Each year
IndustryWeek sets out to identify the
50 Best Manufacturing Companies (IW50 BMC) in the United States. The list not only affirms that manufacturing is alive and well in the U.S.A., but it also enables us to get a glimpse into what makes a manufacturer world class.
What is it, for instance, that sets apart a company like petroleum refiner
Sunoco Inc.? In today's economic climate, it's more remarkable to not make money if your business is operating oil refineries. And yet, the very volatility of the petroleum market makes long-term production forecasts something of a high-stakes poker game.
When Sunoco's fourth-quarter 2006 profits and revenues underperformed to Wall Street's expectations, John Drosdick, the company's CEO, along with other senior managers took the unusual step of voluntarily relinquishing several C-level perks. The benefits include tax payments on Drosdick's behalf for personal use of the corporate aircraft and use of a company-owned car, which the CEO returned in July 2006.
It's this kind of leadership, coupled with a commitment to the company's best interests, that makes Sunoco a repeat visitor to the
IW50 BMC list. And even with the fourth-quarter stumble, Sunoco ended up posting more than $38 billion in revenue (revenue growth of nearly 15% compared with 2005 results) and 47.7% return on equity for the year. With or without the corporate jet, that's flying high. To calculate which companies from the
IW U.S. 500 make it to the coveted
IW 50 BMC list, a formula is applied that considers financial measures that pertain to operational efficiency and market success. We compare financial performance for the last three years (2004 to 2006) in revenue growth, return on equity and profit margin, as well as manufacturing-specific metrics that address the capital/asset intensive nature of manufacturing. These metrics are asset turnover, inventory turnover and return on assets.
The six variables are weighted, with the most recent year contributing 50% of the calculation in each area.
This year's list includes representatives from 18 industries. As expected, petroleum & coal producers dominated the charts with 14 companies represented.
Other industries include primary metals, computers & other electronic products, medical instruments, motor vehicles, and chemicals.
This year we welcome 20 newcomers to the list.
Encore Wire Corp., which boasts a 99.95% order fill rate for its copper electrical wire in the fabricated metal products industry, had $1.2 billion in revenue for 2006 -- not bad for a freshman Best Manufacturing Company. The company also had a 33% return on assets and a 54% return on equity.
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