History Podcasts

Large Companies and the economy - History

Large Companies and the economy - History

Life on the Farm

The second half of the 19th century was the period of the emergence of the large American corporation. The railroads were the first large companies. The very nature of the railroads required it to be large, with many levels of management. If railroads were to run with a minimum of accidents, it required precise organization and access to more information than other corporations generally had. Running a railroad demanded knowing the location of every train, at all times. Additionally, the railroads were the first large companies to raise much of its capital on the public markets. Thus, if on a typical day in the 1830s only dozens of trades took place on the New York Stock Exchange, by the 1850s — after the railroads discovered the Stockmarket— tens of thousands of shares were traded daily.

The public trading of company stock had another impact — i.e., for the first time, owners were not necessarily the managers. While the British and the Dutch had used stock companies, such as the East India Company to fund their exploration and trading of companies, that was not the case in American companies, at least not until the railroads came around. At this juncture, professional managers became the norm in growing American corporations. A few large companies grew to dominate their markets during this time period. It was a period where a number of individuals were able to dominate their markets and industries. Many those industrialists became known as the “Robber Barons” — i.e., people who became incredibly wealthy by dominating their markets. Some of the famous Robber Barons were John D Rockefeller(Oil), Andrew Carnegie(Steel) , John Astor(real estate and fur) James Pick (Finance) JP Morgan (Finance)

America’s biggest companies are flourishing during the pandemic and putting thousands of people out of work

(Leonardo Santamaria for The Washington Post)

As the coronavirus pandemic devastated small businesses and plunged millions of Americans into poverty this summer and fall, executives at some of the country’s largest corporations sounded surprisingly upbeat.

“I don’t think we’ve ever been more excited or energized about our prospects,” PayPal finance chief John Rainey said on a November conference call.

“These are times when the strong can get stronger,” Nike chief John Donahoe told analysts in September.

“With all that’s happening around the world, it’s really unfortunate,” said Jensen Huang, chief executive of graphics chip maker Nvidia, during an August earnings call. “But it’s made gaming the largest entertainment medium in the world.”

With few exceptions, big businesses are having a very different year from most of the country. Between April and September, one of the most tumultuous economic stretches in modern history, 45 of the 50 most valuable publicly traded U.S. companies turned a profit, a Washington Post analysis found.

Despite their success, at least 27 of the 50 largest firms held layoffs this year, collectively cutting more than 100,000 workers, The Post found.

The data reveals a split screen inside many big companies this year. On one side, corporate leaders are touting their success and casting themselves as leaders on the road to economic recovery. On the other, many of their firms have put Americans out of work and used their profits to increase the wealth of shareholders.

When the coronavirus struck, big companies promised to help battle the crisis. Dozens of prominent chief executives, who last year signed a public pledge to focus less on shareholders and more on the well-being of their employees and broader communities, appeared eager to make good on that promise. Many suspended payments to investors and vowed not to hold layoffs.

Then, 21 big firms that were profitable during the pandemic laid off workers anyway. Berkshire Hathaway raked in profits of $56 billion during the first six months of the pandemic while one of its subsidiary companies laid off more than 13,000 workers. Salesforce, Cisco Systems and PayPal cut staff even after their chief executives vowed not to do so.

Companies sent thousands of employees packing while sending billions of dollars to shareholders. Walmart, whose CEO spent the past year championing the idea that businesses “should not just serve shareholders,” nonetheless distributed more than $10 billion to its investors during the pandemic while laying off 1,200 corporate office employees.

Kirk Hanson, an author and longtime professor of business ethics, says it’s incumbent upon the United States’ top corporations to help pull the country through the worst recession in decades, particularly given the outsized profits they’re enjoying.

“There is an obligation on the part of the largest and most successful businesses to help buffer the human impact of the crisis,” said Hanson, who now is a senior fellow at Santa Clara University’s Markkula Center for Applied Ethics.

Instead, Hanson said, they have contributed to the country’s growing economic divide.

