Call it a last nail in the coffin of the Industrial Age.
The Fortune 500 list, a who's who of the mightiest manufacturers in America for 40 years, is now including in its tony ranks Wal-Mart, McDonald's, Microsoft and others in the service world.It was time for a change, according to Fortune magazine, because the lines are blurring between the companies that make products and those that sell, maintain, design or package them.
If appliance maker General Electric Co., for example, derived 40 percent of its revenues last year from writing mortgages and other services, and computer firms make their own software, why not let them weigh in together?
In effect, Fortune's old method of ranking the country's top 500 industrial and service companies separately was outdated.
As well, the power of the service sector couldn't be ignored. In 1993, Fortune's 500 biggest service companies made $93.7 billion in profits, nearly 50 percent more than their counterparts on the industrial list.
There were even more service companies on the new list than industrials: 291.
Of course, the industrial powerhouses of old aren't gone. In the 41st annual list, General Motors Corp. again grabs the No. 1 spot, just as it has 31 times before. Ford Motor Co. and Exxon Corp. take second and third places, as they did in the previous year.
But three newcomers appear among the top 10 on the Fortune 500, which ranks companies according to 1994 sales figures. Wal-Mart Stores Inc. takes fourth spot, AT&T Corp. is No. 5 and Sears, Roebuck and Co. is No. 9.
"If you consider the Fortune 500 began as a ranking of bigness, it doesn't make a lot of sense to have (Wal-Mart) relegated to another list," says managing editor John Huey. "They are clearly a major player that's here to stay."
Fortune attributes the blurring of lines between manufacturers and service companies to two trends.
The computer revolution allows companies to cheaply hire others to do work they once did before. Nike Inc., for example, designs, markets and distributes shoes but doesn't actually make any, said Fortune.
In addition, deregulation has allowed more companies to be compared by their sales figures. Previously, Fortune compared those companies by assets, since the profits of regulated companies are closely controlled by governments.
Some well-known companies were bumped from the list, although they are included in an expanded roster of 1,000 companies grouped by industry and also ranked by sales.
Among those toppled from the top tier are B.F. Goodrich Co., which fell from 239 to 501; Rubbermaid Inc., which slipped from 226 to 503; and the Tribune Co., which went from 227 to 506.
American Stores nabs 39th spot
Salt Lake City-based American Stores was ranked 39th in the latest Fortune 500 list.
The ranking of the nation's largest companies was compiled by Fortune magazine on the basis of 1994 sales.
Fortune has reformulated the list to include service companies as well as the industrial firms that historically have comprised the rankings.
American Stores was previously on Fortune's service list. It had 1994 sales of $18.355 billion.
Smith's Food & Drug Centers, Salt Lake City, previously on the service list, was ranked 378th this year and its 1994 sales amounted to $2.981 billion.
Boise-based Albertsons was ranked No. 88. It also previously was on the service list and had sales of $11.895 billion.