U.S. Firms Add Jobs, but Mostly Overseas

By SCOTT THURM

Thirty-five big U.S.-based multinational companies added jobs much faster than other U.S. employers in the past two years, but nearly three-fourths of those jobs were overseas, according to a Wall Street Journal analysis.

Those companies, which include Wal-Mart Stores Inc., WMT +0.14%International Paper Co., Honeywell International Inc. and United Parcel Service Inc., boosted their employment at home by 3.1%, or 113,000 jobs, between 2009 and 2011, the same rate of increase as the nation's other employers. But they also added more than 333,000 jobs in their far-flung—and faster-growing— foreign operations.

The biggest U.S. companies added foreign jobs at three times the rate they added domestic jobs, according to a WSJ analysis. Scott Thurm has details on The News Hub. Photo: AP

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The companies included in the analysis were the largest of those that disclose their U.S. and non-U.S. employment in annual securities filings. All of them have at least 50,000 employees. Collectively, they employed roughly 6.4 million workers world-wide last year, up 7.7% from two years earlier. Over the same period, the total number of U.S. jobs increased 3.1%, according to the Labor Department.

The data show that global companies, aided by overseas revenue, are faring better than purely domestic companies during the economic recovery. Nearly 60% of the revenue growth between 2009 and 2011 at the companies in the Journal's analysis came from outside the U.S.

Partly as a result, these companies are more likely to focus their resources and people outside the U.S. The nation's largest private-sector employer, Wal-Mart, added 100,000 jobs outside the U.S. last year; its head count in the U.S. has been flat at 1.4 million since 2007.

..

Economists who study global labor patterns say companies are creating jobs outside the U.S. mostly to pursue sales there, and not to cut costs by shifting work previously performed in the U.S., as has sometimes been the case.

"If you want to capture market share in China, you're going to have to hire lots of locals," says Arie Lewin, a professor at Duke University's Fuqua School of Business who has studied outsourcing and offshoring. "You just can't export that stuff."

Jobs added overseas "are not necessarily at the expense of U.S. workers," adds Martin Baily, of the Brookings Institution, a former economic adviser to President Bill Clinton. Mr. Baily says it is "almost inevitable" that the biggest and most successful U.S. companies would look beyond the nation's borders.

Where American companies are creating jobs is a hot political issue. President Barack Obama has proposed tax benefits for companies to create jobs in the U.S., and tax penalties for those with large operations in other countries. His tax-overhaul plan—which has no real chance of passing Congress this year—would require, for the first time, that U.S. companies operating overseas pay a minimum tax on their foreign earnings.

Republicans, including presumptive presidential nominee Mitt Romney, say excessive taxes and regulations are driving jobs overseas. Mr. Romney has suggested cutting the nation's 35% corporate tax, which he calls, "among the highest in the industrial world," to 25%, lower than the 28% Mr. Obama has proposed.

Of the 35 companies in the analysis, 16 added jobs both in the U.S. and abroad, while six of them cut both domestic and international jobs.

Seven companies reduced their workforces in the U.S., while expanding them elsewhere. They include International Paper, which has restructured as Americans use less office paper and demand rises overseas.

At the end of 2008, more than two-thirds of its 61,700 employees at the 114-year-old industrial stalwart were in the U.S. Since then, International Paper has closed U.S. mills and bolstered its packaging division through acquisitions in the U.S. and Asia.

Its total workforce—61,500 at the end of last year—hardly changed. But the location of those employees changed a lot, with 8,000 fewer in the U.S. and 8,000 more in other countries. So did International Paper's revenue.

Sales in the U.S. and Europe in 2011 were nearly unchanged from 2008. But revenue from Asia more than doubled over the period to $1.8 billion.

"We focused on capturing emerging-market growth of our core product lines by investing globally, while in the U.S., we doubled down in corrugated packaging where we see real opportunity," says Tom Ryan, an International Paper spokesman. He says the company's U.S. workforce has grown in 2012 with its acquisition of Temple Inland Inc.

