News Column

Last-Minute Surge in a Strong Economy

June 2001

Revenues for the 500 largest Hispanic-owned companies in the nation reached a record $21.18 billion in 2000, an increase of 12.8 percent from the previous year. Those numbers demonstrate that the economic slowdown on the heels of a strong bull economy active since the early 1990s didn't hamper the companies of the HISPANIC BUSINESS 500 during 2000, a year in which the overall U.S. economy grew a vigorous 5.0 percent.

A close look at the 500 reveals that the largest companies accounted for all the growth. The top 150 companies on the list reported 2000 revenues of $16.83 billion compared to $13.9 billion in 1999. That calculates to a revenue increase of $2.93 billion. In contrast, cumulative revenues for companies below the 150 mark lost ground last year, falling 10.8 percent. In other words, the big got bigger while the smaller companies encountered more resistance to growth. Minimum revenue to make the list also fell, from $5.62 million to $5.20 million, indicating difficulties for firms in the $5 million revenue range.

Nine of the largest 150 companies reported revenue growth of 100 percent or better. The companies with the largest volume revenue gains were clustered atop the list: Number 2 Burt Automotive (an increase of $230.3 million), newcomer Brightstar (a $214 million increase), number 5 Related Group of Florida (up $203 million), and the number 1 company MasTec Inc. (plus $200 million). For the second consecutive year, the HISPANIC BUSINESS 500 features two companies MasTec and Burt above the $1 billion mark.

In the context of the U.S. business environment, corporate consolidation and restructuring continue to reshape the HISPANIC BUSINESS 500. At least 16 companies that appeared on the list last year reported they were no longer at least 51 percent Hispanic-owned, or that a pending change of ownership put their Hispanic ownership in question. Even companies that remain on the list felt ripples from the M&A wave. For example, Pueblo Holdings had the steepest drop on the directory, falling from the number 10 position last year to number 193, after selling off some business units, starting with its divestiture of Accubank Mortgage in late 1999.

Sector breakdown shows that the proportion of the service companies among the HISPANIC BUSINESS 500 doesn't differ significantly from the makeup of the U.S. economy. This year, service claims 30.2 percent of the companies and 28.3 percent of the total revenues for the 500 figures that have inched upward over the past five years, from 28.2 percent of companies and 21 percent of total revenues.

Proportionally, the construction sector in the HISPANIC BUSINESS 500 is twice as large as in the U.S. economy. Likewise, manufacturing is 183 percent larger and wholesale is 65 percent larger than in the overall economy. On the other hand, retailing accounts for a much smaller share of the pie among HISPANIC BUSINESS 500 firms.

The construction, automotive, and wholesale sectors led the way for revenue increases this year. Once again, auto dealers reported the highest average revenue per company a natural, given their big-ticket items. The automotive sector also had the highest productivity (measured as gross revenue per employee), with $878,512 per worker, followed by wholesale at $634,331.

The CEOs of the 500 trimmed their payroll by 8.6 percent last year. Only 1 percent of CEOs expect to lay off workers this year, while 69.6 percent hope to hire. But recruiting plans usually hinge on the health of the economy, particularly with nearly half the chief executives citing market conditions and competition as their prime barriers to growth.

California widens its lead this year as the state with the most companies, playing host to 133 HISPANIC BUSINESS 500 firms. Florida places second in number of companies (117), but first in revenue, with nearly a third of the cumulative total. Florida is home to seven of the 15 largest companies on the list beginning with number 1 MasTec and these seven companies contribute $3.3 billion to the state's total revenues. Meanwhile, with only 16 companies on the list, Colorado has total revenues of more than $1.6 billion, thanks to the billion-dollar performance of number 2 Burt Automotive.

A solid 73.4 percent of companies on the directory hold minority certification, and government contracting accounts for 16.4 percent of revenues. That revenue figure shows an incremental gain since five years ago, when 70 percent of the companies held certification and government contracts provided 15.7 percent of revenues. Since 1996, the percentage of HISPANIC BUSINESS 500 revenues originating from the federal government has decreased, yet money from state and local contracting has more than made up the difference.

Going forward, most CEOs of the HISPANIC BUSINESS 500 see the economy as "growing somewhat" (34 percent) or "growing strongly" (20 percent) this year. Scanning the two-year horizon, 42 percent have a positive outlook and another 9 percent a strongly positive forecast. Those views move in the same direction as, though somewhat more optimistically than, the predictions of the HISPANIC BUSINESS Magazine Board of Economists, most of whom project growth below 2 percent this year.

This year's 500 provides an opportunity to reflect on how Hispanic companies have performed during the extended "bull market" of the 1990s. In sum, these firms have consistently produced strong revenue gains across all industrial sectors over the last decade. The changing complexion of the HISPANIC BUSINESS 500 forms the topic of our feature article "Success Through Adaptation."

Written by Research Director John Cobin and Senior Editor Joel Russell. HISPANIC BUSINESS 500 directory research by Research Director John Cobin, Senior Research Associate Tabin Cosio, and Research Associates Cynthia Marquez, Joaquin Rodriguez, and Melissa Mendoza.

Total Revenues of the HISPANIC BUSINESS 500*

1991-----$10 billion

1992-----$10.09 billion

1993-----$10.96 billion

1994-----$12.16 billion

1995-----$14.00 billion

1996-----$16.28 billion

1997-----$17.09 billion

1998-----$17.44 billion

1999-----$18.78 billion

2000-----$21.18 billion

*All figures in current dollars.

2001 Hispanic Business Inc. Reprinting, copying, or transmitting all or part of this information requires written permission.

Methodology of the HISPANIC BUSINESS 500 Directory

Source: HISPANIC BUSINESS magazine

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