Fortune 500: Rust Belt Turns to Gold : Good Times Roll for Manufacturers as They Post Record Sales, Profit Despite Crash, Magazine Says
A Rust Belt renaissance gave America’s mightiest manufacturers record sales and soaring profits last year, despite fears of a recession raised by the October stock crash, Fortune magazine said Wednesday in its annual elite ranking of the 500 biggest U.S. industrial companies.
“The good times finally roll,” the magazine said in a cover story on the latest Fortune 500 list, contained in its April 25 issue available on newsstands Monday.
“Across the Rust Belt you can hear the sound of champagne corks popping and beer cans shpritzing open: The Fortune 500 had its best year ever in 1987,” the magazine said.
“After half a decade of sitting on the sidelines while the rest of the economy boogied, the biggest U.S. industrial corporations waltzed into the Great American Profit Party with record sales and earnings.”
Fortune said total sales of the 500 climbed 9% last year to $1.88 trillion, up from $1.72 trillion in 1986 and higher than the previous record of $1.81 trillion in 1985.
Geographically, New York was home to 51 of the 500, down from 53 the year before, but that was still enough to keep it the No. 1 corporate headquarters city. Chicago repeated as No. 2 with 24, up from 20 the year before; Pittsburgh was No. 3 with 15, Dallas, Houston and Cleveland tied for fourth with 12 each; Atlanta, Minneapolis, St. Louis and Stamford, Conn., tied for seventh with 10 each; Los Angeles had nine, and Richmond, Va., had eight.
Profits jumped to $91 billion from $64 billion, a 41% increase that gave the 500 its biggest share ever of U.S. industrial profits, Fortune said.
The magazine attributed the performance to freely spending consumers unconcerned with the stock collapse, corporate restructuring that has reduced work forces and the weak dollar that has made U.S. goods more competitive.
“The glow of plants running flat out through the night may be the light at the end of the tunnel for industrial America,” Fortune said.
The most powerful catalysts in the smokestack revival, the magazine said, were basic industries such as forest products and chemicals, which enjoyed the best advantage from the dollar’s protracted decline. Among paper purveyors, median sales increased 17.9% and median profits increased 60%.
“Seven of the companies in the industry more than doubled their profits, showing how much green paper the makers can churn out when their plants are running at capacity,” the magazine said.
Profits at No. 183 Air Products & Chemicals Inc., a maker of industrial gases, enjoyed a more than 30-fold increase to $155.6 million, making it the biggest profit gainer of the list.
Steel and textile companies, which have been among the biggest complainers about foreign competition, also made impressive showings, Fortune said.
“Imports remain strong--Americans hate to give up their Sonys and Toyotas, even if they are a tad more expensive,” Fortune said. “But yen and deutsche marks that buy twice as much as they did three years ago have restored the allure abroad of products bearing the imprint, ‘Made in the U.S.A.’ ”
Chrysler Corp. returned to the top 10 for the first time in a decade, helped by its acquisition of American Motors Corp. Fortune said Chrysler “perhaps best symbolized the story of the 1988 Fortune 500 list--the Rust Belt was back.”
The top six companies, General Motors Corp., Exxon Corp., Ford Motor Co., International Business Machines Corp., Mobil Corp. and General Electric Co., were unchanged from the previous year. Texaco Inc., No. 7, and American Telephone & Telegraph Co., No. 8, swapped places from the year before.
Du Pont repeated in the No. 9 spot and Chevron Corp. was bumped out of No. 10 by Chrysler’s ascent from No. 11.
The new list contained fewer members of industries such as building materials, food, industrial and farm equipment, petroleum refining, rubber products, toys and sporting goods. There were more companies producing chemicals, computers, furniture, metals, drugs and cosmetics.
Newcomers to the list included Sun Microsystems, a California computer maker founded six years ago by four 27-year-olds, which debuted at No. 463 after a 156% increase in sales and 300% jump in profits.
Also thundering into the 500 pack at No. 398 was motorcycle manufacturer Harley-Davidson, which modernized its factories and adopted Japanese-style production methods during the mid-1980s.
Fortune compiles the list of the 500 biggest industrial companies every year based on annual sales of the previous year. The magazine also compiles the Service 500, the biggest U.S. service companies, which is released in May.
FORTUNE 500 COMPANIES: COMING AND GOING Newcomers to the 500 1987 Sales Rank Affiliated Publications: 486 AFG Industries: 488 Allegheny Ludlum: 350 Apollo Computer: 454 Aristech Chemical: 344 Atari: 484 Avery: 426 Coca-Cola Enterprises: 126 Dixie Yarns: 438 Envirodyne Industries: 493 Faberge: 467 Fisher Scientific Group: 345 Great Lakes Chemical: 481 Grow Group: 480 Guilford Mills: 461 Harley-Davidson: 398 Harvard Industries: 449 Henley Manufacturing: 423 Homestake Mining: 471 Jepson: 464 Kimball International: 492 Knoll International: 191 Magnetek: 419 Marion Laboratories: 430 Newell: 386 Ohio Mattress: 429 Reynolds & Reynolds: 447 Schulman (A.): 498 Sun Microsystems: 463 Toro 469 Western Digital: 499 Displaced from the 500 1986 Sales Rank Allen Group: 496 Alumax: 180 Amalgamated Sugar: 472 American Motors: 113 Anchor Hocking: 368 Anderson Clayton: 292 Atcor: 483 Barnes Group: 486 Celanese: 134 Chromalloy American: 352 Clevite Industries: 484 Collins & Aikman: 278 Constar International: 458 Dayco: 327 Diamond-Bathurst: 474 First City Industries: 401 Foster (L.B.): 455 Genesco: 450 Heileman (G.) Brewing: 267 Hughes Tool: 356 Katy Industries: 499 Kenner Parker Toys: 467 Kidde: 145 Lancaster Colony: 495 Lear Siegler: 156 Michigan Milk Prod. Assn.: 494 Monfort of Colorado: 216 Moore McCormack: 480 Nacco Industries: 429 Nashua: 381 NVF: 279 Reichhold Chemicals: 367 Rexnord: 281 Robertshaw Controls: 490 Rochester & Pittsburgh: 500 Sheller-Globe: 322 Southwest Forest Industries: 394 Staley Continental: 132 Tracor: 404 Winn Enterprises: 295 Wisconsin Dairies Cooperative: 482