The Post contacted all 27 large firms that held layoffs this year. Many said the cuts were not related to the pandemic, but instead a necessary part of broader “restructuring” plans, where companies shift spending from declining lines of business to growing ones. In some cases, these plans were decided before the pandemic.

Several emphasized that they hired more people this year than they let go. Anne Hatfield, a spokeswoman for Walmart, said everyone the retailer laid off during the pandemic was offered another job in the company, though she declined to say whether the new roles held the same level of pay and responsibilities as the jobs that were eliminated.

Others pointed to the work they have done to help ease the pain in their communities, such as expanding health and family benefits to employees and distributing personal protective equipment to front-line workers. Cisco gave $53 million in cash and PPE to vulnerable populations and PayPal pledged $530 million in investments in minority-owned small businesses.

In an email, Berkshire Hathaway chief executive Warren Buffett said he leaves all decisions at his subsidiary companies to the management of those companies. Airplane parts maker Precision Castparts, which Berkshire Hathaway acquired in 2015, was forced to cut staff due to a severe drop in demand for new planes, he said. Buffett added that he has given $2.9 billion of his personal wealth to charitable causes this year.

The majority of the largest American corporations have prospered in the coronavirus economy.

Millions of consumers spent more time and money online during government-mandated lockdowns, watching Netflix, viewing ads on Google and Facebook pages, filling Amazon shopping carts and turning the video game business into a bonanza for Nvidia, Microsoft and others. (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)

Revenue change from 2019

Shoppers began splurging on cleaning supplies, hobbies, home cooking and home improvements, driving record growth at big-box stores including Home Depot and Walmart.

Even in the hardest-hit sectors, such as restaurants, travel and hospitality, the biggest companies were largely insulated from the worst of the virus’s reckoning. While independent restaurants struggled to survive, McDonald’s ramped up its takeout and drive-through operations, rolling out new apps and technology catering to on-the-go orders.

Revenue change from 2019

In many industries, the giants devoured market share ceded by small businesses, who lacked the resources to keep stores open during unpredictable swings in customer demand. While the 50 largest companies averaged 2 percent revenue growth over the first nine months of 2020, small business revenue shrank 12 percent over the same period, according to data collected by software provider Womply from thousands of small firms.

Economists estimate at least 100,000 small businesses permanently closed in the first two months of the pandemic alone.

“Once you kill competition, it’s always hard to restore it,” said Matt Stoller, director of research at the left-leaning American Economic Liberties Project. “This is an extinction-level event for small businesses.”

As the pandemic wore on, many companies kept their promises not to lay off staff. Others saw the recession as a good excuse for trimming labor costs.

In April, cigarette maker Philip Morris International made a public commitment to forgo layoffs during the pandemic to help support the “job security and peace of mind” of its 73,000 workers.

“The company will not terminate the employment of any [Philip Morris] employee during this crisis period, unless for cause, and the company has also put on hold any restructuring plan,” Philip Morris said in a news release.

Revenue change from 2019 for Philip Morris

But in June, as infection rates continued to rise, Philip Morris said in a regulatory filing it would eliminate up to 440 workers in New York and Switzerland as part of a restructuring.

In a statement, Philip Morris spokesman Sam Dashiell said the company resumed the restructuring at its Swiss operations center because it determined “prolonging it further would be unfair to everyone.” He declined to explain why the New York layoffs resumed.

Current and former employees at some of these companies say they weren’t surprised to see their leaders renege on promises to retain staff through the pandemic. They didn’t put too much faith in those promises in the first place.

“The choices that they make are governed by, essentially, maximizing shareholder value,” said Gary Walker, a systems engineer who was one of 1,000 employees Salesforce cut in late August.

Pledges, then layoffs

At the onset of the pandemic, Chuck Robbins described the need to keep workers employed as a moral imperative. The chief executive of Cisco, a $180 billion software and networking giant, said large companies like his shouldn’t lay off workers during a global crisis because, even in a bad year, they had the resources to maintain payrolls.

“Why would we contribute to the problem?” Robbins asked in an interview with Bloomberg News published in April. “To me, it’s just silly for those of us who have the financial wherewithal to absorb this, for us to add to the problem.”

