Layoffs at General Mills and lessons from Minnesota’s Fortune 500 companies
Courtesy of General Mills
General Mills, with headquarters in Golden Valley, announced layoffs on Tuesday.
General Mills, one of Minnesota’s first Fortune 500 companies, announced Tuesday that it is eliminating 850 jobs, with about half of the losses in the Twin Cities.
The cuts are related to struggles in the U.S. food industry, and General Mills says it is restructuring to “accelerate administrative efficiencies across the company.” But the news raises bigger questions about the state of Minnesota’s Fortune 500 companies and whether we should be alarmed.
A look back at Minnesota’s Fortune 500 companies helps put the layoffs in a larger context. This history reveals that companies come and go -- and offers some lessons on public policy.
The Fortune 500 ranks by revenue the 500 largest U.S.-based, publically traded companies. Fortune magazine has published the list since 1955, and all of the data are available on its website.
Early years
Seven Minnesota companies appeared on the initial Fortune 500 in 1955. I’ve included each company’s national rank in the Fortune 500 and their rank in Minnesota. For example, General Mills was No. 56 on the 1955 national list and the largest publically traded company in Minnesota.
| Name | Rank - National | Rank - Minnesota | Revenue (millions of dollars) | Revenue (millions of 2011 dollars) |
|---|---|---|---|---|
| General Mills | 56 | 1 | 487.6 | 4,100.0 |
| Pillsbury | 90 | 2 | 336.0 | 2,825.3 |
| Hormel Foods | 92 | 3 | 331.8 | 2,790.0 |
| 3M | 131 | 4 | 230.9 | 1,941.5 |
| Honeywell | 132 | 5 | 229.4 | 1,928.9 |
| Minneapolis-Moline | 353 | 6 | 77.4 | 650.8 |
| Minnesota & Ontario Paper | 379 | 7 | 70.1 | 589.4 |
Source: Fortune 500In the table above, notice that all seven companies were manufacturers, with all but Honeywell connected to natural-resource processing. Four of the seven were tied to agriculture, with three food processors (General Mills, Pillsbury, Hormel) and an agricultural implement manufacturer (Minneapolis-Moline). Two companies were headquartered outside the Twin Cities: Hormel (in Austin) and Minnesota & Ontario Paper (in International Falls).
The year 1983 is half the distance to 2012, so let’s take a look at the Fortune 500 that year. Here are the Minnesota-based companies:
| Name | Rank - National | Rank - Minnesota | Revenue (millions of dollars) | Revenue (millions of 2011 dollars) |
|---|---|---|---|---|
| 3M | 44 | 1 | 6,601.0 | 14,900.0 |
| Honeywell | 59 | 2 | 5,490.4 | 12,393.1 |
| General Mills | 63 | 3 | 5,312.1 | 11,990.7 |
| Control Data | 80 | 4 | 4,292.0 | 9,688.0 |
| Land O'Lakes | 100 | 5 | 3,770.1 | 8,510.0 |
| Pillsbury | 115 | 6 | 3,385.1 | 7,641.0 |
| Farmers Union Central Exchange (CHS) | 234 | 7 | 1,470.6 | 3,319.5 |
| Hormel Foods | 239 | 8 | 1,426.6 | 3,220.2 |
| International Multifoods | 268 | 9 | 1,147.7 | 2,590.6 |
| Ecolab | 379 | 10 | 670.3 | 1,513.0 |
| Deluxe | 427 | 11 | 549.5 | 1,240.3 |
| American Hoist & Derrick | 467 | 12 | 464.2 | 1,047.8 |
Source: Fortune 500Again, all of these are primarily manufacturing companies, but there are four important differences from 1955. First, food processors such as General Mills and Pillsbury diversified their operations, adding restaurant chains and other non-manufacturing divisions.
Second, manufacturing is no longer dependent on natural resource processing. For instance, by 1983 3M had a large portfolio of products that had nothing to do with its original base in sandpaper and other types of abrasives. Similarly, Control Data and Honeywell were computer manufacturers, Ecolab produced cleaning products and Deluxe was one of the largest check printers.
Third, the companies grew much larger. The last column of each table shows company revenues in 2011 dollars. The largest company in 1983, 3M, earned three times more revenue in inflation-adjusted terms than the largest company in 1955 (General Mills).
Fourth, only one company, Hormel, was not headquartered in the metro area. Corporate growth was centered in the Twin Cities.
