I am including several Foreign-owned Corps here, since they have substantial operations in the US.
In determining Pretax Income, I am excluding some items which are large relative to the Pretax Income amount. Thus, items such as Asset Impairments, and Gains and Losses Related to Both Debt Retirements and Asset Dispositions are excluded.
These 55 US Big Broad-Based Manufacturing Corps had Total Pretax Income of $23.8 bil in the 1Q 2012, an 8% increase over the 1Q 2011. This is a massive earnings growth deceleration from the triple-digit earnings growth that prevailed for these Broad-Based Manufacturing companies from annual 2009 to annual 2011.
The stick out Manufacturing Sub-Sector is Farm and Construction Equipment, with their Total Pretax Income in the 1Q 2012 increasing by 27% over the 1Q 2011.
But to get to the salient story here, you need to break down these 55 Broad-Based Manufacturers by Pretax Income size.
When you do that, there is one clear conclusion.....The higher the Pretax Income, the higher the earnings percentage growth.
And this conclusion is pretty pronounced.
The 27 Broad-Based Manufacturing Corps, with Pretax Income above $200 mil in the 1Q 2012, generated Total Pretax Income of $20.4 bil in the 1Q 2012, an increase of 11% over the 1Q 2011.
But here's the real kicker. The 28 Broad-Based Manufacturing Corps, with Pretax Income less than $200 mil in the 1Q 2012, generated Total Pretax Income of $3.3 bil in the 1Q 2012, a decrease of 8% as compared with the 1Q 2011. And 15 of these 28 Broad-Based Manufacturing Corps, or more than half of them, had Pretax Income declines in the 1Q 2012!
Clearly, substantial economic fiscal stimulation is needed for the smaller Manufacturing companies, like these latter 28 companies. Giant Manufacturing companies like Caterpillar and Boeing don't need the economic stimulation.
These smaller Manufacturing companies are the ones that create the US jobs. But they are not going to do it, if they experience an 8% Profit decline in 2012.
Thus, I think the proper focus has to be on how best to wisely increase the earnings of these smaller Manufacturing companies in the remainder of 2012.
I think by far the most important thing to do is to extend the 100% first-year tax expensing of equipment and computer software investments made in the remainder of 2012. The CBO-scored cost should not be very significant.
And I think the second most important thing to do is to Pass the Research and Experimentation Tax Credit for businesses for all 2012 expenditures, but substantially enhance it for smaller businesses, and simplify it.
Third, these smaller Manufacturing companies should receive a 10% tax credit for all US jobs they create in 2012.
Fourth, these smaller Manufacturing companies should be allowed a 20% income tax credit for the expenses of moving their operations from overseas back to the US. And pay for this by removing income tax deductions all businesses now get for moving their production from the US to overseas. This one's pretty cool, where the pay-for is also positive to the US job count.
Fifth, these smaller Manufacturing companies, should be allowed to substantially accelerate first-year tax depreciation on all new building and building remodeling investments made in the remainder of 2012, and rein in its CBO-scored cost, by lowering tax depreciation on these same investments in years 2 through 10.
And sixth, these smaller Manufacturing companies, but not the larger ones, should be allowed to repatriate their foreign earnings at a somewhat discounted US federal income tax rate, for the rest of 2012, if they use the proceeds to invest in either Research and Experimentation, in Capital Expenditures, or in any Computer Software, including Web Design, in 2012.
The practical way to make the sixth one above work well is to permit all companies, large and small, to repatriate foreign earnings up to a maximum amount, such as $500 mil to $1 bil, for the rest of 2012, at a somewhat discounted US federal income tax rate. And this one is a significant pay for. Thus, I would use the US government tax proceeds raised here to fund the above first five stimulus measures, and also to fund primarily near-term, job-creating School Construction Fix-ups, and secondarily some additional job-creating US Infrastructure investments.
