Global Competition
The July 20, 2009 issue of Fortune magazine published its annual Global 500 special section, giving information on the performance of the 500 largest companies in the world. Some interesting things can be interpreted from this special report. Let’s take a look.
Top 7 corporations in the world, by Revenue:
- Royal Dutch Shell – Netherlands
- Exxon Mobil – U.S.
- Wal-Mart Stores – U.S.
- BP – Britain
- Chevron – U.S.
- Total – France
- ConocoPhilips – U.S.
Note that Wal-Mart Stores is the only non-oil company on this list. Is oil a really big business in the world, or what? Do we really think that big oil will support alternative energy?
Top 6 most profitable corporations in the world:
- Exxon Mobil – U.S.
- Gazprom – Russia
- Royal Dutch Shell – Netherlands
- Chevron – U.S.
- BP – Britain
- Petrobras – Brazil
Well, apparently, oil pays well, since the six most profitable businesses in the world are all oil corporations.
Interesting Observations:
• Of the top 100 largest corporations in the world, there are only 5 American manufacturing companies.
- General Motors – no. 18
- Ford – no. 19
- Hewlett-Packard – no. 32
- IBM – no. 45
- Proctor and Gamble – no. 68
• The two most profitable banks in the world are Industrial & Commercial Bank of China, and China Construction Bank.
• America has 6 of the top 10 money-losing companies in the world, and only two of them are financial institutions.
• Since 1998, the number of American companies in the Global 500 have dropped from 185 to 140, a 24% decrease.
• Since 1998, the number of Chinese companies in the Global 500 has risen from 6 to 37, a 616 % increase.
What can we learn?
First, it is obvious that big business in America has trouble competing in the world market. If it wasn’t for U.S. oil companies, our position would be even more abysmal. Considering the declining number of U.S. companies on the Global 500 list, it is easy to conclude that the future for big business in the U.S. is pretty dismal.
The good news is that small business can pick up the slack in world trade left by the big guys. Every small business in America should be factoring world-wide trade into their business plans. From a sales and marketing standpoint—think globally!
UAW vs. the UAW?
One of my readers asked what my take was on the ownership of Chrysler and GM stock by the United Auto Workers (UAW) union. Here is what I see today.
Restructuring of the auto industry by the government auto task force (Treasury staffers, and the Boston Consulting Group) requires the United Auto Workers (UAW) to become shareholders in both Chrysler and GM. This is because the union’s employee trust–VEBA–(this is the one that manages health care for workers and retirees) is owed about $9 billion by Chrysler, and about $20 billion by GM. Yes…that’s BILLION dollars. So, the government task force is forcing the UAW to take shares of stock for one-half of those obligations.
The UAW has taken about 55% of Chrysler’s total shares, and is expected to take about 39% of GM’s total shares. Although the union plans on selling their shares “eventually,” they are now faced with some unusual issues for a union. Here are just some of them:
- The union’s trust (VEBA) needs the money owed them in order to remain solvent. So, if the value of the shares received does not go up rather quickly, so the union can sell their shares, the trust will run out of money. Hard to say which will come first, or if Chrysler, for instance, ever does create shareholder value.
- Many people have the perception that the UAW is to blame for the downfall of the auto industry, and now owns a great deal of it. This will be a problem when the union tries to organize the workers of other industries, like casino workers in Atlantic City.
- When the UAW tries to organize another automaker (Honda?), they will be viewed as a substantial owner of competitors, and therefore will have a conflict of interest.
- When bargaining for the next contract, every dollar the union gains for the workers is a dollar of value the UAW may lose from their shares in the company. If bargaining reaches an impasse, and the union goes out on strike, thus crashing the stock value…who are they actually hurting?
There are other more subtle problems the union is going to have in this situation, but as UAW President, Ron Gettelfinger pointed out…this is still the best option available.
What do some others think about this situation?
Finally–Shareholders Take Action
The investment group, Finger Interests Number One, Ltd., owns a small block of Bank of America stock, and has charged, in a regulatory filing, that the board of directors of Bank of America ignored shareholder interests when they approved the purchase of Merrill Lynch & Co.
Now, three board members; Ken Lewis, CEO; O. Temple Sloan, lead director; and Jackie Ward, director, are up for reelection, and the investment group is asking shareholders to vote these incumbents out and bring in new blood. The election of board members will take place at the Bank of America annual meeting in late April.
It is about time shareholders discarded their complacency and started fulfilling their obligations as “owners” of companies–especially those “owners” of failing companies. Makes one wonder what role shareholders played in the current crisis on Wall Street. I wonder how many shareholders actually spoke out during the nomination for board members–or even voted for that matter.
Have you looked closely at your portfolio lately?
A Plague is Among Us!
A plague of cell phones, that is—or more appropriately, a plague of inconsiderate users of cell phones. I am writing this while sitting in the foyer of a medical building, waiting for a friend. There are 5 other people sitting out here with me—4 of whom are talking on their cell phones.
I now know more about several other families than I probably know about my own. Maybe that’s because I have my cell phone turned off. I am certainly learning more than I care to know.
I don’t understand why people have to SHOUT when they are talking on a cell phone…there is no possibility of tuning out their conversations…I think I could still hear some of them if I was outside the entrance doors.
I do find it fascinating watching one twenty-something talk to her sister on one cell phone, while texting someone else on a second cell phone. I guess that is the ultimate in “multi-tasking.” These must be scintillating conversations.
Oh, my, I did NOT need to hear that!
It’s nearly impossible today to go anywhere and not be inundated by insipid and meaningless one-sided cell phone conversations carried on by people around you. Makes one wonder what people did before the proliferation of cell phones—maybe they had more time to think, or create, or observe, or at least have some consideration for those around them.
Probably not going to happen in today’s society.
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