23 Jan Biotech leads list of top U.S. companies to work for
In the first couple of weeks, we have been retrospectively reviewing what happened to major pharma and biotech companies, including our Midwest ones, during 2005. This review was based purely on investor perspective as reflected in a stock price and resultant valuation of a company.
But there are other ways to look at and value the impact of our industry. One such way is the recent Fortune Magazine list of “The 100 Best Companies to Work For – 2006” published on January 11th. The 100 top companies chosen were selected from about 1,500 companies, of which 466 went through what was deemed an exhaustive survey process. Some of the base line parameters used for the evaluation were:
• Company needs to be at least 7 years old and have more than 1,000 U.S. employees
• Fortune’s review of their policies and culture of each company (one-third of the weight)
• The opinions of the company’s own employees (this criterion received two-thirds of the weighting in the scoring)
It is interesting to note that this latter activity, employee’s opinions, was based on a 57-question survey which went to 400 randomly selected employees of each company. The questions asked employees focused on the following:
• Attitudes toward management
• Job satisfaction
Fortune, itself, evaluated each company on 4 categories:
• Credibility (communication to employees)
• Respect (opportunities and benefits)
• Fairness (compensation, diversity)
• Pride/camaraderie (philanthropy, celebrations)
So what were the results? I looked at this list with two optics: (a) a biotech/Pharma optic, and (b) a Midwest optic. Let’s see what the biotech/optic list revealed:
|Ranking||Company||Prior Year Ranking||Location|
|32.||Alcon Labs||42||Fort Worth, TX|
|39.||Amgen||33||Thousand Oaks, CA|
|51.||Genzyme||Not ranked||Cambridge, MA|
Interesting to see that Genentech and Amgen, which were the top biotech companies in financial results in 2005, were also leaders in this listing of leading companies. But also interesting to see two Big Pharma companies as well: Alcon and Eli Lilly. In the case of Genentech, 95 percent of all employees are shareholders and many have benefited from the soaring stock price. It probably also helps to feel part of a team that is developing successful new cancer drugs.
So what happened to Pharma giants Pfizer, Johnson & Johnson, Abbott Labs, Baxter International, etc? They didn’t make the cut! Interestingly, Microsoft, which DID make the cut, was ranked at 42, and Starbucks, which traditionally has had a great image with employees, ranked only 29th.
What is happening? According to Fortune, globalization, with merciless cost pressures, is making it more and more difficult for U.S. companies to treat employees well. Two amazing facts that came out of the survey:
1. The average American business last less than 20 years before it fails or gets bought
2. The 100 Best Companies, on average, are an incredible 85 years old
Let’s look now at the Midwest companies that showed up on the list:
|Ranking||Company||Prior Year Ranking||Location|
|8.||J.M. Smucker (jams)||6||Orrville, OH|
|10.||S.C. Johnson (consumer products)||7||Racine, WI|
|12.||Plante & Moran (accounting)||17||Southfield, MI|
|13.||Quicken Loans (mortgage bank)||12||Livonia, MI|
|16.||Edward Jones (brokerage firm)||Not ranked||St. Louis, MO|
|17.||Republic Bancorp (bank)||3||Owosso, MI|
|22.||American Century Invest||26||Kansas City, MO|
|31.||Robert W. Baird (investment bank)||18||Milwaukee, WI|
|34.||CDW (computer sales)||14||Vernon Hills, IL|
|44.||Pella (window maker)||39||Pella, IA|
|50.||Northwest Community Hospital||Not ranked||Arlington Heights, IL|
|52.||Eli Lilly||73||Indianapolis, IN|
|68.||Bronson Healthcare Group||36||Kalamazoo, MI|
|70.||A.G. Edwards||56||St. Louis, MO|
|75.||Quad/Graphics||Not ranked||Sussex, WI|
|84.||Worthington Industries||Not ranked||Columbus, OH|
|86.||Principal Financial Group||61||Des Moines, OH|
|89.||Mayo Clinic||81||Rochester, MN|
|95.||Wm. Wrigley Jr.||77||Chicago, IL|
|98.||General Mills||63||Minneapolis, MN|
The Midwest had 21 companies out of the top 100 – not bad! Interesting to also see the number of healthcare/hospital groups in the list! By the way, Michigan leads the way with 5 companies in the list.
More on biofuels: looking south to Brazil
Near the end of last year, I did an article on the growth of biofuels in the Midwest due to large availability of biomass through such crops as corn and soybean. I also commented on the growth of this trend in India.
Another country leading the way in biofuels is Brazil. According to a recent article in the Wall Street Journal, Brazil is now producing ethanol for about $1.00/gallon compared with the international price of gasoline of about $1.50/gallon. In Brazil, ethanol is mostly derived from sugar cane, and is now available in 29,000 gas stations throughout the country, and represents about 20 percent of Brazil’s transport fuel market. Brazil’s use of traditional gasoline has actually declined since the late 1970’s.
One of the stimuli behind this move was the termination by the Brazilian government of support for the sugar industry, which forced sugar manufacturers to become more efficient and find other uses for the crop. According to the WSJ, 7 out of every 10 new cars sold in Brazil can use “flex-fuel”, meaning gasoline, ethanol, or a mixture of the two.
Brazil has become so efficient in ethanol production that it expects to double current exports of about $600 million/year to about $1.3 billion by 2010 (most sales are to Sweden and Japan). Ethanol releases less carbon dioxide than gasoline.
The Brazil ethanol model is being looked at by China, India, and the U.S. In the U.S., the most recent energy bill signed into law last August stipulates that the use of ethanol must double by 2012. But U.S. ethanol is made from corn which is about 30 percent more expensive than Brazil’s ethanol. According to WSJ, Henry Ford’s first car was made to run on ethanol.
Brazil’s improvement in ethanol efficiency has come in part due to biotechnology. Brazilian scientists at the Centro de Technologia Canaviera (funded by sugar growers), about 2 hours outside of Sao Paulo and in the heart of the sugar industry, have worked on decoding the DNA of sugar cane. The Center has helped Brazilian growers to select varieties of sugar cane that are more resistant to drought and pests, while at the same time yielding higher sugar content. The Center has developed some 140 new varieties of sugar cane over the last 20 years, which has helped lower the cost of growing sugar cane by about 1 percent/year. Brazilians used to get 2,000 liters (520 gallons) of ethanol out of a hectare (2.5 acres) of sugar cane. That yield has triple to about 6,000 liters/hectare.
Additionally satellite imagery of Brazilian sugar cane fields has helped Brazilian researchers to identify which variety of sugar cane will grow best in different parts of the country, the best time to harvest, and where to situate new fields.
It seems that the U.S. could take a lesson on biofuels from South American biotech scientists.
See you next week!
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