Below here in the first presentation is the Pretax Income (PTI) or Pretax Loss (PTL) in both the 1Q 2012 and 1Q 2011 for each of these 55 US Broad-Based Manufacturing Corps, sorted by Manufacturing Sub-Sector. The second presentation below here shows all 55 of these Manufacturing Corps, sorted by 1Q 2012 Pretax Income size.
| Increase | Increase | |||
| PTI | PTI | (Decrease) | (Decrease) | |
| 1Q 2012 | 1Q 2011 | Amount | % | |
| mils $s | mils $s | mils $s | ||
| Broad-Based Manufacturing Sorted by Sub-Sector | ||||
Motor Vehicle and Parts | ||||
| Ford Motor | 2,038 | 2,776 | (738) | -27% |
| GM | 1,760 | 1,460 | 300 | 21% |
| Chrysler | 506 | 160 | 346 | 216% |
| Paccar | 479 | 286 | 193 | 67% |
| Delphi Automotive | 436 | 409 | 27 | 7% |
| TRW Automotive | 308 | 347 | (39) | -11% |
| Harley Davidson | 266 | 183 | 83 | 45% |
| Borg Warner | 221 | 170 | 51 | 30% |
| Lear | 174 | 199 | (25) | -13% |
| Goodyear Tire & Rubber | 142 | 186 | (44) | -24% |
| Autoliv | 141 | 240 | (99) | -41% |
| Allison Transmission | 119 | 55 | 64 | 116% |
| Dana Holding | 106 | 55 | 51 | 93% |
| Oshkosh | 60 | 112 | (52) | -46% |
| Navistar | (221) | 6 | (227) | -3783% |
| Total all 15 | 6,535 | 6,644 | (109) | -2% |
| Conglomerates Manufacturing | ||||
| 3M | 1,603 | 1,545 | 58 | 4% |
| Boeing | 1,463 | 883 | 580 | 66% |
| United Technologies | 1,461 | 1,540 | (79) | -5% |
| Honeywell | 1,122 | 946 | 176 | 19% |
| Johnson Controls | 496 | 475 | 21 | 4% |
| Ingersoll-Rand | 142 | 164 | (22) | -13% |
| Total all 6 | 6,287 | 5,553 | 734 | 13% |
| Farm & Construction Equipment | ||||
| Caterpillar | 2,298 | 1,763 | 535 | 30% |
| Deere | 800 | 746 | 54 | 7% |
| CNH Global NV | 359 | 198 | 161 | 81% |
| Dover | 267 | 229 | 38 | 17% |
| Joy Global | 198 | 149 | 49 | 33% |
| AGCO | 152 | 101 | 51 | 50% |
| Sauer Danfoss | 110 | 111 | (1) | -1% |
| Total all 7 | 4,184 | 3,297 | 887 | 27% |
| Metals | ||||
| Parker Hannifin | 401 | 390 | 11 | 3% |
| Timken | 238 | 171 | 67 | 39% |
| Nucor | 225 | 266 | (41) | -15% |
| US Steel | 186 | (70) | 256 | 366% |
| Alcoa | 138 | 505 | (367) | -73% |
| Steel Dynamics | 68 | 167 | (99) | -59% |
| Total all 6 | 1,256 | 1,429 | (173) | -12% |
| Electronic/Electrical Equipment & Products | ||||
| Emerson Electric | 814 | 833 | (19) | -2% |
| Rockwell Automotive | 223 | 204 | 19 | 9% |
| Cooper Industries | 197 | 181 | 16 | 9% |
| Amphenol | 174 | 178 | (4) | -2% |
| Whirlpool | 133 | 154 | (21) | -14% |
| Total all 5 | 1,541 | 1,550 | (9) | -1% |
| Industrial Machinery | ||||
| Illinois Tool Works | 663 | 621 | 42 | 7% |
| Eaton | 368 | 335 | 33 | 10% |
| Pall Corp | 112 | 104 | 8 | 8% |
| Total all 3 | 1,143 | 1,060 | 83 | 8% |
| Packaging and Containers | ||||
| Owens-Illinois | 170 | 115 | 55 | 48% |
| Ball Corp | 137 | 148 | (11) | -7% |
| Crown Holdings | 122 | 113 | 9 | 8% |
| Total all 3 | 429 | 376 | 53 | 14% |
| Industrial Instruments | ||||
| Danaher | 696 | 557 | 139 | 25% |
| Office Equipment & Furniture | ||||
| Pitney Bowes | 159 | 134 | 25 | 19% |
