Included in these 41 was Danaher, whose one-time Gain in the 1Q 2013 comprised the entire Pretax Income increase in the 1Q 2013 over the 1Q 2012. Also included in these 41 was PPG Industries, whose Restructuring and Environmental Remediation Charges in the 1Q 2012 comprised the entire Pretax Income increase in the 1Q 2013 over the 1Q 2012. Thus, I excluded both of them below.
That leaves me with 39 Broad-Based Manufacturing Corps.
These 39 US Broad-Based Manufacturing Corps generated US Generally Accepted Accepted Accounting Principles (GAAP) Total Pretax Income in the 1Q 2013 of $19,876 mil, which was down 5.55% from the $21,044 mil earned in the 1Q 2012.
On the other hand, these same 39 US Broad-Based Manufacturing Corps generated GAAP Total After-tax Net Income which was down by a substantially lower 0.75% in the 1Q 2013 as compared with the 1Q 2012.
So, what's up with the 4.80% positive earnings spread from the down 5.55% Pretax Income in the 1Q 2013 to the down 0.75% After-tax Net Income in the 1Q 2013?
Well, it's all about the effective income tax rate and financial engineering.
In total, these 39 US Broad-Based Manufacturing Corps slashed their effective income tax rates on a book basis from 28.9% of Pretax Income in the 1Q 2012 to 25.3% in the 1Q 2013.
Having the key US Broad-Based Manufacturing Sector generating a total decline of 5.55% in Pretax earnings in the 1Q 2013 is just horrible for the US economy. And it's also terrible for US job creation in this critical US sector. The key question is that, given these horrible operating results, just how much shedding of US jobs will there be in this key US Broad-Based Manufacturing Sector. And since these largest US Broad-Based Manufacturing Corps generated such a significant Pretax Income decline in the 1Q 2013, then it only makes sense that the huge number of smaller US Manufacturing Corps will be doing likewise, and even more so. This is flat out horrible for US job creation since in this sector is where a lot of the good-paying US jobs are now located.
So, how does the US Congress react to this horrible 1Q 2013 quarter for the critical US Broad-Based Manufacturing Sector? Well, they flee Washington DC.
It is pretty clear that substantial fiscal stimulus to the US economy has been needed for quite some time. So how has the US Congress responded? Now granted the Obama Administration should have been bolder and more creative, but the US Congress has rejected nearly every recommendation made by the Obama Administration to spur the US economy and US job creation.
And so what has the US Congress done instead? They passed an immediate severe austerity Sequester which substantially harms US economic growth, US job creation, the profits of these US Manufacturers and also the profits of US Technology Corps.
And what is the intellectual foundation that the US Congress used to pass this immediate severe austerity Sequester, which results in a substantial reduction in US jobs and US economic growth? An economic study by two Harvard professors which concludes that when the US debt level is 90% of US GDP, that as if by magic, GDP growth drops dramatically.
And now that it has been proven that this economic study is clearly erroneous, how does the US Congress react to the complete collapse of the intellectual foundation of their immediate severe austerity Sequester initiative? By ignoring its collapse.
Below here is the GAAP Pretax Income, GAAP Income Tax Expense, and GAAP Effective Income Tax Rates on a book basis for both the calendar 1Q 2013 as well as the 1Q 2012 for each of these 39 US Big Broad-Based Manufacturing Corps:
