Leica Q3 Results

[rosuna]

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By my calculation that's around £35,000 per annum. I wouldn't describe that as 'grossly under paid'.

 

Leica's main problem is the nonexistence of a complete portfolio of digital products, leaving aside the Panasonic rebranded cameras and the M8. The R system is dead and the S system isn't yet here. When the 3 systems are in the market (M, R and S) sales will be much higher, development costs will be much lower and the company will stabilize. I expect a Leica branded micro 4/3 camera and Leica branded premium lenses for the M4/3 system as well. This year is critic for Leica: no products, worldwide economic crisis and high development and I+D costs... but 2010 will be different.

[Wolfgang Esslinger]

Don't forget too that a significicant proportion of the Leica workforce, nearly half, are in Portugal where costs will be somewhat lower, though not as low, relatively, as they once were.

 

Does someone know how many of the jobs are part-time?

[barjohn]

Let me explain my numbers. I manage a large engineering force. We pay our employees between $35K to $110K. A new engineer or scientist just out of college starts at around $60K. Our average burdened cost for a 1,920 hour year is $195K per employee. What you all are leaving out are the costs beyond direct salary. We pay the bulk of health insurance, social security, tax, medicare tax, life insurance, dental insurance, vision insurance, holidays, vacation (runs 2 weeks to 5 weeks depending on length of employment), training, office space, office supplies, equipment (computers, printers, etc.), phone service,etc. It all adds up. I realize that in the EU some of these things are provided by the state but that means the company pays it in taxes. Also during their vacation, typically 30 days, they shut down operations in many companies, we don't. I used an average of $150K for them assuming that their wage scales are lower than ours but I doubt if they are that much lower.

[guywalder]

Let me explain my numbers.

 

why not just use Leica's own numbers like the other people in the thread? Aren't Leica's numbers a little bit more relavant to a discussion about Leica than those of a different company in a different country making different products??

[barjohn]

Because you don't know what went into Leica's numbers or their motives for presenting them the way they did. If all they put in their numbers is direct salary, that is misleading and down plays their actual costs. Thus, it pays to apply some common sense and see if the numbers hold up to scrutiny. If they have an average burdened salary cost of €42K per employee it means their average salary cost is around €28K per employee. If that is accurate they have the lowest paid highly skilled employees anywhere outside of the far east. On the other hand given their poor QC maybe that is why.

[miami91]

Because you don't know what went into Leica's numbers or their motives for presenting them the way they did. If all they put in their numbers is direct salary, that is misleading and down plays their actual costs. Thus, it pays to apply some common sense and see if the numbers hold up to scrutiny. If they have an average burdened salary cost of €42K per employee it means their average salary cost is around €28K per employee. If that is accurate they have the lowest paid highly skilled employees anywhere outside of the far east. On the other hand given their poor QC maybe that is why.

 

Leica is a public corporation, right? I know the Kaufmann family owns 99% of the outstanding shares (or whatever), but if it's publicly traded, surely they have financial reporting requirements similar to the SEC here in the States. Now, not that American companies don't also "cook the books" (see Enron), but presumably Leica wouldn't be doctoring the numbers so absurdly on personnel costs. In particular, why would they under-report this? That would understate their losses (or in different circumstances, overstate their profits), which would mean higher taxes paid to the German taxman. This doesn't make sense...

 

Jeff.

[JHAG]

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Because you don't know what went into Leica's numbers or their motives for presenting them the way they did. If all they put in their numbers is direct salary, that is misleading and down plays their actual costs. Thus, it pays to apply some common sense and see if the numbers hold up to scrutiny. If they have an average burdened salary cost of €42K per employee it means their average salary cost is around €28K per employee. If that is accurate they have the lowest paid highly skilled employees anywhere outside of the far east. On the other hand given their poor QC maybe that is why.

 

Averages don't mean a thing.

Statistics course :

Mr Chick loves chicken and eats two per week.

Mrs Chick hates chicken and never touch it when her husband cooks it.

Results of that survey :

Chick family, who loves chicken, eats one chicken every week.

