My take on company consolidation in the aerial mapping industry.

The old saying—that history repeats itself—seems to be as true as ever in the photogrammetric mapping industry. 

Twenty years ago, an investment group began acquiring aerial mapping companies with the goal to amass a powerhouse that would dominate the industry. I call this the battleship model.  The belief was that there is a correlation between size and efficiency and that gained efficiency could lower the cost of projects. The challenge was to feed the machine. The misconception was that size was directly related to capacity, not efficiency. With many projects in house, quality and schedules began to suffer.  Some projects failed completely, resulting in lawsuits. The consolidated mapping company eventually folded, and the investors literally sailed off to sea.

In the 1990s, there were a couple of attempts to consolidate mapping companies. One was an extremely well-funded investor that acquired many small, regional companies distributed across the country. This was the franchise model, a mapping company in every town. The challenge was that each company had its own culture and way of operating; distributing projects across the organization was not easy. Eventually, the investor decided that the returns were not as lucrative as planned and pulled back.  Some of the companies bought themselves back, and some closed.

In the same time frame, two consolidations involving publically traded companies occured. Both more than tripled in size through a series of acquisitions. Again, feeding the machine became the necessity. Projects were literally being bought to achieve the revenue goals required to maintain stock prices. I worked at both of these companies and have firsthand knowledge of the pressure put on the operations. Mapping is a seasonal industry, and it is a challenge to show quarterly growth to a shareholder. Most companies are happy to make some money at the end of the year. 

One of the above companies notoriously tried to balance the revenue over several quarters. That didn’t end well for the company or the shareholders. The other company began laying people off and engaging offshore labor to lower costs. During one of the layoffs, I was told that we were “right-sizing the company.” Eventually, I was right-sized when the parent company cut their losses and moved on to the next market. 

Currently, there is yet another major consolidation going on in the mapping industry. It remains to be seen if this one will succeed where others have not. Hopefully, management has looked back into the past and learned from mistakes. Maybe they’ll introduce a new, innovative business model that will achieve success. 

Every one of these examples has collateral damage. Right out of the gate, when two companies merge there is a duplication of middle management resulting in the first layoff.  Then, to feed the machine, production is consolidated to gain efficiency. Employees are often asked to move and some are let go.  Inevitably, the internal resources can no longer feed the machine, and offshore solutions are engaged, resulting in more layoffs. Eventually, quality can no longer be maintained, and the company starts to lose its place in market. That is when bad things happen.

In my opinion, there is a right-sized company for this industry. It’s small to medium and serves a regional market. It needs to be privately or employee-owned. Everyone needs to buy in and understand that you can make a decent living but you are not going to get rich. Maybe I am too nostalgic—some might say delusional—and those days are over.  I hope not.