Four months later, Cisco began implementing a plan to lay off thousands of employees.

The majority of Americans who lost jobs this year were laid off from small businesses, many of which had no option but to cut workers to stave off financial collapse.

But larger companies actually laid off a greater portion of their workforces over that period — 9 percent for large firms vs. 7 percent for smaller firms — despite having more resources to survive the downturn. Their layoffs were quietly acknowledged in regulatory filings and shrouded in corporate jargon, like an “involuntary reduction of associates” at Coca-Cola and “operating model changes to streamline and speed up strategic execution” at Nike.

Revenue change from 2019

The Salesforce layoffs punctuated one of the software giant’s fastest periods of growth and followed frequent pledges by its chief executive to assist with coronavirus relief. Marc Benioff, a self-styled leader of the corporate philanthropy movement, said in a series of tweets in late March that Salesforce pledged “not to conduct any significant lay offs over the next 90 days.”

He suggested all CEOs should take a similar “90 day pledge” and encouraged all Salesforce employees to keep supporting hourly workers, such as housekeepers and dog walkers, who do work for them.

Making good on that pledge was not hard for Salesforce, a company sitting on more than $9 billion in cash and short-term investments. It generated $2.7 billion in profit during the first six months of the pandemic, as businesses flocked to Salesforce’s tools for helping them manage operations remotely.

Revenue change from 2019 for Salesforce

The layoffs, about five months after Benioff’s tweet, were part of a plan to “reallocate resources” including “eliminating some positions that no longer map to our business priorities,” the company said in a statement. They were announced one day after the software giant announced its biggest quarter of profit and revenue in history, sending its stock soaring 30 percent.

“Of course I’m cheesed about it. How could you not be?” said Walker, who was laid off after 12 years at the company. “It’s not great timing.”

Walker, 48, who lives with his wife and two dogs in Herndon, Va., said he appreciates Salesforce giving him generous severance benefits and understands large companies sometimes have to cut labor costs to please investors.

Gary Walker was laid off from Salesforce in August after 12 years with the company. (Jahi Chikwendiu/The Washington Post)

Cheryl Sanclemente, a Salesforce spokeswoman, said in a statement the company offered to help all of the people who were affected find new jobs, including in some 12,000 openings it expects to fill over the next year. She added that the company has provided protective equipment to health-care workers throughout the pandemic and gave $30 million to organizations fighting the covid-19 crisis.

Salesforce pointed out that the company did make good on his promise not to hold layoffs within 90 days of his tweet.

Similarly, Wells Fargo explained that it never committed to a time frame when it pledged to pause layoffs — which the company referred to in a statement as “job displacements” — back in March.

“At that time, we said we would continue to evaluate and did not pledge to pause job displacements for a specific period of time,” spokeswoman Beth Richek said in an email. “Starting in early August, we resumed regular job displacement activity.”

Revenue change from 2019 for Wells Fargo

She declined to comment on the number of workers who were affected, though sources told Bloomberg News the San Francisco-based bank was cutting the first 700 workers in what is expected to be a massive restructuring impacting tens of thousands of jobs over the coming years.

Then there’s Cisco, which started the year determined not to “add to the problem” of pandemic unemployment, in the words of its CEO. Despite benefiting from a quarantine-fueled boom in videoconferencing tools including its Webex software, the company lost ground to Zoom and reported slowing growth in its cloud computing business.

Robbins, who spent the first few months of the pandemic repeatedly reassuring staff that their jobs would be safe, by summer acknowledged a round of cost-cutting was needed, according to three former employees who were in meetings with Robbins this year and left the company within the past three months. The former employees — two who left voluntarily, one who was laid off — all spoke on the condition of anonymity while discussing their former employer.

Revenue change from 2019 for Cisco

Cisco began a restructuring plan to eliminate $1 billion in costs, including a campaign to ask employees to take voluntary retirement packages or a 20 percent pay cut in exchange for working four days a week, the people said. In addition to the voluntary departures, Cisco began conducting involuntary layoffs in the early fall.

