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Leaders Look Inside For The Future

Dec. 8, 2005
Clear-minded thinking at top companies gives insight into the next generation of U.S. manufacturing.

After three years of naming the IW 50 Best Manufacturing Companies based on market and manufacturing metrics, IndustryWeek decided to dig a little deeper into the leading minds of those companies that rose to the top.

To do so, we asked executives at some of the 50 companies to craft an essay in one of five areas that IndustryWeek deemed important to the future of manufacturing: infrastructure, globalization, supply chain, leadership and sustainability.

Our goal was to find out how these companies have survived and thrived despite the difficulties that plagued most companies the past five years.

For example, the topic and practice of sustainable manufacturing ensures businesses will be in existence in the future -- and that the footprints the companies leave on the earth are not intrusive. Many of the top companies are working to reduce CO2 emissions, to add more recyclable content to their products and to reduce their energy consumption.

Essay Sections



Supply Chain


These companies also want to ensure that workers and their families are taken care of in terms of quality of work life and quality of personal life, not only to make a happy, productive workforce, but also to appeal to consumers and customers as a manufacturer with heart.

Indeed, Winnebago's annual report states, "The company must pursue conduct in a manner that is socially responsible and that commands respect for its integrity and for its positive contributions to society."

Additionally, the Forest City, Iowa-based manufacturer's Winnebago Industries Foundation provides assistance to organizations that contribute to the well-being of the company's surrounding communities.

In terms of infrastructure, the 21st century delivers many challenges to manufacturers -- challenges that have never before been addressed because the challenges never existed. The way companies do business today is real-time. Companies need to upgrade their IT systems. Companies are asking about transportation issues -- can the existing roads and ports handle globalized economies? Is the energy grid reliable?

See Also...

A Look Inside The IW 50

And leading companies are investing in upgrading plant infrastructure now that the economy has started to bounce back.

Add to that what Ecolab considers its most important infrastructure asset -- employees.

The St. Paul, Minn.-based manufacturer realizes that many companies base the success of infrastructure on state-of-the-art facilities or business processes and systems. But in order to make those elements work well, employees need to be engaged and appreciated.

With 22,000 employees, Ecolab is prepared to meet the service needs of its customers.

As for the supply chain, that seems to be on everyone's agenda. Is it lean enough? Is it robust enough? What happens if a link in the chain breaks? No matter how good you are, you are only as strong as your weakest link -- thus the importance of keeping supply-chain issues on the front burners.

18 industries are represented in the IW 50 Best Manufacturing Companies list for 2005.Apparel 3 Beverages 2 Chemicals 6 Communications Equipment 1 Computers & Other Electronic Products 4 Fabricated Metal Products 1 Food 3 Furniture & Fixtures 1 Leather Products 1 Machinery 3 Motor Vehicle Parts 1 Motor Vehicles 4 Petroleum & Coal Products 9 Pharmaceuticals 1 Primary Metals 1 Publishing & Printing 7 Railcars, Ships, & Other Trans. Equip. 1 Wood Products 1 For Dell, the company that epitomizes a lean supply chain structured around its customers, the primary focus with suppliers is continuity of supply. The company also analyzes operational performance on an hourly basis and aligns its supply chain, manufacturing and logistics operations to meet customers' needs.

Deluxe Corp., the Minnesota-based paper check manufacturer, also bases its supply-chain success on inventory levels.

Adapting to market changes -- fewer and fewer paper checks are being used to pay bills -- Deluxe converted the structure of its supply chain from consumption/replenishment to demand planning.

Looking into leadership, strong leaders are good -- but strong leaders that can adapt to change while remaining consistent within their leadership style are world class.

Whether it is a family business that has seen only one surname on the CEOs door or a corporation that has hosted dozens of c-level executives, leadership is what makes or breaks a manufacturer. Indeed, poor leadership has put many a manufacturer out of business.

According to Procter & Gamble, the best leaders follow a consistent gameplan for facilitating successful change within their organizations.

The Cincinnati-based company's game plan includes a clear vision, the right infrastructure, engaging the organization and concentrating on consumer interests.

To round out the topics for our soothsayers, we asked about globalization. This topic can hardly be ignored considering our economy is truly a global economy that no longer knows borders and boundaries.

