IW 500: The Economy's Global Powerplant

The U.S.' largest manufacturers capitalize on market opportunities abroad and at home.

Smart investors know, when considering an investment in any public company, that they better read the footnotes in the 10-K. This is where they can find the details on pending lawsuits and other litigation, tax issues, loans to directors and officers, and details on any "extraordinary" charges. Buried within these notes, as specified by the Financial Accounting Standards Board, is a geographic breakdown of a company's revenue. For investors this is critical information when evaluating a firm's position with regard to market opportunities and the risks of currency fluctuations. In aggregate, this data reveals just how global U.S. manufacturers are today. Which is the most global manufacturer in the land? Fairchild Semiconductor ( No. 379). Headquartered in South Portland, Maine, Fairchild is the only company from the Pine Tree State to make IW's annual list of the 500 largest publicly traded U.S. manufacturers. About $1.2 billion or 85% of the company's total sales come from outside North America. The firm generates over half of its revenues from the Asia/Pacific region. With 81% of sales from overseas, Fairchild's much larger competitor, Texas Instruments (TI) (No. 79), isn't far behind in terms of globalization. From its home base in Dallas, TI reported total sales of just under $10 billion in 2003. On average, 36% of total sales of the IW 500 companies came from outside of the United States, Canada and Mexico. By extrapolation, overseas sales therefore account for roughly $1.4 trillion of the almost $4 trillion in revenues recorded by the 500 largest U.S. manufacturers in their most recent annual reports. It should be noted that each company segments sales according to its own designated market regions. Dell Inc. (No. 15), for example, combines sales for the United States, Canada, plus all of Latin America. Because it does not report North American data separately, we did not include Dell in this analysis. Still, Mergent, IndustryWeek's partner on the IW U.S. 500 project (See, "The Source," www.industryweek.com.), was able to compile distinct North American and international sales data for 70% of the companies appearing on the 2004 list. On the other extreme of the globalization spectrum, nine manufacturers reported zero sales outside of North America. Among these, the appropriately named LaFarge North America (No. 205) supplies cement, ready-mix concrete, sand, gravel and drywall exclusively to construction sites in the United States and Canada. The $3.3 billion company is headquartered outside of Washington, D.C. Temple-Inland Inc. (No. 156) is another stay-close-to-home manufacturer. The $4.7 billion, Austin-based firm makes corrugated packaging and forest products (gypsum wallboard, fiberboard and particle board). It also provides a range of financial services through a subsidiary, Guaranty Bank, which manages $17.6 billion in assets. Globalization varies by industry. Lead by Fairchild Semiconductor, the most global major industrial sector by a long shot is computers and other electronic products. The industry averages 60% of sales from outside of NAFTA countries. It includes such international heavyweights as IBM (No. 7), Hewlett-Packard Co. (No. 9) and Intel Corp. (No. 25). Other more global sectors include the chemical industry (44% international sales), motor vehicle parts (42%), and medical instruments and equipment (42%). One of the least global industries, with an average of just 19% of sales from international markets, is the petroleum industry. This sector is characterized by extremes. Exxon Mobil Corp. (No. 1), reported 71% of sales from outside North America, $167 billion of $237 billion total sales. Valero Energy Corp. (No. 18) recorded only 1.6% of sales outside the United States and Canada. Based in San Antonio, the $38 billion company's combined oil refining operations have a throughput capacity of 2.4 million barrels per day.

Going Global
Average International Sales By Industry
Industry International Sales, % Globalization Leaders International Sales, %
Computers & Other Electronic Products 59.9 Fairchild Semiconductor International Inc. 85.0
Chemicals 43.8 OM Group Inc. 79.6
Medical Instruments & Equipment 41.6 Bio-Rad Laboratories Inc. 65.7
Motor Vehicle Parts 41.6 Autoliv Inc. 70.9
Machinery 40.0 FMC Technologies Inc. 62.2
Communications Equipment 39.5 Agere Systems Inc. 79.6
Instruments 39.4 Agilent Technologies Inc. 63.6
Pharmaceuticals 36.7 Schering-Plough Corp. 57.3
Aerospace & Defense 35.9 Sequa Corp. 50.4
Fabricated Metal Products 35.3 Gillette Co. 62.7
Food 32.0 Chiquita Brands International Inc. 73.1
Plastics 31.8 Tupperware Corp. 73.3
Apparel 31.4 Nike Inc. 56.5
Beverages 28.9 Coca-Cola Co. 73.7
Electrical Equipment & Appliances 28.5 Exide Technologies 58.9
Publishing & Printing (including software) 27.0 Oracle Corp. 52.3
Primary Metals 26.6 Engelhard Corp. 49.9
Motor Vehicles 26.4 Paccar Inc. 55.4
Paper 19.2 Avery Dennison Corp. 47.6
Petroleum & Coal Products 18.6 Exxon Mobil Corp. 63.1
Furniture & Fixtures 16.8 Steelcase Inc. 27.9
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