Thursday, February 04, 2010

Fortune 500 Firms in 1959 vs. 2009; 86% Are Gone

What do the companies in these three groups have in common?

Group A. American Motors, Studebaker, Eastman Kodak, Maytag and National Sugar Refining.

Group B. Boeing, Campbell Soup, Deere, IBM and Whirlpool.

Group C. Cisco, eBay, McDonald's, Microsoft and Yahoo.

All the companies in Group A were in the Fortune 500 in 1959, but not in 2009.

All the companies in Group B were in the Fortune 500 in both 1959 and 2009.

All the companies in Group C were in the Fortune 500 in 2009, but not 1959.

Here's
the complete database of the Fortune 500 every year from 1959-2009.

Comparing the Fortune 500 in 1959 to 2009, I find that there are only 72 companies that appear in both lists. In other words, only 14% of the Fortune 500 companies in 1959 were still on the list fifty years later in 2009, and 86% of the companies have either gone bankrupt, merged, gone private, or still exist but have fallen from the top 500 companies (ranked by gross revenue). That's a lot of churning and creative destruction, and it's probably safe to say that many of today's Fortune 500 like the ones listed above will be replaced by new companies in new industries by the year 2059.

Thanks to Nick Schulz for the idea. The 50 year database is a great resource and I might try some additional analysis, this was just a quick start.

8 Comments:

At 2/04/2010 5:54 PM, Blogger John Thacker said...

I thought that the done thing was to mention John Kenneth Galbraith at this point, but let's not speak ill of the recent dead I suppose.

 
At 2/04/2010 6:11 PM, Anonymous Anonymous said...

This evidence churning and creative destruction is going to have to be deliberately ignored by those who argue that we have an entrenched corporate elite who control every aspect of our government and are lives. Thankfully, they have lots of practice ignoring evidence that does not support their narrative.

 
At 2/04/2010 9:07 PM, Anonymous Anonymous said...

This gives the lie to the "stock market always recovers" meme that is fed to stock market investors. Let's pretend I was an 18 year old lad in 1959 with a little bit of an inheritance who invested it the Fortune 500 because the stock market ALWAYS recovers... If I had split my investment evenly amongst all 500 companies, only 14 percent of those companies now remain as I reach my retirement age.

Yes, the stock market does ALWAYS recover because those companies that fail are delisted, and the money that was invested in them is cleared from the slate.

 
At 2/04/2010 9:43 PM, Anonymous morganovich said...

try this in europe. you'll find it's nearly all the same companies.

 
At 2/04/2010 10:33 PM, Anonymous Anonymous said...

A couple of questions:

For the second Anonymous commentor: That only 14% of the companies remain in their original name is unimportant. How did your investment do?

And for Morganavich: Why? and Is that a good thing?

 
At 2/04/2010 11:41 PM, Anonymous Lyle said...

What would be interesting is how many companies vanished by merger during the 50 years and how many went under. In oil it would be mostly mergers, as Gulf, Texaco, Sinclair,Getty, Mobil, Superior and a long list of companies were gobbled up. Also true in tech, and definitly in the Banking sector, look at Bank of America (really NCNB of Charlotte that first gobbled up banks in NC then the southeast, and then gobbled up the Original Bank of America, but kept the name. Another case is Wells Fargo, starting out as Norwest bank of Minneapolis, Or JPMorgan Chase which was Chemical bank gobbled up Texas Commerce, and then Chase and finally Morgan.
It would then be interesting to see what a unit trust that bought the 50 in 1959 would be worth today.

 
At 2/05/2010 9:30 AM, Anonymous morganovich said...

no, it's a bad thing. it's the result of heavy state involvement in business and of a deck massively stacked against entrepreneurship stifling growth and innovation.

try starting a company in germany.

 
At 1/31/2011 10:48 PM, Blogger John said...

You mention Eastman Kodak is one company in group A that wasn't on the Fortune 500 in 2009. They were actually #284.

 

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