For California businesses, 1984 was a vintage year. The state recorded remarkable gains, out performing the nation in overall growth and expanded employment.
While the gross national product--the sum of goods and services--increased by 6.8% last year, California's economy expanded by 9.7%. And while U.S. employment in non-farm businesses was up 4.5%, California's grew by 6%.
Companies headquartered in the state shared in the prosperity. Combined profit of the 100 top-ranked industrial firms on The Times' roster of leading companies was $9.6 billion, 23.2% higher than earnings of last year's list. The combined revenue of the top 100 industrials increased 1.3% to $189.4 billion--a healthly, if unspectacular, comeback from two previous years of decline, especially considering that revenue dropped at each of the state's four biggest companies.
Compared to the U.S. economy's growth in 1984--which was the fastest since 1951--the 9.7% growth in California was "an extraordinary gain," said Robert Parry, senior economist at Security Pacific National Bank, who added that last year "has to be considered one of the best years of expansion for the California economy."
FOR THE RECORD
Los Angeles Times Thursday June 27, 1985 Home Edition Business Part 4 Page 2 Column 3 Financial Desk 1 inches; 26 words Type of Material: Correction
Wyle Laboratories' net income for the year ended Jan. 31 was $9.4 million. The figure was incorrectly reported in The Times' roster of leading California companies published June 9.
Expects Slower Growth
Although the economy will continue to expand through the rest of this year and next, the growth will slow, economists said. Parry expects the state's economy to grow about 1 to 1.5 percentage points faster than the rest of the nation, which would mean a 4.5% increase this year, and a 4% growth in 1986.
Beth Mace, an economist at Crocker National Bank, believes that employment growth will slow to about 4%, which will create about 400,000 jobs in the non-farming sectors this year.
But even as the pace of growth slackens from 1984's hard-charging pace, the economic forces that affected this year's ranking of California largest companies continue to modify the way business is done in the state. Some of the trends illustrated in this year's roster are:
- Oil companies' fortunes continue to decline with the slippage of wholesale oil prices. Again this year, the major oil companies have a hammerlock on the top four spots on The Times' roster. But year-to-year declines in profit and revenue, combined with robust expansion by other business groups, have diluted the oil industry's contribution to the list. For this year's roster, the oil companies account for about 42% of the total revenue generated by the 100 industrials. But that figure was almost 47% last year, and 53% in 1981, when oil prices began to ease.
- As oil services and other energy-related companies slip further down the list, many firms are poised to replace them; chief among them are high-technology companies and firms in the business of aerospace and defense contracting.
- Mergers and acquisitions continue to be an important force in the state's business climate, both removing companies from the list and strengthening others. Eight of the companies from last year's top 100 list don't show up this year because they were acquired by other firms. They are Carnation, Petrolane, NI Industries, Rolm, Republic Corp., Dysan, Synergex and the Presley Cos. Another three companies--Denny's, Shapell Industries and Parsons Corp.--are absent because they were taken private.
Last year's biggest acquisition by a California company, Chevron's $13.3-billion purchase of Gulf Oil, is not reflected on this year's roster because Chevron was not allowed to include Gulf earnings and sales until after it completed the required divestiture of some assets.
- The state's high-technology companies are seeing increased profits and revenues despite tremendous volatility in the computer industry. The biggest jumps were made by two high-tech companies, Seagate Technology and Convergent Technologies.
- Service industries, such as health-care providers and leisure-time firms, slowly are elbowing out old-line manufacturing companies for a bigger share of the state's growth.
Only three companies from last year's roster dropped from the top 100 because their revenues failed to keep pace. Only 16 of the top 100 industrials had revenue declines from 1983 to 1984. The four major oil companies--Chevron, Atlantic Richfield, Occidental Petroleum and Unocal--were among them, with a 6.2% combined revenue drop, to $79.5 billion from $84.8 billion last year. That group's profit also dropped 8%, to $3.93 billion from $4.27 billion.
Among the remaining 12 companies with revenue declines were other companies either in the energy business or heavily dependent upon it: Tosco, with a 23.9% drop in revenue; Fluor, which dropped to No. 10 on a 17% revenue decline; Pauley Petroleum which dropped 6.5%, and Baker International, down 0.2%.
Biggest Sales Decline
The largest decline in sales among the industrials was recorded by Kerr Glass Manufacturing, a Los Angeles maker of canning jars and other containers, that saw its revenues plunge 39.1% and dropped 26 places on the roster to No. 84.