The Journal's results are consistent with more extensive surveys by the U.S. Commerce Department, which found that U.S.-based multinational companies added jobs in the U.S. between 2004 and 2010, but added far more jobs overseas. That partly reversed the trend between 1999 and 2004, when the department said U.S.-based multinationals cut jobs in the U.S. while adding them overseas.

The biggest job losses in the earlier period were among manufacturers. More recently, some big manufacturers, including Caterpillar Inc. CAT +0.16%and General Electric Co., GE +0.82%have been expanding U.S. operations.

In its earnings report Wednesday, Caterpillar said it had added 6,500 U.S. jobs in the past year, along with 7,200 outside the U.S., to meet strong global demand for its mining equipment.

Excluding its NBCUniversal unit, which it sold last year, GE says it has added 14,000 jobs in the U.S. since 2009. GE has expanded U.S. factories that make appliances, locomotives and other products.

Overall, U.S. manufacturers have added 470,000 jobs since January 2010, after cutting nearly five million jobs over the prior decade.

Other companies report stable U.S. employment as they expand abroad. Diversified manufacturer Honeywell added 11,000 jobs outside the U.S. over the past two years, while U.S. employment shrank to 53,000, from 54,000. Over that period, Honeywell's overseas sales rose 28%, more than twice as fast as the 12% increase in U.S. sales.

A Honeywell spokesman says the company expects half of its revenue growth in the next five years to come from emerging markets such as China and India. "We must invest in building strong leadership teams and [research and development] and production capabilities where the growth is and our customers are," he says.

Historically, economists say, overseas hiring supported U.S. jobs in areas like sales, engineering and management. When Wal-Mart hires employees for new stores in China, it also needs more human-resources personnel at its headquarters in Arkansas, says Matthew Slaughter, associate dean of the Tuck School of Business at Dartmouth College and a former economic adviser to President George W. Bush.

But Mr. Slaughter and Mr. Baily, the ex-Clinton adviser, say they worry that the relationship is weakening as U.S. companies shift more investment abroad. The Commerce Department estimates that roughly a third of spending on plants and equipment by U.S.-based multinationals went outside the U.S. in 2009, up from one-fourth of the total in 1999.

Publicly traded companies are required to disclose their total number of employees in their annual report filed with the Securities and Exchange Commission. The SEC doesn't require them to disclose how many of the jobs are in the U.S. An SEC spokesman says the rule probably dates from 1970s. The spokesman says he knows of no discussions about requiring disclosure of U.S.-based jobs.

At some companies, U.S. jobs are falling prey to technology, as well as global business trends. UPS delivered a record average of 15.8 million packages a day last year, slightly more than its previous record of 15.7 million in 2007. But shipping patterns changed: international traffic rose 26% from 2007, while shipments in the U.S. declined 3%.

UPS reorganized its U.S. operations to eliminate some management jobs and revise its route map. It also installed keyless remote entry systems on all its U.S. trucks. UPS says the keyless systems save drivers three seconds at every stop, the equivalent of six minutes per driver per day, or $70 million a year. As a result, it can handle more U.S. shipments "without adding as many people as we might overseas," says spokesman Norman Black.

With its streamlined operations, and reduced domestic traffic, UPS cut its domestic workforce by 17,000 employees over the past two years, to 323,000. Outside the U.S., it added 7,000 jobs, to 75,000, not counting its planned acquisition of TNT Express NV TNTE.AE +0.05%of the Netherlands.

Those figures exclude seasonal hiring, which hit 55,000 jobs at the peak of the 2011 holiday season.

"This is a business you can only go so far with technology," Mr. Black says. "At a certain point, when volume starts to climb, we do add people

Consumer Price Rise Puts Fed in Quandary

Consumer prices rose 2.7% in March from a year ago,
presenting a quandary for Federal Reserve officials who say their mission is to
keep the inflation rate lower.