Jennifer Yamamoto, a Cisco spokeswoman, said the company is increasing its investments in certain business areas and reducing investments in others. Before publication of this story, Yamamoto declined to specify the number of people the company laid off. After publication, she revealed Cisco had “restructured” about 3,500 workers.

However, two of the former employees said they heard directly from managers at the company that Cisco planned to cut at least 8,000 employees, or more than 10 percent of its workforce.

Asked about Robbins’s statements from earlier this year, Yamamoto said the CEO “did not commit to no layoffs, but rather said we would preserve what we could depending on how the pandemic played out, and he would then assess the needs of the business every 60 days before making any decisions. As the pandemic continued, things changed in the macro landscape and we had to make some tough choices.”

Disparity sharp among restaurants

Nowhere has the disparity between big and small businesses ballooned during the pandemic the way it has for restaurants. Just ask Dave Mainelli.

For more than two decades Mainelli and his family have owned and run Julio’s Restaurant, a Tex-Mex joint in Omaha. His wife headed operations, his brother was a manager, and his son, a bartender. Customers held birthday parties and family reunions, plus wedding and funeral receptions there.

When the pandemic hit and business started to falter, Mainelli said he tried to keep Julio’s open because of the difficulty of telling many of his longtime employees that it was over. He cut back on hours and eventually on staff, dropping from 40 to a dozen as he tried to survive on delivery and pickup.

But with thin margins and debts beginning to mount, he closed Julio’s for good in June, after 25 years in business.

“There were a lot of tears. It was one of the hardest things I’ve ever been through and I‘ve been through a lot of hard stuff,” he said.

While 1 in 6 restaurants permanently closed during the first months of the pandemic, according to the National Restaurant Association, big chains have ramped up their drive-through operations and rolled out new apps and menus catering to on-the-go orders.

Maybe no one has done this better than McDonald’s, which was battered by the pandemic in the spring but has since been gobbling up more business by the day, using its scale to outpace hundreds of thousands of competing restaurants.

Analysts say McDonald’s has leveraged its advantages by quickly simplifying its menu, allowing its locations to serve more customers in a shorter time without them having to enter its restaurants. Deliveries and mobile app use is growing. Drive-through orders grew to account for 90 percent of McDonald’s sales during the pandemic, up from two-thirds of sales before this year.

“The large companies have these asset bases that the smaller companies cannot compete with, particularly now,” said Lauren Silberman, an analyst at Credit Suisse.

Contrast that with the options available to Mainelli. To boost delivery sales he partnered with a local service in Nebraska, but it cut into profits dramatically. “When you rely on delivery, your margins get shrunk because you’re paying them a chunk,” he said.

McDonald’s and other chains have long focused on data analysis and app development, capabilities they are now employing during the pandemic. Its digital drive-through menus allow restaurants to customize menu items for factors such as time of day, the weather and current restaurant traffic.

It is also testing tools for tailoring menus more specifically to customers as they arrive. So, if you have been ordering a Big Mac meal with fries and a large Sprite since the beginning of the pandemic, McDonald’s could begin identifying you through the app running on your phone and start displaying that meal more prominently when you pull up to the drive-through.

Not every McDonald’s franchise has flourished. But for those facing a cash crunch, the company put up nearly $1 billion to allow franchise owners to defer rent and royalty payments until their business returned, a luxury few other restaurant owners enjoy. “Because of our scale and financial stability, we were able to quickly provide franchisees with financial support when they needed it most,” Kevin Ozan, McDonald’s chief financial officer, told investors in November. Company spokespeople declined to comment further.

The result for McDonald’s shareholders has been a gift better than the plastic toy at the bottom of any Happy Meal. In October, shares of its stock reached an all-time high — up 27 percent since the beginning of March — and the company increased its dividend 3 percent.

Restaurant owner David Mainelli stands in front of the former location of his family’s restaurant, Julio’s, in Omaha earlier this month. The restaurant group has been a staple in the community since 1977, and announced they were closing their doors in June 2020. (Carley Scott Fields for The Washington Post)

The gulf between McDonald’s and most independent restaurants is staggering. Restaurant employment is down 17 percent during the pandemic, according to the Independent Restaurant Coalition, with more than 2 million restaurant workers out of a job heading into winter. Many of the owners that are permitted to remain open are doing so by slashing staff and costs and focusing on takeout as much as possible.

