The Wrap: Efficiency

Efficiency

Tech companies are lauded for their scalability. With no need for factories or physical inventory, their profit margins can sit healthily wide with a few coders and sales people running the whole operation.

While true, there are a set of industries printing money given their employee base. Digging into the fundamentals, we can measure the general efficiency of a company through NIPE- net income per employee.

At an industry average US$610k in net income per employee, the Tobacco industry is unsurprisingly a profit making powerhouse. Real Estate Investment Trusts and BioTech round out the top 3. In fact, the REIT Host Hotels & Resorts Inc. generates over US$2.5m per employee, a figure higher than any other company. Stake listed Gilead sits in second. All data is according to research completed by Erik Rood of Google.

Of course, the metric is based on net income. Many tech companies run at a loss and spend huge amounts on growth and research. Amazon has a NIPE of around US$21k. Tobacco companies and REITs are mature industries focussed less on innovation.

On the other end of the scale, due to the horrible year that resources have had, oil, gas, and mining related industries are all operating at a loss per employee.