Profits at the nation's 500 largest service companies fell 12% last year because they failed to plan for the recession, Fortune magazine said Wednesday.
In its annual ranking, Fortune said service companies "were apparently out picking daisies" instead of following the lead of industrial concerns, which trimmed work forces and boosted quality in anticipation of hard times.
From 1982 to 1990, the 500 largest manufacturers posted a 27% increase in productivity, based on inflation-adjusted average sales per employee, Fortune said. Over the same period, service companies had a 1% drop in productivity.
The Fortune 500 service companies' combined profits totaled $61 billion in 1990, down from $69.7 billion in 1989 and $79.5 billion in 1988, according to Fortune's June 3 issue.
The magazine ranks firms in eight categories: diversified service, commercial banking, diversified financial, life insurance, retail, transportation, utilities and savings institutions.
The companies are ranked on sales, profits, assets, stockholders' equity and market value, among other factors.
The only categories to show bottom-line improvement over the previous year were banks, savings institutions and retailers. But their performance was "hardly cause for celebration," the magazine said.