| 1Q 2013 | 1Q 2012 | GAAP | ||||||||
| 1Q 2013 | GAAP | 1Q 2012 | GAAP | GAAP | Combined | |||||
| 1Q 2013 | GAAP | Effective | 1Q 2012 | GAAP | Effective | Pretax | Net | |||
| GAAP | Income | Income | GAAP | Income | Income | Income | Income | |||
| Pretax | Tax | Tax | Pretax | Tax | Tax | Increase | Increase | |||
| Income | Expense | Rate | Income | Expense | Rate | (Decrease) | (Decrease) | |||
| mil $s | mil $s | mil $s | mil $s | mil $s | mil $s | |||||
| Broad-Based Manufacturing Corps | ||||||||||
| Ford Motor | 2,123 | 511 | 24.1% | 2,038 | 640 | 31.4% | 85 | 214 | ||
| United Technologies | 1,770 | 418 | 23.6% | 1,584 | 320 | 20.2% | 186 | 88 | ||
| 3M | 1,617 | 470 | 29.1% | 1,603 | 462 | 28.8% | 14 | 6 | ||
| Boeing | 1,438 | 332 | 23.1% | 1,463 | 539 | 36.8% | (25) | 182 | ||
| Honeywell | 1,260 | 291 | 23.1% | 1,122 | 297 | 26.5% | 138 | 144 | ||
| Caterpillar | 1,127 | 246 | 21.8% | 2,298 | 689 | 30.0% | (1,171) | (728) | ||
| Lockheed Martin | 1,025 | 264 | 25.8% | 951 | 283 | 29.8% | 74 | 93 | ||
| Deere | 946 | 289 | 30.5% | 800 | 266 | 33.3% | 146 | 123 | ||
| General Dynamics | 824 | 253 | 30.7% | 821 | 257 | 31.3% | 3 | 7 | ||
| Northrop Grumman | 712 | 223 | 31.3% | 756 | 250 | 33.1% | (44) | (17) | ||
| Raytheon | 663 | 167 | 25.2% | 666 | 212 | 31.8% | (3) | 42 | ||
| Illinois Tool Works | 646 | 187 | 28.9% | 652 | 188 | 28.8% | (6) | (5) | ||
| Corning | 528 | 34 | 6.4% | 592 | 118 | 19.9% | (64) | 20 | ||
| Johnson Controls | 395 | 217 | 54.9% | 519 | 102 | 19.7% | (124) | (239) | ||
| Parker Hannifin | 339 | 82 | 24.2% | 401 | 88 | 21.9% | (62) | (56) | ||
| Harley-Davidson | 339 | 114 | 33.6% | 266 | 94 | 35.3% | 73 | 53 | ||
| TE Connectivity Ltd | 338 | 60 | 17.8% | 359 | 91 | 25.3% | (21) | 10 | ||
| Paccar | 337 | 101 | 30.0% | 479 | 152 | 31.7% | (142) | (91) | ||
| L-3 Communications | 273 | 79 | 28.9% | 283 | 96 | 33.9% | (10) | 7 | ||
| Dover | 267 | 70 | 26.2% | 260 | 74 | 28.5% | 7 | 11 | ||
| Alcoa | 234 | 64 | 27.4% | 138 | 39 | 28.3% | 96 | 71 | ||
| Rockwell Automation | 227 | 51 | 22.5% | 223 | 56 | 25.1% | 4 | 9 | ||
| Joy Global | 206 | 64 | 31.1% | 198 | 55 | 27.8% | 8 | (1) | ||
| Borg Warner | 200 | 51 | 25.5% | 221 | 58 | 26.2% | (21) | (14) | ||
| Rockwell Collins | 197 | 36 | 18.3% | 213 | 52 | 24.4% | (16) | 0 | ||
| Amphenol | 194 | 41 | 21.1% | 174 | 46 | 26.4% | 20 | 25 | ||
| Whirlpool | 190 | (67) | -35.3% | 133 | 36 | 27.1% | 57 | 160 | ||
| Ametek | 176 | 51 | 29.0% | 162 | 52 | 32.1% | 14 | 15 | ||
| Nucor | 153 | 43 | 28.1% | 225 | 62 | 27.6% | (72) | (53) | ||
| Flowserve | 148 | 49 | 33.1% | 129 | 36 | 27.9% | 19 | 6 | ||
| Lear | 147 | 38 | 25.9% | 174 | 39 | 22.4% | (27) | (26) | ||
| Textron | 143 | 28 | 19.6% | 177 | 57 | 32.2% | (34) | (5) | ||
| Ingersoll-Rand | 126 | 24 | 19.0% | 142 | 38 | 26.8% | (16) | (2) | ||
| Timken | 114 | 39 | 34.2% | 238 | 82 | 34.5% | (124) | (81) | ||
| Pall Corp | 102 | 22 | 21.6% | 98 | 23 | 23.5% | 4 | 5 | ||
| Ball Corp | 98 | 18 | 18.4% | 122 | 28 | 23.0% | (24) | (14) | ||
| Crown Holdings | 93 | 24 | 25.8% | 122 | 32 | 26.2% | (29) | (21) | ||
| Stanley Black & Decker | 90 | 9 | 10.0% | 135 | 30 | 22.2% | (45) | (24) | ||
| Dana Holding | 71 | 27 | 38.0% | 107 | 37 | 34.6% | (36) | (26) | ||
| Total all 39 | 19,876 | 5,020 | 25.3% | 21,044 | 6,076 | 28.9% | (1,168) | (112) | ||
| Total Pretax Income % Decrease | -5.55% | |||||||||
| Total After-tax Combined Net Income % Decrease | -0.75% | |||||||||
| = Positive Income Tax Earnings Spread | 4.80% |
