Industrial Strength

Everett M. Dirksen had the right idea about high finance. "A billion here and a billion there," he reputedly once said, "and pretty soon you're talking real money." Dirksen, the legendary senator from Illinois who died in 1969, is said to have made his tongue-in-cheek remark in reference to the federal budget. But his point is just as well taken in today's business world. We don't want to dismiss a billion here or there too casually. Having said that, we still must ask: What's the big deal about $9.1 billion? That's the difference in total revenues for the IW 1000 between this year and last. Needless to say, it's a drop rather than a gain. But in a year that saw many giants shrivel and some others collapse, the drop is a relatively tiny one indeed. How tiny? Let's give it a visual.

Total revenues for the IW 1000 -- that is, the world's 1,000 largest publicly held manufacturing companies -- this year: $9,005,521,000,000. ($9.005521 trillion.)

And last year: $9,014,658,000,000. ($9.014658 trillion.)

The $9.1 billion change (less than one-sixth of Bill Gates' net worth) translates into a decline of a minuscule 0.10135%. With apologies to the late Sen. Dirksen, how many companies wouldn't settle for that? Such is the measure of strength among the world's manufacturing powerhouses. Mergers and acquisitions -- not to mention gainers and losers -- altered the ingredients of the list, certainly. But the IW 1000 remains as potent as ever. From apparel, with the most modest revenues ($16.8 billion), to petroleum, with the highest revenues ($1.7 trillion), each of the 25 industries represented on the list clearly demonstrates that recent obituaries for manufacturing have been prematurely written, to say the least. Exxon Mobil Corp., with revenues of $187.5 billion, led the list for the second year in a row. General Motors Co. (GM), with revenues of $177.3 billion, once again was second. Both titans took falls from the previous year, with Exxon Mobil down by nearly $41 billion and GM down by $7.4 billion. But in light of the consistent revenue totals for the entire IW 1000, those declines, as well as the declines of other perennial leaders, serve only to underline the remarkable resilience of manufacturing overall. An industry-by-industry analysis shows that the top 10 revenue producers, in order, were: petroleum/coal products, motor vehicles and parts, electronics/electrical equipment, food, chemicals, computer/office equipment, metals, pharmaceuticals, industrial equipment, and publishing/printing. That tracks precisely with the industry leaders last year. Nine of the top 10 companies on this year's list are in the petroleum or auto industries. That's up from eight last year, as Chevron Texaco, thanks to a merger, pushed in to the No. 8 spot. That pushed out IBM, last year's No. 10, which now occupies the 11th spot. In addition to Exxon Mobil and Chevron Texaco, the top 10 includes oil firms BP PLC (third), Royal Dutch/Shell Group (sixth), and Total Fina Elf SA of France (ninth). Besides GM, the auto manufacturers in the top 10 are Ford Motor Co. (fourth), DaimlerChrysler AG (fifth), and Toyota Motor Corp. (10th). The only company not from the petroleum or auto industries in the top 10 is General Electric Co. (GE) at No. 7. Not surprisingly, petroleum/coal products remained among the industries experiencing the highest rate of revenue growth. With 92 oil firms in the IW 1000, the average revenue growth in the category was 26.1%, making it second best. Leading the way in revenue growth was the transportation-equipment industry. With 18 transportation-equipment companies in the IW 1000, the category experienced a 27.7% rate of revenue growth. Other industries exceeding 15% in revenue growth this year: computer/software services (four companies, averaging 23.3% growth), textiles (11 companies, averaging 17.6% growth), and electronics /electrical equipment (109 companies, averaging 16.0% growth). The auto industry was further down the list; with 71 companies, the average revenue growth for motor vehicles and parts was 6.3%. In terms of profit margin, the picture for the top companies shined even brighter. Though the revenue leaders did not necessarily score revenue increases this year over last, they tended to perform particularly well on the bottom line. Petroleum/coal products. Despite Exxon Mobil's revenue decline, the company enjoyed a profit margin of 8.1%, best among the oil companies in the top 10 of the IW 1000. Royal Dutch/Shell Group, also in the top 10, was not far behind with a profit margin of 8.0%. Last year's profit-margin leader in the petroleum field, Houston-based Apache Corp., managed to outscore the giants once again. The independent oil and gas producer, No. 620 in this year's IW 1000, posted a profit margin of 25.2% on revenues of $2.8 billion. Motor vehicles and parts. GM, the consistent revenue leader in the industry, showed a profit margin of 0.3%. Best among the top revenue producers in the automotive industry was Toyota Motor Corp., with a profit margin of 3.5%. Both of the other automakers in the top 10 showed negative profit margins: Ford at -3.4%, and DaimlerChrylser at -0.4%. For the second year, Washington, D.C.-based Donaher Corp., a manufacturer of automotive specialty tools, posted the best profit margin in the industry. The company, No. 496 in this year's IW 1000, had a profit margin of 7.9% on revenues of $3.8 billion. Electronics/electrical equipment. GE, the industry's revenue leader, also was among the best in profit margin with 11.3%. The industry's next revenue leader, Siemens AG, No. 13 in the IW 1000, had a profit margin of 2.4%. Hitachi Ltd., No. 16, had 1.2%. The industry's best profit margin was posted by United Microelectronics Corp. of Taiwan. The company, No. 551 in the IW 1000, showed a profit margin of 44.7% on revenues of $3.2 billion. United Microelectronics is a leading contract manufacturer of semiconductors, and has alliances and joint ventures with such other IW 1000 stalwarts as IBM Corp. and Infineon Technologies AG. Food. Switzerland's Nestl SA repeated as the revenue leader among food companies in the IW 1000. The company, No. 23 on the list, had a 7.9% profit