Testing Laboratories
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Industry Overview
About 6,000 testing laboratories in the US are in operation, with combined annual revenue of around $9 billion. Major companies include National Technical Systems, and subsidiaries of major corporations such as Pratt & Whitney and Hexagon Metrology. The industry is fragmented: the top 50 firms account for only 35 percent of industry revenue. Most labs have about 10 employees; the largest have more than 1,000.
Testing labs provide a variety of engineering, quality control, and certification services by performing physical and chemical tests on products and processes. Companies perform these tests either in a lab or at the customer’s site. The industry doesn't include medical or pharmaceutical testing.
Competitive Landscape
Demand is driven largely by industry and government spending on R&D to improve the efficiency of operations and develop new products and services. The profitability of individual companies depends on technical expertise and the ability to accurately predict project costs. Large labs have advantages in providing a larger breadth of service through multiple locations; some have strategic partnerships with major corporations. Small labs compete effectively by specializing in particular types of service. The industry is labor-intensive: average revenue per worker is less than $100,000. Testing labs compete with internal labs of major corporations and government entities.
Products, Operations & Technology
Major testing lab services include chemical, nondestructive, mechanical, and electrical testing. Chemical testing accounts for about 36 percent of industry revenue; nondestructive testing (testing that doesn't destroy the test object) for about 19 percent; mechanical testing, 9 percent; and electrical testing, 8 percent. Other services include calibration testing, thermal testing, and assaying.
Testing laboratories have facilities or warehouses specifically constructed to perform tests, simulating various environments according to temperature, altitude, humidity, sunshine, dust, or explosive atmosphere. Items tested include high-technology products, electrical components, hazardous materials, automotive parts, and military items. Testing labs test products for safety; provide product and electrical certifications; and provide compatibility, stress/performance functionality, and compliance testing. Testing often involves measuring the flow of fluids, chemicals, water, steam, and propellants.
Most tests require special equipment such as electromagnetic interference (EMI) chambers; seismic simulators; environmental, fire, and gas flow chambers; and munitions testing equipment. The cost of such equipment can be substantial, with individual equipment prices ranging from $15,000 to more than $400,000.
Testing labs need to stay abreast of advancing technology and may develop new technologies. They frequently install state-of-the-art equipment to perform tests for clients. Computer systems and proprietary software are used in many testing applications.