Regardless of company headquarters, every manufacturer is touched by globalization. Whether it is a part from China or outsourced services from India, companies can no longer function in a bubble.

With this in mind, Valassis CEO Al Schultz takes on what globalization means for the United States -- even rhetorically asking Alan Greenspan, "How will the U.S. economy survive after all of our middle-income jobs have been outsourced to Asia and we no longer manufacture much of anything?"

Not a naysayer, Shultz suggests education is the key to leveling the playing field.

While not all 50 companies participated in the project, we did receive valuable content from those that did.

We hope that you will find inspiration as well as insight in the following essays. And who knows, maybe next year your leaders will be asked to commit to paper what your company sees for the future.

Essay Sections

Follow The Leader: How companies are led translates into how well they perform.
Questioning Globalization: Competition on a global scale is squeezing manufacturers dry.
Securing A Stellar Supply Chain: Only as strong as its weakest link, the supply chain can make or break manufacturers.
Analyzing Infrastructure: Support behind infrastructure is where the focus should lie.
Sustaining The Future: How companies manage resources today determines what is to come tomorrow.
A Look Inside The IW 50
The formula for naming the IW 50 Best Manufacturing Companies was based on six categories: profit margin, sales turnover, inventory turns, revenue growth, return on assets and return on equity. While each company on the IW 50 list is a stellar performer, there are companies that rise above. See more on the IW 50 methodology here. Below you find the Top 10 performers in each category. You can also view the IW 500 list (where the top 50 originated) and its methodology. Double-Digit Performance (%)
Company Name Industry Profit Margin Revenue Growth ROE ROA
Amphenol Corp. Computers/ Electronic Products 10.7 23.5 50.5 50.5
Autodesk Inc. Publishing/ Printing 18.0 29.6 35.6 21.8
Coach Inc. Leather Products 19.8 38.6 61.3 42.4
Columbia Sportswear Co. Apparel 12.7 15.1 21.6 17.7
Electronic Arts Inc. Publishing/ Printing 19.5 19.1 32.3 24.5
Gillette Co. Fabricated Metal Products 16.1 13.2 76.0 17.0
International Game Technology Machinery 19.7 16.8 29.0 11.7
Johnson & Johnson Pharmaceuticals 18.0 13.1 31.7 17.6
Lexmark International Inc. Computers/ Electronic Products 10.7 11.8 34.6 16.5
Newfield Exploration Co. Petroleum/ Coal Products 23.1 33.0 22.8 11.4
Procter & Gamble Co. Chemicals 12.6 18.5 40.0 14.8
Qualcomm Inc. Communications Equipment 35.2 22.9 22.6 19.5
Timberland Co. Apparel 10.2 11.8 35.6 23.8
Varian Medical Systems Inc. Machinery 13.5 18.6 29.7 15.9
Wm. Wrigley Jr. Co. Food 13.5 18.9 27.1 19.6
Top 10 Companies Based On Profit Margin (%)
Company Name Profit Margin Primary Industry IW 500 Rank
Qualcomm Inc. 35.25 Communications Equipment 170
Newfield Exploration Co. 23.10 Petroleum & Coal Products 412
Coach Inc. 19.81 Leather Products 422
International Game Technology 19.67 Machinery 259
Electronic Arts Inc. 19.52 Publishing & Printing 229
Johnson & Johnson 17.97 Pharmaceuticals 17
Autodesk Inc. 17.95 Publishing & Printing 441
Harley-Davidson Inc. 16.72 Motor Vehicles 158
Gillette Co. 16.14 Fabricated Metal Products 86
Anheuser-Busch Cos. Inc. 15.00 Beverages 61
IW 50 Best Managed Companies For remaining 450 companies that comprise the IW 500
Median: 9.1 Median: 5.0
Average: 10.4 Average: 6.1
Top 10 Companies Based On Sales Turnover