margin on revenues of $51.1 billion. UK-based Unilever Group, No. 27 on the list, came in with a 3.5% profit margin on revenues of $46.5 billion. Kraft Foods Inc., No. 44, had a profit margin of 5.6% on revenues of $33.9 billion. Best in the class was Coca-Cola Co., No. 101 in the IW 1000. The company posted a profit margin of 19.8% on revenues of $20.1 billion. Chemicals. Cincinnati-based Procter & Gamble Co. led its industry in revenues again. The company, No. 37 in this year's IW 1000, had revenues of $39.2 billion. P&G bubbled to near the top in terms of profit margin as well; of the 106 chemical companies in the IW 1000, the company emerged comfortably within the top quarter with a profit margin of 7.4%. Also among the top group were BASF AG of Germany, No. 60 in the IW 1000, which had a profit margin of 18% on revenues of $29 billion; and Du Pont & Co., No. 81 in the IW 1000, which had a profit margin of 17.5% on revenues of $24.7 billion. Five countries continued to dominate the IW 1000 as home base to the most companies and the highest revenues. The United States and Japan once again far outdistanced the others. The U.S. can claim 351 companies in the prestigious list, with total revenues of $3.7 trillion. Japan can boast 230 companies with total revenues of $1.7 trillion. Rounding out the top five: Germany, 50 companies with revenues of $734 billion; France, 46 companies with revenues of $549.4 billion; and the United Kingdom, 54 companies with revenues of $541.7 billion. China, which previously had just one company on the list, this year went to six companies representing total revenues of $74.5 billion. Taiwan added four companies, bringing its total to 22 companies representing revenues of $59.4 billion. The Russian Federation added three companies this year, for a total of six companies representing revenues of $44.2 billion. South Korea also gained three companies, bringing its total to 24 companies and total revenues of $187.7 billion -- the seventh-largest revenue producer in the IW 1000. Australia had five fewer companies on this year's list, dropping to 11 companies representing revenues of $44.5 billion. Canada dropped two companies, bringing its total to 35 companies representing revenues of $174.2 billion. In addition to the top five, Canada is now outdistanced by the Netherlands, South Korea and Italy on the list of countries producing the most total revenues in the IW 1000. Lest we conclude that it has been all work and no relaxation across the world over the past year, it is worth noting that La-Z-Boy Inc. was among several companies catapulting to new places on this year's list. La-Z-Boy, the recliner manufacturer, moved 216 places from 958 to 742. The company had revenues of $2.3 billion, up 1.4% from its total last year. Also worth noting is a new "X" company on the list. Exxon, of course, remained at the top, and Xerox Corp. held steady at 107 (down slightly from 98 last year). The new "X" firm, Xilinx, marks its spot at 963. The company, founded in 1984 and headquartered in San Jose, California, calls itself the "leading innovator of complete programmable logic solutions." Xilinx forms strategic alliances with chip manufacturers and focuses on research and development, marketing, and technical support. The strategy is clearly working; the company posted revenues of $1.66 billion. Xilinx is one of 180 companies in the IW 1000 that came in with revenues below $2 billion. That's 25 more companies at that level making the list this year over last. We wouldn't call that a decline in the strength of the list, however, because each company surely bears watching for growth. A billion here, a billion there. Pretty soon you're talking real money. Editorial Research Director David Drickhamer contributed to this report. ********** Ranking Methodology IndustryWeek partners with Thomson Financial to compile IW 1000. IndustryWeek partnered with Thomson Financial to produce this year's IW 1000, our seventh annual ranking of the world's largest publicly held manufacturing companies. Thomson Financial's global databases were used to identify all publicly held manufacturing firms meeting IW's SIC code criteria. The actual cutoff for inclusion on the IW 1000 list was $1.575 billion in revenues. Thomson Financial obtained the latest financial information on these companies. This process was supplemented with Internet-based research. Erik L. Fine, a Charlotte, N.C.-based information consultant, managed the data project. Editorial Research Director David Drickhamer supervised the project and gave editorial direction. Manufacturing companies were defined according to criteria established by IW. They included: companies with a majority of their business in a manufacturing industry; companies that generated less than 50% of revenues from manufacturing, but more revenue from manufacturing than the lowest-revenue-producing companies on last year's list; computer software companies whose primary business is the manufacture of software programs; oil and gas companies that derive approximately 50% of their revenues from the refining of oil and gas products; and companies that derive approximately 50% of their revenues from the manufacture of mined materials. Because all publicly held manufacturing companies were eligible, a number of subsidiaries or associate companies that are publicly traded separately from their parent company made the list along with the parent. The data elements are based on information obtained directly from publications distributed by the corporations. To more accurately reflect a company's core business, revenue numbers from continuing operations only were used. Currency valuations in U.S. dollars were made using exchange rates as of Dec. 31, 2001. Where 2001 data are not available, 2000 data are provided. An asterisk next to the company name on the IW 1000 list indicates that 2000 data were used. Where 2000 figures are given, revenue growth is for 1999-2000. An "NA" appears in cases where data were not available. Accounting standards and terminology vary from country to country. Direct comparison of figures, even when terms appear to be the same, can be misleading. Top Three-Year Average Profit Margins