| Paints | ||||
| PPG Industries | 279 | 351 | (72) | -21% |
| Pumps & Pumping Equipment | ||||
| Flowserve | 129 | 131 | (2) | -2% |
| Xylem ITT | 84 | 101 | (17) | -17% |
| Total all 2 | 213 | 232 | (19) | -8% |
| Motors & Generators | ||||
| Ametek | 162 | 133 | 29 | 22% |
| Engines & Turbines | ||||
| Cummins | 650 | 522 | 128 | 25% |
| Miscellaneous Manufacturing | ||||
| Stanley Black & Decker | 158 | 180 | (22) | -12% |
| Snap-On | 107 | 84 | 23 | 27% |
| USG | (25) | (108) | 83 | 77% |
| Total all 3 | 240 | 156 | 84 | 54% |
| Total all 55 | 23,774 | 21,994 | 1,780 | 8% |
| Broad-based Manufacturing Sorted by 1Q 2012 PTI Size | ||||
PTI > $200 Mil | ||||
| Caterpillar | 2,298 | 1,763 | 535 | 30% |
| Ford Motor | 2,038 | 2,776 | (738) | -27% |
| GM | 1,760 | 1,460 | 300 | 21% |
| 3M | 1,603 | 1,545 | 58 | 4% |
| Boeing | 1,463 | 883 | 580 | 66% |
| United Technologies | 1,461 | 1,540 | (79) | -5% |
| Honeywell | 1,122 | 946 | 176 | 19% |
| Emerson Electric | 814 | 833 | (19) | -2% |
| Deere | 800 | 746 | 54 | 7% |
| Danaher | 696 | 557 | 139 | 25% |
| Illinois Tool Works | 663 | 621 | 42 | 7% |
| Cummins | 650 | 522 | 128 | 25% |
| Chrysler | 506 | 160 | 346 | 216% |
| Johnson Controls | 496 | 475 | 21 | 4% |
| Paccar | 479 | 286 | 193 | 67% |
| Delphi Automotive plc | 436 | 409 | 27 | 7% |
| Parker Hannifin | 401 | 390 | 11 | 3% |
| Eaton | 368 | 335 | 33 | 10% |
| CNH Global NV | 359 | 198 | 161 | 81% |
| TRW Automotive | 308 | 347 | (39) | -11% |
| PPG Industries | 279 | 351 | (72) | -21% |
| Dover | 267 | 229 | 38 | 17% |
| Harley Davidson | 266 | 183 | 83 | 45% |
| Timken | 238 | 171 | 67 | 39% |
| Nucor | 225 | 266 | (41) | -15% |
| Rockwell Automotive | 223 | 204 | 19 | 9% |
| Borg Warner | 221 | 170 | 51 | 30% |
| Total all 27 | 20,440 | 18,366 | 2,074 | 11% |
| PTI < $200 Mil | ||||
| Joy Global | 198 | 149 | 49 | 33% |
| Cooper Industries | 197 | 181 | 16 | 9% |
| US Steel | 186 | (70) | 256 | 366% |
| Lear | 174 | 199 | (25) | -13% |
| Amphenol | 174 | 178 | (4) | -2% |
| Owens-Illinois | 170 | 115 | 55 | 48% |
| Ametek | 162 | 133 | 29 | 22% |
| Pitney Bowes | 159 | 134 | 25 | 19% |
| Stanley Black & Decker | 158 | 180 | (22) | -12% |
| AGCO | 152 | 101 | 51 | 50% |
| Goodyear Tire & Rubber | 142 | 186 | (44) | -24% |
| Ingersoll-Rand | 142 | 164 | (22) | -13% |
| Autoliv | 141 | 240 | (99) | -41% |
| Alcoa | 138 | 505 | (367) | -73% |
| Ball Corp | 137 | 148 | (11) | -7% |
| Whirlpool | 133 | 154 | (21) | -14% |
| Flowserve | 129 | 131 | (2) | -2% |
| Crown Holdings | 122 | 113 | 9 | 8% |
| Allison Transmission | 119 | 55 | 64 | 116% |
| Pall Corp | 112 | 104 | 8 | 8% |
| Sauer Danfoss | 110 | 111 | (1) | -1% |
| Snap-On | 107 | 84 | 23 | 27% |
| Dana Holding | 106 | 55 | 51 | 93% |
| Xylem ITT | 84 | 101 | (17) | -17% |
| Steel Dynamics | 68 | 167 | (99) | -59% |
| Oshkosh | 60 | 112 | (52) | -46% |
| USG | (25) | (108) | 83 | 77% |
| Navistar | (221) | 6 | (227) | -3783% |
| Total all 28 | 3,334 | 3,628 | (294) | -8% |
| Total all 55 | 23,774 | 21,994 | 1,780 | 8% |