The Fed has been predicting since the 2008 crisis that
immense economic slack—in the form of unemployed workers, vacant homes and idle
factories— would hold inflation down because it would make it more difficult
for firms to raise prices or workers to win wage increases. But inflation has
repeatedly moved above the Fed's expectations during the recovery.

Fed officials have said they would consider another round of
bond-buying, known as quantitative easing, to bring down long-term interest
rates if the recovery falters. They continue to expect inflation to slow
because of underused resources such as idled plants. But if it remains above
2%, it could make the Fed less willing to do any more to boost economic growth.
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The Labor Department reported Friday its consumer price
index rose 0.3% in March from February and has advanced at a 3.7% annual rate
in the past three months after slowing late last year. Rising energy prices
were a primary factor, with gasoline costs up 9% in March from a year earlier.
Inflation has slowed from higher levels—as the Fed predicted last year—and
other measures of inflation are a bit tamer. For example, the Fed's preferred
yardstick, the Commerce Department's personal consumption expenditure price
index, was up 2.3% in February from a year earlier. Moreover, measures that
exclude food and energy are lower.

The Fed says its goal is to keep inflation at 2% in the long
run. It has predicted consumer prices would settle at or below that rate during
much of the economic recovery. In January, for instance, officials forecast
inflation between 1.4% and 1.8% by year's end. They will update that forecast
at their next policy meeting April 24-25. The low-inflation expectation also
underpins their decision to hold short-term interest rates near zero for years
to come.

In recent years, Fed officials have largely seen jumps in
gasoline prices as temporary. They correctly predicted last year that oil and
other commodities prices would settle down after jumping in early 2011. But
inflation's recent return above 2% has reignited a broader debate inside the
central bank about whether factors other than short-term bursts of energy costs
might be at play.

Some officials argue that there isn't as much slack in the
economy as is commonly believed, and thus inflation pressures have been
stronger than expected. The recession and financial crisis, this group of
officials argues, left structural problems in some markets that are creating
price pressures.

Housing is one example. Millions of homes remain unoccupied
five years after the housing bust, representing a large stock of unused
capacity that should be putting substantial downward pressure on housing costs.
But many people have opted to rent where supply is tight, in part because of
under-building of rentals during the home-ownership boom.

Associated Estates Realty Corp., a 53-property apartment
owner based in Richmond Heights, Ohio, has a 97% occupancy rate. "There
hasn't been a lot of new product built in the last four or five years, and we
have more renters coming into the pool," said Jeffrey Friedman, the
company's chief executive. The firm expects to raise rents 4% to 5% this year
to an average rate of about $1,000 a month.

Nationwide, rental costs were up 2.5% from a year earlier in
March, the Labor Department said Friday. A wing of inflation-wary officials at
the Fed see this kind of example as a reason to worry the Fed's policies are
fanning inflation pressures.

"The economy has experienced both a reduction in the
demand for goods and damage to its productive capacity," Narayana
Kocherlakota, president of the Minneapolis Fed, said in a speech in Minnesota
this week. "It does not appear that demand is significantly below the
productive capacity of the United States." Because of that, inflation
hasn't receded as much as the Fed forecast, he argues.

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Wal-Mart is still expanding in China, despite higher food
prices and rising labor costs. The WSJ's Deborah Kan and Laurie Burkitt speak
to Wal-Mart Asia CEO Scott Price.
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Many others in the central bank, including the Fed's most
powerful decision makers, disagree with Mr. Kocherlakota, who declined to
comment for this story. These officials believe there is still a great deal of
spare capacity in the economy which will hold inflation down despite temporary
spikes. High unemployment—at 8.2% in March, well above its long-run average of
less than 6%—is their key piece of evidence.

"There is still slack in the U.S. economy, and this is
really the important thing to focus on," New York Fed President William
Dudley told students at Syracuse University Friday. Because of that, he said he
expects inflation to fall below 2% by next year.

