The economics of the weirdest niche in the car safety industry
At first glance, Humanetics Innovative Solutions Inc. looks like it has a pretty sweet business model. The suburban Detroit company is the world’s largest maker of crash-test dummies, the steel-and-vinyl humanoids stuffed with electronics that gauge how a car crash could injure a human body. The company enjoys a global market share exceeding 70 percent, and its dummies can cost as much as $1 million apiece. Regulators in the U.S. and other countries effectively require Humanetics customers to buy at least some of its products.
With a setup like that, you might say, even a dummy could make a fortune. This makes Humanetics Chief Executive Officer Christopher O’Connor laugh, though for a different reason than you might think. He’d much rather discuss the implications of 3D printers and driverless cars than how Humanetics, or any dummy maker, turns a profit. “I’ve said to myself, if I had $10 million, I wouldn’t invest in this business,” O’Connor says. “I love it, but the reality is, you’re not going to make a ton of money. The margins are always going to be tight.”
The business of making and selling crash dummies is odd, and not only because it involves faceless mannequins acting as proxies for the mangled and the dead. Dummy makers spend years and millions of dollars developing products that customers profess to admire but decline to buy. Vehicles and drivers have changed dramatically, but the model of dummy used in many government-required crash tests has been around for four decades. The industry sells a mere 200 to 250 dummies in a decent year and generated $111 million in revenue globally in 2016, according to market- research company Technavio.
Bu hikaye Bloomberg Businessweek dergisinin October 29, 2018 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Bloomberg Businessweek dergisinin October 29, 2018 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
Instagram's Founders Say It's Time for a New Social App
The rise of AI and the fall of Twitter could create opportunities for upstarts
Running in Circles
A subscription running shoe program aims to fight footwear waste
What I Learned Working at a Hawaiien Mega-Resort
Nine wild secrets from the staff at Turtle Bay, who have to manage everyone from haughty honeymooners to go-go-dancing golfers.
How Noma Will Blossom In Kyoto
The best restaurant in the world just began its second pop-up in Japan. Here's what's cooking
The Last-Mover Problem
A startup called Sennder is trying to bring an extremely tech-resistant industry into the age of apps
Tick Tock, TikTok
The US thinks the Chinese-owned social media app is a major national security risk. TikTok is running out of ways to avoid a ban
Cleaner Clothing Dye, Made From Bacteria
A UK company produces colors with less water than conventional methods and no toxic chemicals
Pumping Heat in Hamburg
The German port city plans to store hot water underground and bring it up to heat homes in the winter
Sustainability: Calamari's Climate Edge
Squid's ability to flourish in warmer waters makes it fitting for a diet for the changing environment
New Money, New Problems
In Naples, an influx of wealthy is displacing out-of-towners lower-income workers
