, as indicators of financial performance, the business:

• Increased revenues from $270M to $335M;
• Grew operating profits from $4M to $32M;
• Generated $125M in pre-tax cash flow that was not reinvested in the business; and
• Realized a 45% return on invested capital in 2007.

The financial performance compares favorably to the results of US public companies.  For instance, our return on invested capital was in the 99th percentile ranking.