At Kayla’s Kitchen and Closet, located in tiny Park Falls, Wis., the menu offers soups, salads and a spicy blackberry bacon panini. Owner Kayla Myers also operates a clothing store next door offering Levi’s jeans, Minnetonka moccasins, children’s clothing and tuxedo rentals.

She said she has been boosting sales with Facebook posts. But she closed off half of her six tables for social distancing measures and cut hours. “You don’t have any point in opening if people can’t even come in,” she said.

After closing Julio’s this year, Mainelli sold the brand and became a writing instructor at local colleges. He and his wife gawk at the long lines of cars at McDonald’s, and he predicts the same fate for independent restaurants that locally owned bookstores faced when Amazon first arrived.

“The same thing is going to happen to the restaurants,” he said. “It’s going to be Olive Garden, Applebee’s and Chili’s. There are not going to be any independents.”

Incentive Programs—New and Existing Companies

Local programs

The city of Austin offers tax abatements, enterprise zone exemptions, public utility incentives, and financing programs for qualified new and existing companies. The Economic Development staff of the Greater Austin Chamber of Commerce can provide ongoing assistance to relocating companies, from initial inquiry to full employment. Chamber staff can act as area-wide resources for community presentations, initial interface with company employees, spousal employment assistance, residential real estate brokers/tours, special mortgage and banking programs, child care/elder care, and cultural acclimation.

State programs

The state of Texas offers a number of incentive programs to attract new and expanding businesses to the state. The Texas Economic Development Act of 2001 encourages large-scale manufacturing, research and development, and renewable energy by offering an eight-year reduction in property taxes. Other property tax incentives are offered to companies owning certain abated property and those that are located in specified areas known as reinvestment zones. The Texas Enterprise Zone Program offers sales and use tax refunds to companies that create jobs in certain economically distresses areas of the state. Other sales and use tax refunds are extended toward manufacturing machinery and equipment, with agricultural products and semiconductor components targeted in particular. Research and development expenditures may be qualified for franchise tax credits, as can businesses creating jobs or injecting capital into "strategic investment areas."

Job training programs

The Texas Workforce Commission (TWC) provides workforce development assistance to employers and jobseekers across the state through a network of 28 workforce boards. Programs for employers include recruitment, retention, training and retraining, and outplacement services for employees. TWC also administers the Skills Development Fund, a program that assists public community and technical colleges create customized job training for local businesses. In the 2000-2001 school year alone, the Center for Career and Business Development, operated by Austin Community College, trained more than 5,800 employees of local high technology companies. This college also developed the Robotics and Automated Manufacturing program to produce skilled technicians for such highly automated industries as automotive manufacturing, an industry targeted by the city for growth. The Greater Austin Chamber of Commerce and the city of Austin founded the Capital Area Training Foundation (CATF) as an industry-led, non-profit organization dedicated to establishing long-term education and workforce development solutions. CATF courses provide college credit, internships, industry tours, and guest speakers who help students make the connection between high school and the world of work.

Development Projects

The city of El Paso has been involved in extensive improvement projects since 2000, when a plan for specific "Quality of Life Capital Improvements" was approved to span a 10-year period. New zoo facilities were completed, and still underway are plans for a new $6.65 million History Museum building (construction began in 2004), and improvements to city parks and libraries. As part of that initiative, the city's 5-year plan for capital improvements begins in 2005 and includes specific projects such as new fire stations, additional library branches, new animal care facilities, new parks and recreation facilities, further renovations and improvements to the zoo, street improvements, airport improvements, and public transportation improvements. At the end of 2009, projected spending for the 5-year improvement plan is a massive $440,924,631.

Developments completed in 2004 included a new $27.4 million, 110,000 square foot wing at Thomason Hospital. The wing generated an additional 100 high-paying jobs and expanded the number of critical care beds at the hospital from 18 to 30. The new unit includes an ambulatory surgery unit, an emergency department observation unit, a critical care unit, and a new labor and delivery unit. After $9 million in renovations, the 60-year-old El Paso County Coliseum is bringing in record revenues additional seats and new air conditioning were part of the renovations.

