Only 52 US companies have been on the Fortune 500 since 1955, thanks to the ‘creative destruction’ that fuels economic prosperity

By Mark Perry.

What do the companies in these three groups have in common?

Group A: American Motors, Brown Shoe, Studebaker, Collins Radio, Detroit Steel, Zenith Electronics, Fuller Brush, Otis Elevator, and National Sugar Refining.

Group B: Boeing, Campbell Soup Company, Colgate-Palmolive, Deere, General Motors, IBM, Kellogg, Procter & Gamble Company, and Whirlpool.

Group C: Amazon, Facebook, eBay, Home Depot, Microsoft, Google, Netflix, Office Depot, Walmart, CVS Health, and Target.

All of the companies in Group A were in the Fortune 500 in 1955, but not in 2021.

All of the companies in Group B were in the Fortune 500 in both 1955 and 2021 and have remained on the list every year since it started in 1955 according to this 2018 report from Fortune. (Note that: a) the report incorrectly stated 54 surviving companies instead of only 53, b) United Technologies merged with Raytheon in April 2020 bringing the count to 52 companies, and c) Alcoa should have been on the list instead of Arconic.)

All of the companies in Group C were in the Fortune 500 in 2021, but not in 1955.

The list of Fortune 500 companies in 1955 is available here and the list for 2021 was just released yesterday and is available here (based on sales for the fiscal year ended on or before Jan. 31, 2021). Comparing the 1955 Fortune 500 companies to the 2021 Fortune 500, there are only 52 companies that appear in both lists and have remained on the list since it started (see graphic above). In other words, only 10.4% of the Fortune 500 companies in 1955 have remained on the list during the 66 years through this year, and nearly 90% of the 1955 Fortune 500 companies have either gone bankrupt, merged with (or were acquired by) another firm, or they still exist but have fallen from the top Fortune 500 companies (ranked by sales revenues) in one year or more. Many of the companies on the list in 1955 are unrecognizable, forgotten companies today (e.g., Armstrong Rubber, Cone Mills, Hines Lumber, Pacific Vegetable Oil, and Riegel Textile).

Economic Lessons: The fact that nearly nine of every ten Fortune 500 companies in 1955 have gone bankrupt, merged, reorganized, or contracted demonstrates that there’s been a lot of market disruption, churning, and Schumpeterian creative destruction over the last six decades. It’s reasonable to assume that when the Fortune 500 list is released 60 years from now in 2080, almost all of today’s Fortune 500 companies will no longer exist as currently configured and will be replaced by new companies in new, emerging industries that we can’t even imagine today, and for that we should be extremely thankful. The constant turnover in the Fortune 500 is a positive sign of the dynamism and innovation that characterizes a vibrant consumer-oriented market economy, and that dynamic turnover is speeding up in today’s hyper-competitive global economy.

According to a 2016 report by Innosight (“Corporate Longevity: Turbulence Ahead for Large Organizations“) corporations in the S&P 500 Index in 1965 stayed in the index for an average of 33 years. By 1990, average tenure in the S&P 500 had narrowed to 20 years and is now forecast to shrink to 14 years by 2026. At the current churn rate, about half of today’s S&P 500 firms will be replaced over the next 10 years as “we enter a period of heightened volatility for leading companies across a range of industries, with the next ten years shaping up to be the most potentially turbulent in modern history” according to Innosight.

The latest May 2021 report from Innosight (“2021 Corporate Longevity Forecast“) predicts continued turbulence and turnover for the S&P 500:

Creative destruction continues apace – and at a high level. After a plunge in activity due to the COVID pandemic, major rebounds in private equity, M&A, and IPOs are leading indicators of a continued future rise in the value of the S&P 500. Our tracking of corporate longevity of S&P 500 firms shows a steady churn rate of companies dropping off the index as new entrants join the list and corporate lifespans continue their downward trajectory.

Corporate longevity remains in long-term decline, according to Innosight’s biennial corporate longevity reports. Our latest analysis shows the 30- to 35-year average tenure of S&P 500 companies in the late 1970s is forecast to shrink to 15-20 years this decade (see chart below).

Another economic lesson to be learned from the creative destruction that results in the constant churning of Fortune 500 (and S&P 500) companies over time is that the process of market disruption is being driven by the endless pursuit of sales and profits that can only come from serving customers with low prices, high-quality products and services, and great customer service. If we think of a company’s annual sales revenues as the number of “dollar votes” it gets every year from providing goods and services to consumers, we can then appreciate the fact that the Fortune 500 companies represent the 500 companies that have generated the greatest number of dollar votes of confidence from us as consumers – like Walmart (No. 1 in 2021 for the ninth straight year with $559 billion in “dollar votes” and only the fourth time in history the sales of any Fortune 500 company has exceeded the $500 billion mark — Walmart in every case), Amazon (No. 2 at $386 billion, up by 37.6% from a year ago), Apple (No. 3 at $274 billion), and CVS Health (No. 4 at $268 billion). Together those top four 2021 Fortune 500 companies — all large retailers selling products directly to consumers — had combined revenues of almost $1.5 trillion in “dollar votes” as a direct measure of the amount of value they created for (mostly) American consumers.

As consumers, we should appreciate the fact that we are the ultimate beneficiaries of the Schumpeterian creative destruction that drives the dynamism of the market economy and results in a constant churning of the firms who are ultimately fighting to attract as many of our dollar votes as possible. The 500 top winners of that competitive battle in any given year are the firms in the Fortune 500, ranked not by their profits, assets, or number of employees, but by what is ultimately most important in a market economy: the dollar votes (sales revenues) cast by consumers — the “kings and queens” who rule supreme in the marketplace."