Post #21: Metrology for beginners - Heptagon Capital – Production

We take the efficient functioning of our mobile handsets and our cars for granted. Similarly, every time we get on an aeroplane or need a complex medical…

Post #21: Metrology for beginners

We take the efficient functioning of our mobile handsets and our cars for granted. Similarly, every time we get on an aeroplane or need a complex medical procedure performed, we work on the assumption that the equipment being used is totally reliable. None of the above would, however, be possible without the discipline of metrology. Put simply, metrology is the science of measurement. All the above examples have to work precisely in order for them to work at all. Put another way, without the application of metrology equipment, they wouldn’t. Luckily, the tricky stuff is left to scientists, but your author (who has a background in liberal arts and definitively not science) got to spend a day with some of the world’s experts in the field last week and came away reassured.

The demand outlook for metrology (i.e. measurement) products remains robust. Consultants value the market at ~$650m, and see it growing at ~6% for the coming future (per Grand View Research). Every manufacturing business – whether industrial, medical or technological – is trying to improve process efficiency and reduce wastage, thereby growing returns on capital employed. Adopting more advanced metrology systems is, therefore, an effective strategy.

Future trends such as more fuel-efficient planes or electronic/autonomous vehicles require new components – often with more complexity – directly driving demand for more metrology solutions. Similarly, rising life expectancy implies an increased opportunity for medical equipment that can deliver outcomes with ‘nanometer accuracy’ as one expert put it to us. Trials in the field of treating, for example, Parkinson’s Disease, have been particularly effective.

Elsewhere, innovation continues apace in the field of metrology. There was much talk about ‘industry 4.0’ and additive manufacturing at the event we attended. Admittedly, both are phrases which carry a certain amount of hype, but also create opportunities for metrology businesses. In terms of the former, the upside lies in sharing information across diverse machines across a workshop or factory floor. Again, more precise information means better outcomes. With regard to the latter, less than 1% of all manufacturing globally is done in an additive fashion at present (i.e. layers are added to a product – via, say, 3D-prinitng). While part of the reason for slow uptake is that such machines can often cost up to 50% more in cost, the returns from their adoption can be an apparent 200-300% increase in productivity. Businesses as diverse as BAE, Sandvik and Siemens have already begun to incorporate such machines with related metrology tools into their production. Metrology matters.  

Disclaimers

The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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