Now look at today. There are 19 Minnesota-based companies in the Fortune 500:
| Name | Rank - National | Rank - Minnesota | Revenue (millions of dollars) |
|---|---|---|---|
| UnitedHealth Group | 22 | 1 | 101,862.0 |
| Target | 38 | 2 | 69,865.0 |
| Best Buy | 53 | 3 | 50,272.0 |
| SuperValu | 75 | 4 | 37,534.0 |
| CHS | 78 | 5 | 36,915.0 |
| 3M | 102 | 6 | 29,611.0 |
| USBancorp | 132 | 7 | 21,339.0 |
| Medtronic | 164 | 8 | 15,933.0 |
| General Mills | 181 | 9 | 14,880.2 |
| Land O'Lakes | 210 | 10 | 12,849.3 |
| Xcel Energy | 246 | 11 | 10,654.8 |
| Ameriprise Financial | 248 | 12 | 10,621.0 |
| C.H.Robinson | 259 | 13 | 10,336.0 |
| Mosaic | 268 | 14 | 9,937.8 |
| Hormel Foods | 327 | 15 | 7,895.1 |
| Thrivent Financial | 332 | 16 | 7,842.8 |
| Ecolab | 365 | 17 | 6,798.5 |
| St. Jude Medical | 437 | 18 | 5,611.7 |
| Nash-Finch | 498 | 19 | 4,807.2 |
Source: Fortune 500There is a wide variety of industries that were absent in earlier years: retailing (Target, Best Buy), health care (UnitedHealth Group), financial services (US Bancorp, Ameriprise Financial), logistics and distribution (SuperValu, C.H. Robinson) and medical devices (Medtronic, St. Jude Medical).
3M, General Mills, and Hormel were on the list in 1955 and 1983, and they’re still there. They are not the same companies they were back then: 3M continues to move into new areas, General Mills absorbed Pillsbury, and Hormel now has turkey processing (through Jenny-O) in addition to its traditional strength in beef and pork products.
The trend to bigger and bigger companies also continued. UnitedHealth’s $102 billion revenue was seven times bigger, in constant dollars, than 3M’s 1983 revenue.
A virtuous circle
Minnesota’s per capita income was below the national average in 1955, at the national average in 1983 and above the national average in 2012. (See my Feb. 9 post for more details.) The growth of Fortune 500 companies in Minnesota and the rise in Minnesota’s per capita income worked together in a virtuous circle that benefited both.
The first part of the circle is the effect of corporate growth on economic growth. The evolution of large companies in Minnesota from natural resource processing in 1955 to diversified manufacturing in 1983 to a broad range of industries in 2012 promoted economic growth directly by creating large numbers of high-wage jobs throughout the state.
The second half of the circle is the feedback from economic growth to corporate growth. Control Data is gone. But the human capital and knowledge that Control Data employed – the heart of economic growth -- didn’t disappear when the company died. Instead, these resources were now available to fuel the growth of companies such as Medtronic and Target.
All of this means that we should put news such as layoffs at General Mills in a larger context. Established companies adapt or sometimes go away, and new firms come on the scene. It makes little sense to put in place public policies that focus on keeping particular businesses intact. Rather, we should create an environment in which people have the knowledge, skills and access to capital so that they can move among jobs or create new businesses.
Who knows what kinds of companies will be on the Fortune 500 in 2040?
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Comments (14)
This is great analysis
Thanks so much for putting this into perspective. Excellent piece.
Interesting look at history
This kind of reporting is why I love MinnPost.
Great article
Love the historic perspective as that is often missing in journalistic pieces. Thanks.
What is also informative is
What is also informative is to compare the list of the companies above, with list of places with the most employees in the state.
http://www.positivelyminnesota.com/Business/Locating_in_Minnesota/Major_...
For instance UHG is, by a wide margin, the biggest company by revenue. However, it employs about 10,000 employees which places it 15th in terms of number of employees in the state and employs less than 6% of health care industry workers in the state.
General Mills is ranked as the 30th largest employer in Minnesota and Medtronic is is ranked as the 17th largest employer. Best Buy is 22nd largest employer.
And CHS, US Bankcorp, Land O Lakes, CH Robinson, Mosaic, Thrivent, EcoLab, St. Jude and Nash Finch do not even show up on the list of the largest employers in the state of Minnesota.
The top 10 employers?
1) Minnesota - 40K
2) US Government - 34K
3) Mayo - 33K
4) Target - 31 K
5) Allina - 23K
6) Walmart - 20K
7) Fairview - 20 K
8) Wells Fargo - 20 K
9) U of MN - 19 K
10) MN SCU - 19 K
Given the tax-free life that most large corporations live, the fortunes of the state and country are in the jobs and types of jobs that it's citizens have.
And, given the changes in direction coming with the spending issues related to government, health-care and education, it would seem that a significant sector of Minnesotans with jobs are looking at some heavy weather ahead.
When your top two employers
are government, you're looking at a situation not unlike a perpetual motion machine.
Government creates nothing so it doesn't generate revenue in the traditional way. It takes its money from citizens and the private sector so it can pay its employees who work to tax and enforce regulations on the citizens and businesses, who are then weakened by such takings, which means it can contribute less to government, which then raises its taxes to make up the shortfall to pay its government employees, to continue to tax and regulate the citizens and businesses, which are weakened further ...