Company Name Sales Turnover Primary Industry IW 500 Rank
Universal Forest Products Inc. 3.22 Wood Products 261
Sunoco Inc. 3.15 Petroleum & Coal Products 36
Thor Industries Inc. 2.87 Motor Vehicles 298
Winnebago Industries Inc. 2.82 Motor Vehicles 472
Valero Energy Corp. 2.82 Petroleum & Coal Products 11
Sanderson Farms Inc. 2.80 Food 487
Premcor Inc. 2.70 Petroleum & Coal Products 58
Western Digital Corp. 2.63 Computers & Other Electronics 223
Georgia Gulf Corp. 2.29 Chemicals 294
Polaris Industries Inc. 2.28 Railcars, Ships & Other Trans. Equip. 345
IW 50 Best Managed Companies For remaining 450 companies that comprise the IW 500
Median: 1.3 Median: 0.9
Average: 1.6 Average: 1.0
Top 10 Companies Based On Inventory Turns
Company Name Inventory Turns Primary Industry IW 500 Rank
Dell Inc. 102.26 Computers & Other Electronics 16
Dow Jones & Co. Inc. 75.12 Publishing & Printing 360
Harte-Hanks Inc. 63.95 Publishing & Printing 495
Newfield Exploration Co. 46.52 Petroleum & Coal Products 412
Chevron Corp. 37.03 Petroleum & Coal Products 4
Sunoco Inc. 33.47 Petroleum & Coal Products 36
Valassis Communications Inc. 30.78 Publishing & Printing 489
Electronic Arts Inc. 27.47 Publishing & Printing 229
Johnson Controls Inc. 26.31 Motor Vehicle Parts 32
ConocoPhillips 25.59 Petroleum & Coal Products 6
IW 50 Best Managed Companies For remaining 450 companies that comprise the IW 500
Median: 11.3 Median: 6.2
Average: 17.9 Average: 9.1
Top 10 Companies Based On Revenue Growth (%)
Company Name Revenue Growth Primary Industry IW 500 Rank
Nucor Corp. 81.57 Primary Metals 79
Premocr Inc. 74.18 Petroleum & Coal Products 58
Murphy Oil Corp. 56.40 Petroleum & Coal Products 102
Georgia Gulf Corp. 52.73 Chemicals 294
Valero Energy Corp. 43.85 Petroleum & Coal Products 11
Sunoco Inc. 42.15 Petroleum & Coal Products 36
Thor Industries Inc. 39.22 Motor Vehicles 298
Paccar Inc. 39.07 Motor Vehicles 78
Coach Inc. 38.59 Leather Products 422
Newfield Exploration Co. 33.01 Petroleum & Coal Products 412
IW 50 Best Managed Companies For remaining 450 companies that comprise the IW 500
Median: 18.8 Median: 12.0
Average: 23.4 Average: 16.9
Top 10 Companies Based On Return On Assets (%)
Company Name Return On Assets Primary Industry IW 500 Rank
Coach Inc. 42.38 Leather Products 422
Deluxe Corp. 35.17 Publishing & Printing 378
Sanderson Farms Inc. 30.59 Food 487
Nucor Corp. 24.96 Primary Metals 79
Electronic Arts Inc. 24.47 Publishing & Printing 229
Timberland Co. 23.79 Apparel 388
Autodesk Inc. 21.78 Publishing & Printing 441
Wm. Wrigley Jr. Co. 19.56 Food 204
Qualcomm Inc. 19.50 Communications Equip. 170
Winnebago Industries Inc. 18.71 Motor Vehicles 472
IW 50 Best Managed Companies For remaining 450 companies that comprise the IW 500
Median: 15.1 Median: 5.5
Average: 15.8 Average: 5.7
Top 10 Companies Based On Return On Equity (%)
Company Name Return On Equity Primary Industry IW 500 Rank
Colgate-Palmolive Co. 149.60 Chemicals 84
Valassis Communications Inc. 132.46 Publishing & Printing 489
Anheuser-Busch Cos. Inc. 82.62 Beverages 61
Georgia Gulf Corp. 77.61 Chemicals 294
Dow Jones & Co. Inc. 76.78 Publishing & Printing 360
Gillette Co. 76.03 Fabricated Metal Products 86
Coach Inc. 61.31 Leather Products 422
Amphenol Corp. 50.50 Computers & Other Electronics 382
Dell Inc. 48.46 Computers & Other Electronics 16
Nucor Corp. 47.88 Primary Metals 79
IW 50 Best Managed Companies For remaining 450 companies that comprise the IW 500
Median: 32.7 Median: 14.9
Average: 39.8 Average: 17.8

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