Box score of business bigness

These 500 firms have been ranked by FORTUNE in order of sales, and are listed in a special supplement enclosed with this issue (“The FORTUNE Directory of the 500 Largest U.S. Industrial Corporations”). The list also includes each company’s assets, gross profits, net profits, number of stockholders and employees, and ranking within each category. It shows, among other things, that as a group the top 500 firms had sales of $137 billion last year, assets of $108 billion (56 per cent of the total assets of U.S. industrial companies), profits of $15 billion before taxes and $8.3 billion after taxes (two-thirds of the net earnings of all U.S. industrial firms). The 500 also employed 7,860,000 workers—44 per cent of the industrial work force. More specifically:

• Twenty-one of the companies had sales of $1 billion or more; fifty-three were in the half-billion-dollar-or-over class; 291 had sales topping $100 million; and all but Nos. 499 and 500 (Goodall-Sanford and Copperweld Steel) were over the $50-million mark.
• Nineteen corporations had $1 billion or more of total assets, forty had assets of more than $500 million. The company reporting the lowest net assets was Langendorf United Bakeries ($12,800,000).
• Twelve companies had net earnings of $100 million or more, twenty-two earned over $50 million. Fifteen, however, suffered net losses. The three biggest losers were the auto independents, Kaiser Motors ($35,500,000), Studebaker-Packard ($26 million), and American Motors ($11 million).
• Seven of the 500 companies employed more than 100,000 workers. Twenty-seven employed more than 50,000, and 353 had payrolls of 5,000 or more.

If the 500 firms are broken down into major industry groups, their sales, net profits, and shares of their industry sales shape up as follows:

Industry No. of companies Sales (billions) Share of industry sales Net profits (billions) Durable manufacturing Machinery 83 $ 18.5 53% $ .9 Transportation equipment 55 25.1 84 1.2 Primary metals 47 15.3 83 1.0 Other durable goods 61 9.4 23 .7 Non-durable manufacturing Food and tobacco 82 22 45 .6 Chemicals and rubber 60 14.5 65 1.1 Petroleum & coal products 35 22.8 94 2.3 Textiles and clothing 35 4.1 22 .1 Other non-durables 30 4.1 19 .3 Mining 12 1.1 12 .1 Totals 500 $136.9 $8.3

The giant among these giants, of course, was General Motors Corp. G.M.'s sales of nearly $10 billion last year were almost double the $5.7-billion sales of second-ranking Standard Oil (N.J.) and more than triple U.S. Steel's $3.2 billion. (Ford, probably the third-largest industrial company in sales, does not release sales figures, and was therefore omitted from the list as were several other firms that withhold figures—e.g., Lever Brothers, Hughes Tool, New Jersey Zinc, Sherwin-Williams, etc.) The fourth-largest company in sales was General Electric with $3 billion, followed by Swift & Co. with $2.5 billion.

G.M., with net earnings of $806 million in 1954 (vs. Standard Oil's $585 million, du Pont's $344 million), was also the top money earner. But big sales are no guarantee of big profits. Of the 100 biggest sellers on the list, for example, only seventy-eight were among the 100 top money earners. Meat packer Armour ranked seventh in sales but 440th in net profits. Wilson & Co., also meat, was thirty-seventh in sales, No. 354 in profits. On the other hand, Texas Gulf Sulphur Co., only 332nd in sales, stood fifty-third in the net-profit ranking.

Men and machines

Assets size was the only classification in which G.M. did not rank No. 1; Jersey Standard, with $6.6 billion of assets, headed the list. Assets, of course, primarily reflect industry characteristics. Thus the food and tobacco industry has a relatively low assets-to-sales ratio (50 per cent) and the total assets of the eighty-two food and tobacco companies on the list amounted to $11 billion—only $134 million per company and $13,250 per employee. Yet several food companies had tremendous assets per employee: Savannah Sugar, for example, had $88,000 of plant, equipment, and cash items behind every employee; Central Soya, $84,000; and Clinton Foods, $63,000.

As might be expected, the firms with the lowest assets per employee were principally old-line machinery and shoe companies like Singer Manufacturing ($4,500), Otis Elevator ($4,600), Remington Rand ($6,100), National Cash Register ($7,000), and United Shoe Machinery ($6,000).

At the high end of the scale the thirty-five oil companies on the list had total assets averaging $765 million per company and $41,000 per worker—the highest investment in plant and equipment for any industry group. But even here the variations were huge: Cities Service and Plymouth Oil had assets per employee of $116,000 and $75,000, respectively, compared to Jersey Standard's $36,500, Socony-Vacuum's $23,700, and Texas Co.'s $37,800.

The company with the highest assets-to-sales ratio was Publicker Industries, a chemical-and-liquor manufacturer whose assets were two and a half times sales. Two other distillers were near the top in this regard, Schenley Industries (220 per cent) and National Distillers (190 per cent)—a reflection, in part, of assets tied up in aging whiskey. Other companies with high assets-to-sales ratios were Sunray Oil (240 per cent), Celanese (220 per cent), and United Shoe Machinery (210 per cent). The meat packers, of course, had the lowest assets-to-sales ratio, ranging from 12 per cent (Hygrade and Cudahy) to 25 per cent (Armour).