[barjohn]

Leica is a public corporation, right? I know the Kaufmann family owns 99% of the outstanding shares (or whatever), but if it's publicly traded, surely they have financial reporting requirements similar to the SEC here in the States. Now, not that American companies don't also "cook the books" (see Enron), but presumably Leica wouldn't be doctoring the numbers so absurdly on personnel costs. In particular, why would they under-report this? That would understate their losses (or in different circumstances, overstate their profits), which would mean higher taxes paid to the German taxman. This doesn't make sense...

 

Jeff.

I have not seen the actual statements but took the word of the poster; however, it doesn't change anything I have said. Whether they use direct salary only for labor costs in their financials would be indicated in the footnotes which I don't have. Common sense tells you that for a workforce of 1,000 employees to have a direct salary average of €42K would mean that the bulk of their employees are low wage laborers and not highly skilled craftsman or engineers. In my case 85% of my labor force is scientists or engineers (many of them senior level) hence my high average labor costs. I fully understand that in the EU some of their indirect labor costs are buried in their corporate tax, such as health care. They may show some of their overhead costs such as office space, supplies and computer systems and support as separate line items. you could go through their financial statement and add all of these costs together and divide it by their labor force and come up with the average fully burdened labor rate. Ok, I now looked at their financials and their labor force in 07-08 was almost 50/50 between salaried versus hourly. As a result their average wage is probably lower. By my estimation (hard to be real accurate because they lump so many of their costs together, it would appear that their average burdened rate was around €90K per employee, trying to get apples to apples comparison. Allowing their projected 2% salary increase and 2% other cost increases, or a 4% increase in these costs means an average employee labor rate of 93.6K. Assuming all of tis is true, Leica employees are not very well paid, at least by US standards and makes me wonder about the quality level. If Leica is "worth its high price" then its employees should be among the better compensated.

[SJP]

Assuming all of tis is true, Leica employees are not very well paid, at least by US standards and makes me wonder about the quality level.

In the NL (which is not the same as "the EU" or Germany) a university graduate MSc in science & engineering should expect about 35-40k gross. Technically skilled workers will start at more like 20-25k. Skilled technicians at a university workshop will finish their career at about 40-45k/year.

[barjohn]

I must say this surprises me as I have traveled several time to Germany, France, Spain, the UK, Switzerland and at least once to Belgium and Finland. From what I observed, prices were as high or higher for most goods, hotels, restaurants, travel, automobiles and housing. I know personal income taxes are also higher so my question is how do these folks live the life styles I see there on such low incomes? Here, I typically pay an engineer with a masters degree a starting salary of $75K to $85K depending on experience. I am in southern California which is a high cost of living area but no worse than most large EU cities.

[NZDavid]

All these comparisons are somewhat meaningless. Interesting, but there are so many swings and roundabouts. Here in New Zealand, salaries are a fraction of those figures cited for U.S. engineers, but then our house prices (and until recently they have been at a record high) are easily a third to a quarter of those in California.

 

When I worked in the media in Germany way back in 1990, salaries were good and so were conditions (six weeks annual holiday, reasonable hours, company-funded recreational facilities). Taxes were higher but there was a very good universal health system. The whole rationale behind the German economy and society at that time was that you work to live, not vice versa. The same is true, still, of many European countries.

 

Following German unification in that same year, Germany's economy struggled to cope. As someone put it, East Germany at first looked like a land full of opportunity but on close inspection turned out to be more like its most famous automotive product, the papier-mache Trabant. There were no instant BMWs.

 

Still, when I visited friends in Germany just over year ago, living standards still seemed good -- although the days of easy and assured economic growth are well over.

 

There are still many smaller German companies (for example, shoe and watch manufacturers) that concentrate on quality workmanship, not just maximum profit and cost cutting. They also view it as important to keep local people employed, not outsource for the cheapest labor, as has happened in so many other countries.

 

When Ernst Leitz decided to produce the first Leica back in 1925, a key reason was to secure employment at a time of economic depression. Economies change; do not believe what you read in the media all the time -- so much is driven by emotion, not reality.

 

I am hopeful the emphasis on quality will persist in companies where wise heads prevail -- not be lost to a rush towards lower standards and profit before all.

[guywalder]

I have not seen the actual statements

 

obviously. If you had read them you would know the accounting standards used, you would know more about how the personnel costs were derived, and you would know more about the breakdown of jobs covered by the personnel costs.

