Sunday, October 07, 2001

Private companies post powerful numbers


Manufacturing dominates Greater Cincinnati 100, but its grip weakens

By James McNair
The Cincinnati Enquirer

        Public companies get all the attention. Their mergers and announcements make all-day business programs on TV. Their stock prices are talked about at cocktail parties and the dinner table, even at truck stops.

        But if public companies are the stars of the economy, private companies are the unsung cast and crew. And in Greater Cincinnati, private companies deserve some of the limelight.

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        In today's 18th edition of the Greater Cincinnati 100, compiled by the accounting firm Arthur Andersen, the region's 100 biggest private companies show that they, too, are capable of posting impressive sales and growth. Disclosing profits is another matter. That's one of the benefits of being private.

        Altogether, the Greater Cincinnati 100 reported $14.4 billion in revenue for 2000, up 5 percent from the year before. Companies on the list averaged $143.8 million in revenue, and it took $41 million to make the list. In other words, these aren't mom-and-pop enterprises.

        More than two-thirds of the companies gave the go-ahead to publish their revenue. The rest gave Arthur Andersen revenue figures for ranking purposes, but asked that the data be kept under wraps. Just play a game of fill in the blank.

        The latest list features a new king of the hill, Joseph Auto Team, the auto retailer. Joseph reported $570 million in revenue last year. That was essentially flat from 1999, but the Tristate's No. 1 revenue-producer the last four years, Ris Paper Co., was acquired, eliminating it from contention.

        Jeff Wyler Automotive Family made it a one-two finish for auto retailers, grossing $525 million in 2000. Wyler is rapidly gaining ground on Joseph Auto. Last year, it made two acquisitions that added $140 million in annual revenue. Because the deals occurred in midyear, the full effect of the additional revenue won't be felt until the 2001 results are counted.

        “Last year was a very big year for the products we sell,” Mr. Wyler said from his company headquarters in Eastgate. “We have two Honda franchises and three Toyota franchises, which do very well. The dealerships I bought have added a whole lot to our revenue and bottom line.”

        One other auto retailer, Kenwood Dealer Group, ended in the eighth spot, while Kerry Auto Group came in at No. 13.

        Manufacturing remains Greater Cincinnati's top-dog industry. Of the 100 companies on the list, 25 are manufacturing concerns such as Standard Textile Co. of Cincinnati and Akers Packaging Service of Middletown. Combined, they accounted for about $3 billion in revenue, or 21 percent of the overall group.

        But manufacturing's presence in the Greater Cincinnati 100 is diminishing. In 1997, there were 33 manufacturing companies on the list. And they represented 25 percent of its aggregate revenue.

        George Vredeveld, an economist at the University of Cincinnati, said manufacturing has taken an especially pronounced blow from the downturn that began early last year.

        “Longer term, both in the U.S. economy and in the local economy, we've seen that manufacturing, while still very important in this economy, has decreased in its relative importance,” Mr. Vredeveld said. “I suspect that will continue.”

        Retailers on the Greater Cincinnati 100 showed the biggest revenue gain, more than doubling to $1.8 billion. But that was largely because of the debut of Cornerstone Brands on the list. The catalog company moved its headquarters from Boston to West Chester Township last year. With $500 million in annual sales, it went right to the No. 5 spot.

        The industry that really grew in 2000 was construction. That sector was represented by 18 companies, up from 16 the year before, and their revenue rose 16 percent to $2.7 billion. In 1996, the construction group consisted of 13 companies with $1.4 billion.

        “I think we expected construction to increase, and most of the construction companies are privately held,” Mr. Vredeveld said. “Housing sales have done pretty well in spite of a slow economy, probably because of more attractive interest rates.”

        John Taylor, regional president of PNC Bank in Cincinnati, said construction of highways, the Great American Ball Park and other infrastructure has kept the industry strong.

        “The cost of capital is very reasonable and continues to spur construction activity,” Mr. Taylor said. “It's the bright spot in our economy and is the one thing we hope will go forward and pull manufacturing back up.”

        Residential real estate was also strong in 2000. One of the region's biggest real estate brokerages, Sibcy Cline, rose from 92nd to 61st on the Greater Cincinnati 100, thanks to a 63 percent increase in sales.

        “The market itself expanded,” owner Rob Sibcy said. “We're constantly recruiting new agents into the business and training them.”

        Standard Textile of Reading, which makes a number of textile products for the health-care and hotel industries, took advantage of an industry shakeout to make acquisitions and increase market share. With one acquisition left to complete, the company's employment will increase 67 percent to 2,000, and Standard will draw 25 percent of its revenue from outside the United States.

        “Over the last several years, health care's been under tremendous pressure, and there's been a big falling out of the players,” Standard CEO Gary Heiman said. “The strong have gotten stronger, and the weak have gotten weaker.”

        One industry continues to be virtually invisible in Greater Cincinnati: technology. Not a single tech company made the 2001 list. The lone technology entry from last year, Data Processing Sciences Corp., didn't want to participate in this year's ranking because of a “change in company focus,” Arthur Andersen said.

       



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