In the late 1960s a French journalist named Jean-Jacques Servan-Schreiber
wrote The American Challenge, one of the most popular books ever published in
France, about the silent economic competition between Europe and the US. The
popularity of the book was partially based on its strategy for European
Unification to match Americaʼs emerging power. As de Gaulle resigned in 1969, Servan-Schreiber offered a contrasting view for a resurgent, unified Europe.
Even more importantly for Americans, the book offers a high water mark
documenting American economic strength. In spite of American preoccupation
with Vietnam, there were many others in the world who envied the economic
power of the US. At this moment in 2011, it seems as though a peak had
been reached some time ago. The American Challenge documented a high point of economic
achievement emerging from the 60s. In light of the challenges that face the US today, when many are beginning to take stock of the economic vitality that appears to have been lost, that moment in 1970 documents an interesting point of perspective.
To contrast the world of 197o with today it’s useful to seek data that might give content to the comparison. The 1970 Fortune 500’s top 30 companies compared with the Fortune 30 from 2010 seemed to be an appropriate comparison. Primarily, I wanted to see whether a comparison of the top firms in the U.S. economy – then and now – would tell any stories.
Table 1 lists the top 30 firms from the Fortune 500 of 1970 and makes the
comparison with 2010.
THE TOP OF THE FORTUNE 500
|1970 List||1970 Sales||2010 List||2010 Sales|
|1. General Motors||$24.3 billion||1. Wal-Mart Stores||$408 billion|
|2. Exxon [Mobil]||$14.9||2. Exxon Mobil||$285|
|3. Ford||$14.8||3. Chevron||$164|
|4. General Electric||$8.4||4. General Electric||$157|
|5. Intl. Business Machines||$7.2||5. Bank of America||$150|
|6. Chrysler||$7.1||6. ConocoPhillips||$140|
|7. Mobil||$6.6||7. AT&T||$123|
|8. Texaco||$5.9||8. Ford Motor||$118|
|9. ITT [Industries]||$5.5||9. J.P. Morgan Chase||$116|
|10. Gulf Oil||$5.0||10. Hewlett-Packard||$115|
|11. AT&T Technologies||$4.9||11. Berkshire Hathaway||$112|
|12. U.S. Steel||$4.8||12. Citigroup||$109|
|13. Chevron[Texaco]||$3.8||13. Verizon Communications||$108|
|14. LTV||$3.8||14. McKesson||$107|
|15. Dupont||$3.7||15. General Motors||$105|
|16. Shell Oil||$3.5||16. American International Group||$103|
|17. CBS||$3.5||17. Cardinal Health||$100|
|18. Amoco||$3.5||18. CVS Caremark||$99|
|19. General Telephone & Electronics||$3.3||19. Wells Fargo||$99|
|20. Goodyear Tire & Rubber||$3.2||20. IBM||$96|
|21. RCA||$3.2||21. United Health Group||$87|
|22. Esmark||$3.1||22. Proctor & Gamble||$80|
|23. McDonnell Douglas||$3.0||23. Kroger||$77|
|24. Union Carbide||$2.9||24. AmerisourceBergen||$72|
|25. Bethlehem Steel||$2.8||25. Costco Wholesale||$72|
|26. Boeing||$2.8||26. Valero Energy||$70|
|27. Eastman Kodak||$2.7||27. Archer Daniels Midland||$69|
|28. Proctor & Gamble||$2.7||28. Boeing||$68|
|29. Atlantic Richfield||$2.7||29. Home Depot||$66|
|30. Rockwell||$2.7||30. Target||$65|
 With appreciation to Fortune Magazine and CNN Money. From http://money.cnn.com/magazines/fortune/fortune500_archive/full/1970/
 Their convention is to show the current name of the company. I have put the changed part in brackets.
My conclusion is that there are almost too many stories to tell. Just this
comparison shows a number of the dramatic transformations of the economy in
- The dramatic consolidation of the oil and gas industries and their continuing geopolitical problems stands out. Perhaps as we watch the run up in oil prices and recognize once again that American dependence on conventional oil has not been broken, the vulnerability of the worldʼs economy to an exceptionally fragile set of political arrangements is still clear. The missing names are particularly obvious (Texaco, Gulf, Chevron, Shell, Amoco, and Atlantic Richfield) and with revolution in Tunisia and drama unfolding in Libya and Bahrain this is not a story that is complete.
- The automotive industry’s crisis has been a long running story over 30 years of American competitiveness but the loss of Chrysler, slippage of General Motors and Ford’s almost surprising success is still notable.
- Part two of this story is the dramatic loss of the American industrial base. The missing companies like US steel, LTV, Union Carbide, Bethlehem Steel, and Rockwell are interesting and itʼs apparent how much has been hollowed out of the American economy.
- Perhaps a related part of this story is the financial crisis and the loss of thefinancial base. Bank of America and J.P. Morgan Chase, Citigroup, AIG, Wells Fargo all have substantial sales. But they acquired substantial parts of their modern portfolios when icons of finance collapsed. General Electric is fundamentally a different company today then it was 10 years ago when GE Capital was playing such an important role in its success as Jack Welch retired.
Oil, manufacturing and finance, all showing the effects of significant turmoil now
are managed with exceptional attention to managing risk. The picture of
consolidation and continuing exposure to powerful global forces can be seen in
- The story of the telecommunications sector, the Internet, the changes in the computer industry almost offer to many stories to create a meaningful summary. In the information sector alone the story of revolutionary change has involved changing government roles and regulations, Globalization, technology innovation and social trends that were rarely anticipated in 1970. CBS is no longer the company that it was in 1970. Verizon and AT&T barelyresemble their 1970 counterparts. Above all, this sector explains why market capitalization rather than sales is probably a better measure of todayʼs marketplace.
- The rise of retail in the current list is astonishing. Not only is Wal-Mart sitting in the lead position but the appearance of Kroger, Home Depot, Costco, and Target is fascinating. And of course
- Finally, there is the story of an aging population and the appearance of Cardinal Health, CVS Caremark, United Health Group Amerisource Bergen on the list.
That’s only seven stories from a small shard of data. Yet it was surprising to me
that in this shifting picture there would so much that could be seen in this
comparison of the world of 1970 and the present.
My memory of the time dwells on the disruptions of Vietnam, civil rights
struggles and Watergate, but what is striking to me now about the two lists is the way in
which the “externalities” to corporate strategies have proven over time to be the forces that defined the companies that disappeared and the evident trends that are shaping the largest
companies that remain in the marketplace today.
I am not reassured by looking at the top 30 companies of the Fortune 500 today.
They would seem to illustrate an economy of accumulated wealth sitting at the
end of a global supply chain expanding its consumption of what other people
make. How long could such a picture be sustainable on todayʼs terms?