[barjohn]

obviously. If you had read them you would know the accounting standards used, you would know more about how the personnel costs were derived, and you would know more about the breakdown of jobs covered by the personnel costs.

 

It doesn't change much as too much is consolidated in their statements to derive meaningful information from them. This is intentional. Note that the International accounting standards and the auditors statements they produce are very weak compared to FASBI standards used in the US and even those are not always tight enough. All the accountant says is they appear to be accurate??? So what. Everything is hidden in consolidations and the foot notes are a joke. US standards would require so much more.

[Isabelle Lenatio]

So Barjohn,

 

based upon your assumptions, your life-style and your southern californian residency you actually think you have the wisdom to question Leica's official results?

 

... this is like saying "Leica technicians don't eat Maine Lobster every day, or even have their Foei Gras flown in from france, poor buggers, they are heavily underpaid and therefore are shit in what they do professionaly"

 

And ....

 

"my companies starting wages are higher than Leica's, Leica must be doing something wrong or cooking the books"

 

Maybe your company' doing something wrong here ....

 

 

But more to the point would be that you know jack-shit about these matters ....

[SJP]

John's salary numbers look about normal USA level, compared to stuff I read in Chemistry & Engineering news. And yes they are substantially higher than in EU for the same sort of level (MSc engineering graduate). Some possible factors that may level stuff out, but I have no inclination to sort out the gory details: cost of health insurance, car insurance, 3rd-person liability insurance, income insurance/pension. I expect these to be much lower in EU than in USA. My first job at a multinational R&D department included a free pension scheme for everyone on salaries below about 35kEURO + they payed about 50% of the monthly health costs which was not counted as part of the gross salary. So a fair comparison is very difficult and may be nonsense even to try.

 

Another point of view - the all-in cost of the R&D department was about 50kEURO per FTE about 15 years ago, now it is about 80k-90k. That includes everything: buildings, gases, chemicals, supplies, equipment investments, energy, lighting, management overhead (that was a big part), cantine.

[dominic]

Q3 (oct-nov-dec) sales 2008/ Q3 sales 2007 in %:

 

Canon : -28%

 

Nikon: -20.4 %

 

Olympus: -25 %

 

Leica: + 7.8 %

 

What else ?

[Isabelle Lenatio]

Q3 (oct-nov-dec) sales 2008/ Q3 sales 2007 in %:

 

Canon : -28%

 

Nikon: -20.4 %

 

Olympus: -25 %

 

Leica: + 7.8 %

 

What else ?

 

....Net income before tax perhaps ....

[barjohn]

Isabello,

 

I wasn't questioning Lieca's numbers, merely stating what anyone with any business knowledge knows. Clearly you have never been taught anything about reading financial sheets or you would know the games companies play to hide information they don't want revealed. Compare the auditors opinion from General Motors financials from Leica's. One of the things US auditors must do is state whether the company is a "going concern." This tells you that its numbers are in line with other like companies and that its sales, cash flows, etc. should allow the company to continue in operation. It is like a doctor's opinion that the patient is healthy and well. Also modern accounting standards use a statement called "sources and uses" that shows in some detail the source of its cash and how the cash is being used. It gives you a measure of sustainability and cash flow requirements. When a company lumps many different things together such as materials (used in manufacture) and consumable supplies used in the office you don't get a clear picture of what went into product and what is used in the course of administration.

 

Dominic, sales numbers without the rest is meaningless. Any company can increase sales if they cut the cost low enough. The question is can they sustain that as they are bleeding red ink out the door.

[dominic]

"Dominic, sales numbers without the rest is meaningless. Any company can increase sales if they cut the cost low enough. The question is can they sustain that as they are bleeding red ink out the door."

 

"""""""

 

Yes, i know that :-)

 

 

Operating cash-flow would be a better indicator.

 

But, comparing sales (of imaging divisions, for japanese companies) is not a futile exercise: Leica Camera is able to cope with the market, in a context of economic crisis.

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Hallo,

Look here: Interesting Leica gear

[marknorton]

At least Leica don't have John working for them as a non-productive, whingeing, overhead...