2002 Rank	Company	3-year Average Profit Margin
527	Compagnie Financiere Richemont AG, Switzerland	47.8
965	Perez Companc, Argentina	41.5
77	Microsoft Corp., USA	36.9
670	CNOOC Ltd., Hong Kong	35.9
810	Norilsk Nickel RAO*, Russian Federation	35.4
551	United Microelectronics Corp.*, Taiwan	34.9
392	Taiwan Semiconductor Mfg. Co. Ltd.*, Taiwan	34.4
189	Oracle Corp., USA	33.5
341	Surgutneftegaz OAO*, Russian Federation	32.5
466	Amgen Inc., USA	30.8

* 2000 year-end revenues Top Three-Year Average Revenue Growth

2002 Rank	Company	3-Year Average Revenue Growth
248	Anadarko Petroleum Corp., USA	261.1
69	Olivetti SpA*, Italy	226.0
553	JDS Uniphase Corp., USA	197.5
432	Korea Kumho Petrochemical Co. Ltd.*, South Korea	194.8
180	Flextronics International Ltd., Singapore	135.1
403	Tatneft OAO*, Russian Federation	128.3
580	Devon Energy Corp., USA	126.6
864	Frontier Oil Corp., USA	122.5
20	El Paso Corp., USA	117.4
154	OAO Lukoil*, Russian Federation	110.7

* 2000 year-end revenues Top Three-Year Average ROA

2002 Rank	Company	3-Year Average ROA
189	Oracle Corp., USA	43.0
958	UST Inc., USA	41.9
813	Asustek Computer Inc.*, Taiwan	40.5
628	Turkish Petroleum Refineries Corp.*, Turkey	33.8
341	Surgutneftegaz OAO*, Russian Federation	32.1
981	PT Perusahaan Rokok Tjap Guda NG, Indonesia	27.3
466	Amgen Inc., USA	26.2
52	Dell Computer Corp.*, USA	26.0
999	Maxim Integrated Products Inc., USA	25.9
392	Taiwan Semiconductor Mfg. Co. Ltd.*, Taiwan	25.6

* 2000 year-end revenues Top Three-Year Average ROE

2002 Rank	Company	3-Year Average ROE
73	Delphi Corp., USA	4,018.9
124	British American Tobacco PLC, UK	1,082.9
425	Maytag Corp., USA	294.9
628	Turkish Petroleum Refineries Corp.*, Turkey	259.5
327	Unisys Corp., USA	170.5
958	UST Inc., USA	167.3
69	Olivetti SpA*, Italy	132.6
570	American Axle & Mfg. Holdings Inc., USA	121.8
114	Sara Lee Corp., USA	97.8
189	Oracle Corp., USA	84.5

* 2000 year-end revenues