He added that new efforts by the Fed to spur growth would
"absolutely" be considered if the economy shows signs of faltering
and inflation remains well-behaved. His camp of officials argues that inflation
is not falling more in part because consumers and businesses have become
conditioned by 30 years of inflation stability to expect prices to move
predictably.

During the 1970s, oil-price jumps spurred inflation fears,
prompting workers to demand higher wages and companies to raise prices in
anticipation. Today, in contrast, top Fed officials believe that stable-price
expectations have prevented such anticipatory moves, meaning inflation doesn't
rise by very much.

Fed researchers have been wrestling with this question, too.
Fed staff at the central bank's last policy meeting in March revised downward
their estimates of the economy's potential output, a slight nod to the
Kocherlakota argument.

But the revisions were small and the staff argued to
officials that there still are lots of underused assets holding back inflation,
minutes of the Fed's March meeting show.

In War Against Iran, U.S. Firepower Would Vie With Guerrilla Tactics

By NATHAN HODGE
Adm. Jonathan Greenert made an important observation last
fall from the tower of the aircraft carrier USS John C. Stennis while in the
Strait of Hormuz on the southern coast of Iran, the world's busiest
oil-shipping lane.

The chief of naval operations was sailing in a flotilla that
showed off the Navy's overwhelming power to strike at long distances: F-18
fighter jets, Tomahawk cruise missiles and deck guns able to fire a shell 15
miles.


As concerns grow over Iran's nuclear program, the U.S. is
beginning to develop a plan in the event that military intervention is
necessary. Reports WSJ's Nathan Hodge, Iran has an inferior military that, in
many ways, could make it more dangerous.
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Yet in the claustrophobic waters of the strait, which
narrows to just 24 miles, Adm. Greenert noted that all that long-range
firepower could potentially be countered by the Iranian patrol boats that came
out to track the U.S. warships. Faced with a fight in close quarters, Adm.
Greenert told a Senate panel recently, "You also may need a sawed-off
shotgun."

As the U.S. and other Western powers prepare to meet
Saturday in Istanbul with Iran to resume negotiations over its nuclear program,
the U.S. military is sharpening its contingency planning. Advocates of peaceful
engagement say economic sanctions against the Islamic regime are starting to
bite, and are hopeful that Tehran will give up its uranium-enrichment program.
Iran says the program is for use in electricity generation, but intelligence
services say the regime is close to developing the capability of building a
nuclear weapon. The Obama administration plays down the chances of a
breakthrough at this meeting, the first face-to-face encounter between US. and
Iranian diplomats in more than a year, saying the best outcome may be agreement
for a second round.

Should all else fail and the U.S. or Israel decide to attack
Iran, say analysts, they would face a miniature version of the U.S. military,
circa 1975—sustained, barely, by a world-wide spare-parts bazaar. Experts say
the Islamic Republic's claims of advanced weaponry—such as armed,
Predator-style drones—are mere boasts.

Spotlight on Iran
Take a look at key dates in the U.S.-Iran relationship and
recent international sanctions, details on major players, a map of major
nuclear sites, and possible naval strategies.

Military officers and defense analysts say the U.S. could
quickly overwhelm Iran's air defenses, leaving evenly spaced bomb craters, for
example, on runways to disable Iranian air bases. Pinpoint airstrikes would
attempt to destroy all Iran's known nuclear facilities—a goal complicated by
the fact that the regime has buried some of its production sites. The Pentagon
is rushing to upgrade its largest conventional bomb to better penetrate
fortified underground facilities.

Naval officers believe Iran would retaliate by waging the
naval equivalent of guerrilla warfare in the Persian Gulf by mining the Strait
of Hormuz or swarming U.S. naval vessels with small boats.

Such threats, so-called asymmetric warfare, could prove as
dangerous and unpredictable as roadside bombs in Afghanistan or Iraq, with an
low-cost mine potentially crippling or sinking a billion-dollar warship.

In such a scenario, the U.S. military would face a
time-consuming and often perilous effort to reopen shipping lanes to
international oil traffic.