Underway in 2005 were plans for a new golf course, federal courthouse, and restoration of a historic theatre. Slated for finish in 2006, the tentatively-named The Dunes at Butterfield Trail golf course will be a high-end course, designed by renowned golf course designer Tom Fazio. To be built near the airport, the course and its 8,800 square foot clubhouse will cost $11 million. Construction is expected to start in 2005 on the new downtown courthouse, with a budget of $63.4 million. The 8-story, 235,000 square foot courthouse will be built on two city blocks. Plans to restore the city's historic Plaza Theatre, at a cost of $25 million, began in 2005. An adjacent building will become the theatre's annex and will be converted into a restaurant on the first floor and a performing arts center, seating about 195 people, on the second floor.

Construction projects to the tune of $50 million were underway in 2005 at University of Texas at El Paso, including a new academic services building, biosciences building, a softball complex, an expansion of the engineering building, and a new research and business development complex. Projects in the planning stages in early 2005 include a new 5-level garage.

Economic Development Information: City of El Paso Department of Economic Development, 2 Civic Center Plaza, El Paso, TX 79901 telephone (915)533-4284 fax (915)541-1316

Commercial Shipping

Chattanooga is located at the crossroads of several major U.S. highways, including Interstates 75, 24, and 59. The city is within one day's drive of nearly one-third of the major U.S. markets and population, and within 140 miles of Nashville, Atlanta, Knoxville, Huntsville, and Birmingham. Chattanooga is the distribution center for the region that includes southeast Tennessee, northwest Georgia, southwest North Carolina, northeast Alabama, and parts of several neighboring states. More than 70 motor freight lines are certified to transport shipments in the area. Two ports—the Port of Chattanooga and Centre South Riverport𠅊re within city limits. Chattanooga remains an important port as a result of the Tennessee Valley Authority's system of locks and dams, and the Tombigbee waterway, which saves days, miles, and dollars on shipments to and from ports along the Ohio and Mississippi Rivers and the Gulf of Mexico. Freight rail transportation is provided by divisions of the CSX Transportation system and the Norfolk Southern Railway. Air cargo service carriers operate out of Chattanooga Metropolitan Airport/Lovell Field.

Labor Force and Employment Outlook

Experienced workers are available in St. Louis. During the 1990s thousands of jobs were lost as major employers downsized, moved out, or merged. In response to the state and nation-wide economic downturn of the early 2000s, the Missouri state legislature has passed several legislative bills to stimulate economic growth and decrease unemployment. The state as a whole continues to experience stability and growth, recognizing four times the national growth rate in the manufacturing sector. In the northern metro St. Louis region, several areas show strong momentum with St. Charles, Warren, and Franklin counties ranked as top performers. According to a Missouri Department of Economic Development news release in April 2005, St. Louis also continues to experience decreasing unemployment and increasing employment growth. In November 2004, it was reported that the city experienced the second fastest job growth year-to-year for the nation. Main industries in the St. Louis area include: aviation, biotechnology, chemicals, electrical utilities, food and beverage manufacturing, refining, research, telecommunications, and transportation.

The following is a summary of data regarding the St. Louis metropolitan area labor force, 2004 annual averages.

Size of non-agricultural labor force: 1,322,800

Number of workers employed in . . .

natural resources and mining: 80,500

manufacturing: 144,700

trade, transportation and public utilities: 253,200

financial accounting: 77,600

professional and business services: 179,800

educational and health services: 195,700

leisure and hospitality services: 136,900

other services: 58,000

Average hourly earnings of production workers employed in manufacturing: $21.90

Unemployment rate: 6.3% (February 2005)

Largest employers Number of employees
BJC Health Systems 21,468
Boeing International Defense Systems 15,500
Scott Air Force Base 12,600
Washington University in St. Louis 12,324
Wal-Mart Stores 12,250
SSM Health Care 11,951