Like a perpetual motion machine, it's an unsustainable model.
That the top individual
That the top individual employers are public sector is largely irrelevant.
What matters is their total compared to total employment in the private sector, and the total number of people employed in the public sector employment is much lower, and in fact continues to fall (a major factor in the difficulty in lowering the unemployment rate) than the number of people employed in the private sector.
No
We need more regulation of banks like JP Morgan Chase - or the death penalty for financial crimes.
But ...
I thought corporations were the root of all evil.
No, ...the love of money is
No, ...the love of money is the root of all sorts of evil...
Visions of the Next Mn Business Trends and Focus
Valuable reporting of the clear facts that most people including those in government, various civic groups and business who often do not consider how busineses evolve and would prefer to look to retaining the past. Your reporting addressess a message that I and others have expressed often. Now a few points to emphasize;
1. Your reference to Control Data as a source of experience personnel is correct but must also include Honeywell and the others who were the source of unique high tech resources in program management, technologies, and systems engineering. These companies were a very unique resource using aerospace and defense and applying the technologies of the U of M etc. The very strong and often criticized aerospace/defense industry in Mn was viewed by DOD a a centerpiece most of which has now evolved and the talent is elsewhere in the Mn economic. We are now in need of a replacement and that is also evolving.
2. Your reference to manufacturing is correct much of that too has changed or gone. Consider however that manufacturing today is not manufacturing yesterday and new skills must be available. MnSCU and the U system are focused to the manufacturing skills GAP and Mn will fill the void.
3. New business sectors are evolving in BioTech, NanoTechnology, Automation etc. Business associations and start ups are evolving and recoginzed.
The challenge and thus an opportunity is to communicate this as a postive for Mn and the Upper Midwest. Then we have a vision for the next Big Thing in Mn.
Dave Broden
Layoffs, historically
An excellent piece, Mr. Johnston.
Old history teachers always like it when someone actually uses history in a contemporary context, and this article certainly does that. Johnston also reiterates a conclusion I reached some time ago regarding the longevity of particular businesses. We live in one of the most dynamic cultures on the planet, in an era when technological change routinely outpaces the ability of institutions (and sometimes individuals) to adapt successfully. There simply are not very many business enterprises that survive for more than a generation – sometimes two – and with that being the case, rational public policy ought not to favor particular businesses, or business models.
Plenty of people in Minnesota are living in neighborhoods, and even houses, that are older than any of the surrounding businesses.
To the old cliché about death and taxes being the only certainties, we should add "change." Adapting to the new is the key to success, both entrepreneurially and societally. That adaptation, of course, is precisely what the right wing wants to avoid, and is one among several reasons why "conservatism," which is not completely without value as an intellectual counterpoint to the excesses of the "cutting edge," eventually reveals itself to be inadequate. The world is going to change whether Mr. Tester, or I, or political figures of more influence, like it or not.
Not to invalidate your thinking entirely, but
This conservative has been on the bleeding edge of technological change in this town since the mid-70s, from having taught the Cray 1 operating system to its academic and defense department users to launching one of the first online learning companies 35 years later in an industry, I would add, that you pooh-poohed as without merit, if I remember correctly, and I continue to this day pushing the envelope while others prefer retirement.
More on Embracing, Encouraging, and Being Part of Change
Change is Opportunity and those who do not connect with this thought and adapt thinking and actions will become extinct in a short time. Remember the Luddites of England-- there are those in Mn and the US whose clock moves only backwards to what was and not forward to what will be. The point I wish to communicate is that Mn strength has been a highly educated and community civic involvement of all citizens for the common good. Our Education system and the infrastructure (physical and social) must recognize, grow and adapt to these factors. With a highly educated work force and high quality of life industries applying evolving technology will emerge and grow. The education system cannnot be just academic learning but must have links to the skills that are emerging. Manufacturing is not now hand work but is automated in most areas so the worker must be adapt the skills to the job not keep the job the same. Mn has a major economic component in the export market adapting our industries to continue this growth is key and yet some focus on internal markets and related jobs. Change and opportunities are happening in Greater Mn as well in the metro area--these business in the agribusiness sector as well as other sectors are equally important to Mn and US economy and are adapting thru education and related investment. Again lets not be Luddites as some would suggest move ahead will a vision of what change means for opportunity for all.
Dave Broden
General Mills
A more interesting article would have focused on the history of General Mills. General Mills has evolved as was vaguely mentioned in the article. General Mills has owned companies from postage stamp companies to Arrow Shirts. At one point General Mills engineers built a small submersible submarine for the US Navy. General Mills has returned to its core business and is now a global company adding a recent acquisition in Brazil. General Mills is also a major food supplier to the US Department of Defense, yes, General Mills is a defense contractor that will be hurt by defense cut backs.
General Mills is a complex company and while the article is interesting it has no relevance to the current layoffs at General Mills.