Our consumption of energy and technology seems endless. If it's not a point and click away or accessible by car, forget about it. Maybe that's why so many of the IW 50 Best Manufacturing Companies come from mining, gas and oil or technology-related industries.
The 2008 list comprises 12 petroleum and coal products manufacturers, 10 from the computers and other electronics sector and nine from the primary metals segment. Several of these companies are new since last year's list. Perhaps the most recognizable newcomer is Microsoft Corp. The Redmond, Wash., computer technology company joins rival Apple Inc. on the IW 50, coming off a strong 2007 during which it increased revenue 15% and profit 12%. The launches of the Windows Vista operating system and the 2007 Microsoft Office suite were major contributors to the company's recent success. Yes, innovation is a common characteristic among IW 50 companies. MEMC Electronic Materials Inc., for instance, says in 2005 it became the first company to produce 300-mm silicon wafers, used by the semiconductor industry in Taiwan to meet growing demand. MEMC's profit margin in 2007 was 43%, the highest of any IW 50 manufacturer.
Profit margin is one of the six variables IndustryWeek measures to create the IW 50. The list is compiled based on a formula applied to the IW U.S. 500 spreadsheet. In addition to profit margin, IndustryWeek compares IW 500 manufacturers' financial performance for the past three years in revenue growth, return on equity, asset turnover, inventory turnover and return on assets. The variables are weighted, with the most recent year contributing 50% of the calculation in each area.
Revenue more than doubled for mining equipment producer Bucyrus International Inc. in 2007. The company also had a profitable year with net income growing 21%. That's due in part to booming demand for mined resources, which also landed copper producer Freeport-McMoRan Copper & Gold Inc. on the IW 50.
The oil and gas exploration boom has been kind to IW 50 newcomer FMC Technologies Inc. The provider of technology solutions for the energy industry has nearly tripled its profit since 2005. Of course, just as in previous years, the list is dominated by oil companies, which continue to post record profits. But one Big Oil company that didn't return to the IW 50 this year was ConocoPhillips. Earnings in 2007 were down 24%, which the company attributed to a $4.5 billion charge in the second quarter to write off assets abandoned when talks failed with Venezuela President Hugo Chavez over the nation's decision to nationalize several oil projects.
The IW 50 Best Manufacturing Companies -- 2008 Methodology
The 2008 IW 50 Best Manufacturing Companies
Map: The 2008 IW 50 Best Manufacturing Companies
One somewhat surprising newcomer is bedding manufacturer Tempur-Pedic International Inc. While the rest of the furniture and fixtures industry has fallen along with the struggling housing market, Tempur-Pedic has thrived. Earnings rose to $141.5 million, up from $112.3 million in 2006. The company introduced several new products during the year, which were "received very positively," according to Tempur-Pedic President and CEO H. Thomas Bryant.
For a sense of how IW 50 manufacturers performed as a whole, inventory turns averaged 13.5, mean profit margin was 12.6%, revenue growth averaged 21.5%, return on assets averaged 19.1%, and the mean return on equity was 42.8%.
The largest company on the list is Exxon Mobil Corp., which also is the largest IW U.S. 500 manufacturer.
Visit www.industryweek.com/iw502008mashup to view a map of where IW 50 manufacturers are headquartered. To read the methodology used to choose the IW 50, see www.industryweek.com/iw50best-2008/methodology. Learn more about each of the 50 companies by signing up for the "Leadership Insights From The IW 50" e-newsletter at www.industryweek.com/newsletters.aspx.