"They have stayed true to their stripes," said a
senior military officer in the Middle East. "They have always taken an
asymmetric approach, going back to the '80s."

Before the 1979 Islamic Revolution, Iran had among the most
formidable conventional arsenals in the region, equipped with modern weaponry
sold to the Shah by U.S. defense firms.

Iran's military was later battered during eight years of war
with Iraq in the 1980s. Iran has since cobbled together an array of
weapons—some homegrown but much acquired from China, North Korea and the former
Soviet Union.
Plane captains stood by as a U.S. helicopter took off from
the flight deck of the aircraft carrier USS Abraham Lincoln in the Strait of
Hurmuz in February.
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Iran has already threatened to block the Strait of Hormuz in
response to tighter international sanctions. Military analysts now estimate
Iran has amassed as many as 5,000 naval mines, ranging from rudimentary devices
that explode on contact, to high-tech mines that, tethered to the sea floor,
can identify the acoustic signature of specific types of ships and explode only
under the richest targets.

Scott Truver, a mine warfare analyst, said finding and
clearing Iranian mines would be a cat-and-mouse game for the Navy. Mine
warfare, he said "is as tough and dangerous as the IEDs on land were.
Mines are equally hard to detect, if not harder."

The U.S. Navy knows firsthand. In April 1988, the frigate
USS Samuel B. Roberts struck an Iranian mine, which blew a hole the size of a
pickup truck in the hull, and nearly sank the ship. The U.S. retaliated by
attacking two Iranian oil platforms and sinking several Iranian vessels.

Among the newest threats are sophisticated torpedoes Iran
acquired from Russia that can home in on the turbulence of a ship's wake and
aren't easily fooled by the decoys commonly used by warships.

Military planners worry about torpedoes launched from Iran's
three Russian-built Kilo submarines, as well as approximately four North Korean
Yono-class mini-submarines, the class of vessel that sank a South Korean
warship in 2010, killing 46 sailors.

Iran's mini-subs cannot range far or stay long under water.
But in the close quarters of the Strait of Hormuz, they could be easily
positioned for attacks.

Iran also is known for its fleet of hundreds of small
speedboats that can carry everything from machine guns to large antiship missiles.
While a single speedboat may not imperil a warship, a swarm of small boats
could overwhelm a larger ship's defenses. In early 2008, a cluster of Iranian
patrol boats sailed close to a convoy of U.S. warships. No shots were fired,
but the provocation underscored potential dangers.

Conventional naval vessels aren't the only concern. Iran can
deploy mines or even missiles from merchant vessels, or dhows. Such threats
would be nearly impossible to spot in the crowded shipping lanes of the Persian
Gulf.

Ten years ago, the Rumsfeld-era Pentagon held a top-secret
war game to test a Persian Gulf scenario. A maverick Marine Corps general, Lt.
Gen. Paul Van Riper, led the "Red Team," the fictional Iranian
adversary. Gen. Van Riper relayed orders to his front-line troops by motorcycle
messenger, so the U.S. could not hack into his networks; he sent out speedboats
armed with missiles and explosives to swarm U.S. warships. After the fictional
smoke cleared, more than a dozen U.S. warships were at the bottom of the Persian
Gulf.
That exercise, known as Millennium Challenge, was a wake-up
call about the potential of asymmetric warfare. The Navy has since unveiled
plans to boost the defenses of its ships in the Gulf.

Adm. Greenert said the Navy is interested in new robotic
underwater vehicles that can search for mines and submarines and improved
Gatling guns to counter Iranian small-boat attacks. The Navy has rushed to test
and field a new anti-torpedo torpedo—a weapon that would potentially counter
Iran's more sophisticated torpedoes.

The Navy recently announced plans to double its fleet of
Avenger-class minesweeping ships in the Persian Gulf.

The U.S. military is taking other steps. Earlier this year,
the Pentagon unveiled plans to refit a transport ship as a staging platform for
different kinds of missions, from countering mines to launching remotely
piloted aircraft. It also could be used as a platform for launching commando operations
with small patrol boats to intercept Iranian vessels, escort ships or protect
oil platforms.