Largest employers Number of employees
U.S. Postal Service 11,447
Schnuck Markets, Inc. 10,800
SBC Communications. 9,250


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Largest Companies In Brazil

According to the 2017 Forbes Global 2000 List, Itaú Unibanco is the biggest company in Brazil with $419.9 billion in assets and $79.2 billion in market value. The company is headquartered in Sao Paulo. Banco Bradesco which is headquartered in Osasco, SP is the second largest company in Brazil with $362.4 billion in assets and $53.5 billion in market value. The third largest company in Brazil with $430.6 billion in assets and 2$29 billion in market value is Banco do Brazil which is headquartered in Brasilia. All of the top three companies belong to the banking industry. Other major companies in the country include Vale, Petrobras, Eletrobas, Itausa, JBS, Ultrapar, and Cielo among others. Of the top twenty largest companies in Brazil 10 are headquartered in Sao Paulo, 3 in Rio de Janeiro while the rest are distributed in other cities

Commercial Shipping

With an international airport, rail hub, seaport, and junction of three freeways within ten miles of downtown, Sacramento is ideally situated for commercial shipping. Inland 85 miles from San Francisco, the Port of Sacramento admits international ocean-going vessels through a deep-water channel connecting it with San Francisco Bay. The port's specialty is handling dry-bulk cargos, and it utilizes the most modern equipment on the West Coast for that purpose. The city is served by three major rail lines. Union Pacific Railroad is the largest railroad in North America its J. R. Davis Yard, in Sacramento County, is the largest rail facility on the west coast. More than 500 motor freight carriers serve the Sacramento area.

Types of business associations

Business associations have three distinct characteristics: (1) they have more than one member (at least when they are formed) (2) they have assets that are legally distinct from the private assets of the members and (3) they have a formal system of management, which may or may not include members of the association.

The first feature, plurality of membership, distinguishes the business association from the business owned by one individual the latter does not need to be regulated internally by law, because the single owner totally controls the assets. Because the single owner is personally liable for debts and obligations incurred in connection with the business, no special rules are needed to protect its creditors beyond the ordinary provisions of bankruptcy law.

The second feature, the possession of distinct assets (or a distinct patrimony), is required for two purposes: (1) to delimit the assets to which creditors of the association can resort to satisfy their claims (though in the case of some associations, such as the partnership, they can also compel the members to make good any deficiency) and (2) to make clear what assets the managers of the association may use to carry on business. The assets of an association are contributed directly or indirectly by its members—directly if a member transfers a personally owned business or property or investments to the association in return for a share in its capital, indirectly if a member’s share of capital is paid in cash and the association then uses that contribution and like contributions in cash made by other members to purchase a business, property, or investments.

The third essential feature, a system of management, varies greatly. In a simple form of business association the members who provide the assets are entitled to participate in the management unless otherwise agreed. In the more complex form of association, such as the company or corporation of the Anglo-American common-law countries, members have no immediate right to participate in the management of the association’s affairs they are, however, legally entitled to appoint and dismiss the managers (known also as directors, presidents, or administrators), and their consent is legally required (if only pro forma) for major changes in the company’s structure or activities, such as reorganizations of its capital and mergers with other associations. The role of a member of a company or corporation is basically passive a member is known as a shareholder or stockholder, the emphasis being placed on the individual’s investment function. The managers of a business association, however, do not in law comprise all of the persons who exercise discretion or make decisions. Even the senior executives of large corporations or companies may be merely employees, and, like manual or clerical workers, their legal relationship with the corporation is of no significance in considering the law governing the corporation. Whether an executive is a director, president, or administrator (an element in the company or corporation’s legal structure) depends on purely formal considerations whether the executive is named as such in the document constituting the corporation or is subsequently appointed or elected to hold such an office, the person’s actual functions in running the corporation’s business and the amount of power or influence wielded are irrelevant. Nevertheless, for certain purposes, such as liability for defrauding creditors in English law and liability for deficiencies of assets in bankruptcy in French law, people who act as directors and participate in the management of the company’s affairs are treated as such even though they have not been formally appointed.