Free «Eaton Corporation» Essay Paper

Eaton Corporation is a worldwide diversified company that operates in the sphere of power management and has a century of great experience. It continues to provide rational solutions regarding energy that help millions of customers throughout the world manage mechanical, hydraulic, and electrical power in an efficient way. A global leader in producing, controlling and distributing electrical systems and components for power quality may get significant profit from the increasing global cost of discovery, extraction, processing, distribution and use of energy. Serving global markets, Eaton helps its customers to use energy more safely, reliably, and efficiently with strong culture and values of doing business properly, which continue to guide the company towards building a more powerful and stable future.

When Eaton Corporation celebrated its anniversary in 2011, the company had millions of customers in one hundred countries and seventy thousand employees. Owing to its innovative spirit, Eaton has already become a global and respectable leader in power management that responsibly provides helpful solutions to its clientele. Nowadays, the company has over 100,000 workers and sells production to over one hundred fifty countries. According to Eaton (2014), in 2013, the world famous power management company had sales of nearly twenty-two billion dollars.

 

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While 2012 began with high hopes and great prospects, the second half of the year showed sputtering of the global economy, deflating most of Eaton’s end markets. During the fourth quarter of the year, end markets decreased by 5%. The reduction was more than twice as much as what the company expected. Despite various weaknesses, the corporation continued to deliver strong returns to its shareholders and demonstrate solid financial outcomes. The company reported record sales of over sixteen billion dollars, which is 2 percent higher compared to 2011. Largely due to the acquisition costs and restructuring charges incurred by Eaton during the year, net profit per share fell 12 % to almost $3.50.

Nowadays, Eaton Corporation is far more different and larger than it was over twelve years ago due to its strong growth in the electrical, hydraulic and aerospace areas of business and the rapid development of industries worldwide. These businesses together account for more than eighty percent of the company’s revenues. Moreover, the company generated nearly two billion dollars in cash from various operations and increased its dividends by 12%. Eaton contributed over four hundred million dollars to the pension plans, strengthening the corporation’s balance sheet. According to Eaton Corporation (2012), the company completed new important acquisitions, including three electrical and two hydraulics businesses.

Ninety-six percent of Eaton’s workforce continues to display strong engagement of employees. Despite demonstrating high results, the company was disappointed with total negative shareholder return of almost eleven percent in 2011, after gaining spectacular sixty-four percent in 2010. According to statistics provided by Eaton Corporation (2012), since 2000, the company’s shares have delivered fourteen percent of compounded total shareholder return.

Since 2000, incomes from the company’s businesses have tripled while earnings from vehicle business amounted to slightly less than 10%. Electrical business of the company generates nearly sixty percent of Eaton’s annual sales in comparison with twenty-nine percent in 2000. In the following years, the corporation will get approximately eighty percent of annual sales by combining electrical, aerospace, and hydraulics spheres of its business with the sales generated by the vehicle business. According to information given by Eaton Corporation (2012), the power management company will generate half of its revenues outside of the USA in comparison to only twenty percent that the corporation got in 2000.

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According to Reuters (n.d.), diversification of Eaton’s business across various geographical cycles helps to balance the unpredictability and variability as the inherent aspects in the management of the industrial company. Despite the apparent weaknesses present in the markets of the Asia-Pacific region as well as the European continent, significant residential and commercial sales in the U.S. enabled electrical business to reach record profits during 2012. Despite the fact that the global economy slowed down through 2012, Eaton progressed but with irregular growth. In 2013, the company did not expect drastic changes in the environment since Eurozone struggled heavily with complex monetary and fiscal decisions. According to Eaton Corporation (2012), the USA remained under great pressure of fiscal imbalance, and developing countries that were once a source of strong growth continued their slow recovery. In order to respond efficiently to the ongoing soft conditions, especially in the European markets, Eaton decided to restructure, consolidate and even close some production facilities, thereby decreasing the company’s future expenses.

Eaton Corporation continues to provide its employees with comprehensive compensation package of great benefits, including retirement, disability, life insurance, and medical savings plans offering more opportunities and flexibility to every worker and his/her family. The company is committed to developing, improving and respecting its employees. The culturally diverse Eaton’s workforce makes every employee valuable and unique. Recognizing different backgrounds and perspectives of Eaton’s workforce, the company fosters the inclusive environment (Eaton Corporation, 2012). A significant number of layoffs were not observed because the company strongly values its skillful staff by providing them with the safe working conditions and improving their workplaces.

According to Brown (2012), Eaton Corporation went through great challenges including instability in the capital and financial markets as well as global recession that significantly affected the demand for the company’s production. In order to respond to various unpredictable events, the company largely changed the structure of its costs in 2009, including 17% reduction in the full-time workforce and other measures relating to cost containment.