Tuesday, April 10, 2012

US Big Industrial Machinery Manufacturing Corps 2011 Annual Earnings On Fire Under Obama

I found 12 US Industrial Machinery Manufacturing Corps with Pretax Income or Pretax Loss of more than $100 mil in any of the most recent three years.  I am excluding any of these Corps headquartered in Texas or New York, which had Pretax Income or Pretax Loss of between $100 mil and $200 mil.

For the most recent fiscal year 2011, these 12 US Big Industrial Machinery Manufacturing Corps registered Total Pretax Income of $6.5 bil, which was an increase of a robust 28% over 2010, and an increase of an off-the-charts 149% over 2009.

In deriving Pretax Income, I start with Pretax Income under Generally Accepted Accounting Principles (GAAP), and then exclude several clearly unusual very large items relative to Pretax Income, such as Asset Impairment Charges.

Clearly, the Obama Administration has created a US economic environment which has permitted these US Big Industrial Machinery Manufacturing Corps to flat out flourish.

I think a major contributor to this strong profit performance in the US Big Industrial Machinery Manufacturing Industry was the 100% first-year tax expensing of equipment purchases, which was in effect for all of 2011 and for the last part of 2010.

Since this 100% first-year tax expensing goes away in 2012, the earnings growth of this industry will drop markedly.

The US economy needs a huge jolt in 2012.

The US Congress has been the major reason that the earnings growth of manufacturers will be declining markedly in 2012.

First, the US Congress recalcitrantly treated the clearly job-creating 2011 American Jobs Act as dead on arrival.  This Jobs Act had some powerful job creation, particularly the US infrastructure investments in it.

And second, and more importantly, the US Congress decided to not extend the 100% first-year tax expensing in 2012.  The most effective way this extension could have occurred is for it to permit the very largest US Corps, perhaps just the top 100, or even fewer, be eligible for it only if they also increase their full-time payroll head counts sufficiently in 2012.  The very largest US Corps, like ATT and Verizon, were the ones that selfishly abused the 100% tax expensing by taking massive advantage of it, while at the same time, slashing their US full-time payroll counts.

And then for all other companies, this 100% first-year tax expensing in 2012 should have had no full-time payroll count requirements to be eligible for it.

If the first-year 100% tax expensing would have been extended in the above manner, this would have been substantially more of a US job creator in 2012 than the 2% payroll tax holiday, and also less costly to the US Government over the long term.

And if some form of more explosive acceleration in 2012 of first-year tax depreciation on building investments by businesses would have been enacted, it would have taken the 2012 US job creation to a completely different level, and clearly where it should be to be fair to all US citizens.

Below here is the Pretax Income and Pretax Losses of these 12 US Big Industrial Machinery Corps for each of the most recent three years.




1 Year 2 Year

PTI(L) PTI(L) PTI(L) % %

2011 2010 2009 Change Change
mils $s mils $s mils $s

Industrial Machinery Manufacturing

Illinois Tool Works 2,593 2,089 1,320 24% 96%
Eaton 1,553 1,036 303 50% 413%
Pall Corp 420 328 271 28% 55%
Gardner Denver 387 232 124 67% 212%
Nordson 315 231 116 36% 172%
Veeco Instruments 272 297 1 -8% 27100%
SPX 220 271 291 -19% -24%
Curtiss Wright 185 158 145 17% 28%
Zebra Technologies 180 150 72 20% 150%
Actuant 159 89 58 79% 174%
Cymer 108 121 17 -11% 535%
Brooks Automation 83 56 (119) 48% 170%

Total all 12 6,475 5,058 2,599 28% 149%