The companies with the highest sales per employee were predominantly from the oil industry. Cities Service with $150,000 of sales per employee topped the list. Sunray Oil ($140,700 per employee) was second and Signal Oil & Gas ($122,400) third. The biggest oil companies did not do nearly so well: Jersey Standard's sales per worker were $42,700, Gulf Oil's $42,000, and Socony-Vacuum's $31,300. Two other companies with high sales per employee were Texas Gulf Sulphur ($67,900) and Philip Morris ($63,400). The companies with the lowest sales per employee were the aircraft manufacturers. Northrop, at the bottom of the list, realized only $2,200 of sales per worker, General Dynamics did $3,450 of business per employee, Temco Aircraft $3,500, Douglas Aircraft $3,600. Blue Bell, Inc., a large maker of work clothes, sold $3,000 per worker while Brown Shoe sold $3,600. By comparison, G.M.'s sales per employee averaged $8,900, U.S. Steel's $12,500, du Pont's $32,500.

If the profits of the 500 corporate giants are related to their sales or assets or considered on any other ratio basis, the very biggest companies cease to be the top performers. To be sure, the twenty-one billion-dollar firms averaged 7.5 per cent net profit on sales vs. 6 per cent for the 500 largest companies as a group and 4.6 per cent for all manufacturing and mining firms. But the most profitable companies came from farther down the list. Texas Gulf Sulphur, No. 332 on the list, netted a whopping 36 per cent on its sales of $84,500,000 to top the profitability list. (Its profitability has been noticed by U.S. investors. Texas Gulf Sulphur has more stockholders—40,000—than all but forty-nine of the 500 biggest companies.) Gillette earned most in relation to assets—37.5 per cent. Smith, Kline & French was second in earnings on assets with 28.7 per cent, while Texas Gulf Sulphur earned 28 per cent. Fourth was Climax Molybdenum, which earned 27 per cent on assets (and 29 per cent on sales), followed in order by Glenn L. Martin (21 per cent), Avon Products (19.1), Libbey-Owens-Ford (18.1), Amerada Petroleum (17.5), Ideal Cement (17.4), International Cellucotton (17.1), and Tecumseh Products (17 per cent).

G. M. ranks eighty-first

The least profitable firms last year were to be found principally in the food, textile, publishing, and transportation-equipment industries. Besides the fifteen members of the 500 club that lost money, seven firms earned less than 1 per cent on assets and sales: Bigelow-Sanford, Glen Alden Coal, Armour, International Packers, John Morrell, Electric Auto-Lite, and Todd Shipyards.

The billion-dollar corporations, except for the meat packers, did considerably better than average in earnings on sales. Du Pont and Standard of California, in fact, ranked fourth and fifth in return on sales. G. M., with a net return of 8.2 per cent, ranked only eighty-first in this category.

However, General Motors earned 15.7 per cent on assets to rank thirteenth on that basis, while among the other billionaire firms Boeing earned 14.6 per cent on assets, Standard Oil of California 12.6 per cent, du Pont and G. E. 12.5 per cent, Texas Co. and Shell Oil 11.6 per cent, and Standard Oil (N. J.) 8.8 per cent. U.S. Steel earned 5.8 per cent, Bethlehem Steel 8.2 per cent, and Westinghouse Electric 6.3 per cent.

Turnover at the top

Do the 500 biggest industrial corporations constitute any threat to the competitiveness of the economy? Certainly not if the business birth rate and population statistics mean anything; since 1939 the number of mining and manufacturing companies has increased from about 240,000 to 360,000, or by 50 per cent. Moreover, recent studies of corporate society, particularly those by Professor M. A. Adelman of M.I.T. and A. D. H. Kaplan of the Brookings Institution, indicate that there has been no appreciable increase in economic concentration in the past forty years. According to Kaplan, for example, the share of all industrial assets accounted for by the 100 largest industrial corporations has remained close to 25 per cent since 1909.

Despite the "oligopolies" of three or four companies that account for the bulk of sales in many industries, there is a great deal of competition among the 500 largest companies—and turnover, too. In fact FORTUNE's preliminary estimates—which will be checked next year and thereafter—suggest that the annual turnover of companies on the 500 list will range from 10 to 20 per cent. Between 50 and 100 newcomer firms, in other words, may rise each year to bump others off the list. As long as there is such fluidity and flexibility at the top of the heap, there is little cause for concern about the vigor and effectiveness of U.S. competition.

*The Census Bureau's classification, mining and manufacturing, used in listing FORTUNE's 500 largest "industrials" is also used in the Federal Reserve Board's Index of Industrial Production. It excludes utilities, transportation, finance, construction, trade, and service companies.