Beyond the waters of the Persian Gulf, military planners
worry about Iran's expanding arsenal of ballistic missiles, built with North
Korean cooperation and know-how. The Defense Department estimates Iran has
around 1,000 short- and long-range missiles that can travel from 90 to 1,200
miles, the largest inventory in the Middle East.

The longer-range Shahab-3, which could reach Israel, has
received the most attention. But Iran's shorter-range Scuds are on mobile
platforms, allowing them to more easily evade detection.

Within striking distance of Iranian missiles are U.S. Army
installations in Kuwait, a command post in Qatar, and the U.S. Fifth Fleet in
Bahrain.

While relatively inaccurate, those missiles may have the
potential to strike panic or provoke a wider war if they hit U.S. allies in the
region. A retired Navy officer said the missiles don't have sophisticated
targeting but could score a blind hit on a Saudi oil field, a Qatari gas
production facility or a city in the United Arab Emirates. "Face it, how
accurate does it need to be?" he said.

Officials with Iran's elite Revolutionary Guards threaten
reprisals against any country used as a launch pad for strikes against Iran. A
conflict with Iran, then, could be a real-world test for U.S. missile-defense
plans. As part of a shift from Bush-era missile defense, which focused on defending
U.S. territory from a long-range missile attack, the Obama administration has
sought defenses against shorter-range Iranian missiles targeting U.S. troops
overseas, as well as allies.

There is also a presumed terror threat. Iran's Ministry of
Intelligence and Security could activate so-called sleeper agents for acts of
sabotage or terror attacks, according to U.S. officials. Militants sponsored or
trained by Iran might attack U.S. diplomatic facilities in Iraq or bases in the
Middle East.

"The assumption is that there are sleeper cells all
around that would be activated in some way," said retired Marine Corps
Gen. Anthony Zinni, the former head of U.S. Central Command, the U.S. military
headquarters that oversees the region.

Military professionals generally agree that U.S. forces
would quickly overwhelm Iran's air defenses. Former Air Force Chief of Staff
Gen. T. Michael Moseley, an architect of the shock-and-awe air campaign against
Saddam Hussein in 2003, said a U.S. air campaign could inflict "a sense of
strategic paralysis" on Iran's air defenses by targeting
command-and-control facilities, early warning radars and airfields.

But, Gen. Moseley said, Iran's air-defense system—comprised
of mostly older U.S. Hawk missiles and some surface-to-air missiles of Soviet
design—was "not a trivial" threat to U.S. aircraft. "Anything
that shoots at you merits some respect," he said.

Military officials said Iran's forces shouldn't be entirely
discounted. In the late 1970s, the Iranians "had all the latest and
greatest stuff" from the U.S., said Richard Brown, a Navy fighter pilot
who helped train Iranian aviators in Isfahan.

Iran maintains a fleet of Vietnam-era F-4 and F-5 jets,
according to defense analysts; its helicopter fleet, which includes versions of
the Chinook, the Cobra and the Huey, would look familiar to a U.S. military
veteran.

It still flies the F-14 Tomcat, made popular in the movie
"Top Gun." Iran was the only foreign military customer for the F-14,
once a high-end U.S. fighter.

Today, many of these aircraft are close to the end of their
service life. Aviation experts say Iran keeps them airworthy by cannibalizing
and reverse-engineering spare parts. Iran bought nearly 80 of the F-14s.
Analysts believe around 25 can still fly. By comparison, Saudi Arabia's fleet
of U.S.-made F-15 fighters outnumbers Iran's F-14s by about six to one.

Veterans of the 1970s training programs in Iran doubt the
Iranians have maintained enough parts to keep its U.S.-made aircraft in flying
condition. Ric Morrow, a naval aviator who worked on the Iranian F-14 training
program, said what remained of the Iranian air force would be "no
contest" for the U.S.

