Military photonics up, machine vision down

The military and security market is one of the few that's faring reasonably well these days. Compare that to machine vision, which is being hit hard with all the other capital equipment markets right now.

Here are two companies that are pretty good proxies for the sales in those two markets: FLIR and Cognex. Both are heavily focused on imaging, but for different markets. The figure shows their revenues since 2006. I didn't adjust for some some minor acquisitions that each of them made, but it doesn't seem to matter much.

FLIR's sales are hardly off it's steady upward climb. Its internal sales are much more complicated. Its government sales and commercial vision sales were up, year over year, for military and security applications. Thermography was down due to falling demand and exchange rates.

Compare that to Cognex, which specializes in machine vision and automation. One would hope that machine vision is one of those markets that may still defy the recession somewhat, particularly from customers looking to improve costs during hard times. But alas, machine vision equipment is capital equipment too, and customers are trying hard to keep capital spending low for now.

If the rest of the year were flat for each company, FLIR's year would end up 1% over 2008 and Cognex's year will be 30% under 2008. That's right in line with our view of their respective markets. The military sector is still going strong, but is at or near a long-term peak. We expect the manufacturing sector to be down about 30% in 2009, but sales will be better in 2010.