The air-to-air weapons built for Iran's aircraft also may
have outlived their shelf life. Steve Zaloga, a missile expert at the Teal
Group, a defense consultancy, said the solid rocket motors and batteries go bad
over time.

Some evidence suggests, however, that Iran operates a global
procurement network to buy spare U.S. military parts. Since 2007, the U.S. Justice
Department has handled more than two dozen export and embargo-related criminal
prosecutions related to military spare parts destined for Iran.

Clif Burns, an export attorney at the law firm Bryan Cave in
Washington, D.C., tracks such cases. He said Iran appeared to give shopping
lists to independent contractors who buy parts in the world's aviation market.
"The procurement effort is pretty large and enforcement alone isn't able
to stop the flow of aircraft parts into Iran," he said.

FOR BIG COMPANIES, LIFE IS GOOD--Large Corporations Emerge from Recession Leaner, Stronger—and Hiring Overseas

Big U.S. companies have emerged from the deepest recession
since World War II more productive, more profitable, flush with cash and less
burdened by debt.

An analysis by The Wall Street Journal of corporate
financial reports finds that cumulative sales, profits and employment last year
among members of the Standard & Poor's 500-stock index exceeded the totals
of 2007, before the recession and financial crisis.


Companies that survived the recession are ahead of where
they were in 2007 in terms of sales, profits and employment, but many of the
jobs they've added are overseas, Scott Thurm reports on the News Hub. Photos:
AP/AP/Reuters
.
Deep cost cutting during the downturn and caution during the
recovery put the companies on firmer financial footing, helping them to
outperform the rest of the economy and gather a greater share of the nation's
income. The rebound is reflected in the stock market, with the Dow Jones
Industrial Average at a four-year high.

"U.S. companies became leaner, meaner and
hungrier," said Sung Won Sohn, a former chief economist at Wells Fargo WFC
-3.41%& Co.,

The performance hasn't translated into significant gains in
U.S. employment. Many of the 1.1 million jobs the big companies added since
2007 were outside the U.S. So, too, was much of the $1.2 trillion added to
corporate treasuries. Two-thirds of Apple Inc.'s AAPL -2.82%$82 billion in cash
and marketable securities as of Sept. 30 was held by foreign subsidiaries, for
example.

RECESSION AND REBOUND
Most big U.S. companies emerged from the recession more
productive, as measured by revenue and net income per employee, and holding
more cash. See how individual companies fared on those measures during the
recession and recovery.

The Labor Department said Friday that employers added fewer
jobs than expected in March, reigniting concerns that the economic recovery
would stall again. Much of Europe is in recession and growth is slowing in
China. Even before Friday's report, analysts expected earnings from S&P 500
companies to rise 9% this year, down from 15% last year.

Overall, though, the Journal found that S&P 500
companies have become more efficient—and more productive. In 2007, the
companies generated an average of $378,000 in revenue for every employee on
their payrolls. Last year, that figure rose to $420,000.

Consider Agilent Technologies Inc., A -2.99%a Santa Clara,
Calif., maker of scientific equipment, that was suffering from the shock of the
economic crisis. In 2009, the company laid off 4,000 employees, or 20% of its
work force, as revenue plunged 22% and the company posted a loss.

.
When revenue began to rebound in 2010, Agilent resumed
hiring—but primarily outside the U.S., in countries such as China and Brazil.
Last year, Agilent's revenue was 22% higher than in 2007, boosted by its 2010
acquisition of Varian Inc. But Agilent employs fewer people than in 2007, even
after absorbing Varian's work force. And Agilent had more than $3.5 billion in
cash on Oct. 31, 2011, nearly twice as much as four years earlier.

But hiring? That's another matter. Chief Executive Bill
Sullivan says he remains "very, very cautious" about hiring while the
recession's scars are fresh. "That's a lesson current leaders of industry
will not forget," he says.


The Journal's analysis is based on data gathered by Standard
& Poor's Capital IQ from corporate filings with the Securities and Exchange
Commission. The analysis includes the 468 companies of the current S&P 500
that have reported financial results for last year.

The analysis also found a rebound in capital spending, that
is, spending on new plants and equipment. Agilent, for example, boosted capital
spending more than 50% last year, to $188 million from $121 million.

For the S&P companies as a group, capital expenditures
rose 19% last year, more than double the 9% increase in 2010. The sharper
increase brought capital spending back to 5.8% of total revenue for the
companies in the Journal's analysis, equal to its level in 2007.

Analysts say the recovery is favoring big companies, like
those in the Journal's analysis. Many smaller companies are struggling to stay
competitive or to obtain financing.

Big U.S. companies have emerged from the deepest recession
since World War II more productive, more profitable, flush with cash and less
burdened by debt.
.
"It's a real winners-versus-losers phenomenon,"
says John Graham, a professor of finance at Duke University. Mr. Graham directs
a quarterly survey of chief financial officers, with CFO Magazine. The March
survey found that finance chiefs of companies with revenue of more than $1
billion were significantly more optimistic about the U.S. economy and their own
companies' outlooks than their counterparts at smaller companies.

The Journal's analysis may overstate the health of American
corporations by looking only at the companies that survived the recession.

Some of the growth in revenues and earnings resulted from
mergers. The analysis excludes former titans like Lehman Brothers Holdings Inc.
and Circuit City Stores Inc., which failed or Anheuser-Busch Cos., which was
acquired by a foreign rival.

Many companies continue to struggle. Revenue at home
builders is less than half the peak levels from the last decade. Medical-device
maker Boston Scientific Corp. BSX -3.35%has shed more than 3,000 jobs since
2007, but its revenue continues to decline and the company posted losses in
four of the past five years.

A Boston Scientific spokesman declined to comment.

One reason for optimism among bigger companies is their
global reach, which helped many cushion the impact of the recession.

Revenue at McDonald's Corp. MCD -0.69%and Starbucks Corp.
SBUX +1.72%declined in 2009, then rebounded on strong sales outside the U.S. At
McDonald's, international revenue rose 24% since 2009, three times as fast as
in the U.S. At Starbucks, international revenue jumped 35% the past two years,
more than double the 14% increase in the U.S.
.The two consumer companies also boosted profit margins by
closing locations during the recession and adding menu items. Such moves are
spawning considerable amounts of cash. McDonald's spent $24 billion to pay
dividends and repurchase shares since 2007—and still boosted its cash holdings
18%, to $2.3 billion.

Foreign corporations also are looking at the U.S., pushing
American companies to be more nimble globally. When Chief Executive Paul Bisaro
arrived at generic-drug maker Watson Pharmaceuticals Inc. WPI +0.32%in 2007,
virtually all of its manufacturing was in the U.S. Mr. Bisaro bought a U.K.
drug maker, closed factories in North America and moved half of Watson's
manufacturing to India, in part to be closer to non-U.S. customers.

Mr. Bisaro kept four U.S. plants to make Watson's most
sophisticated products, installing new equipment and retooling the
manufacturing process. In 2007, the company's Davie, Fla., factory used 866
employees to crank out one billion extended-release pills and capsules. Last
year, 937 workers produced 2.5 billion items.

Watson was sheltered from the worst of the recession—its
annual revenue never declined—and could add employees while becoming more
efficient. Other companies didn't have that luxury.

Revenue at Union Pacific Corp. UNP -0.74%plunged 21% in 2009
as the recession cut railroad shipments. Union Pacific idled locomotives, shut
rail yards and eliminated more than 4,000 jobs—roughly 10% of its work force.
By last year, revenue rebounded to 20% above the 2007 level. But Union Pacific
still employs 10% fewer workers than before the recession.

A Union Pacific spokesman says the company plans to increase
capital expenditures this year " to focus on customers' logistics needs as
well as our own operating efficiency."

Such efficiency moves are essential for companies. But
economists warn that improved efficiency and continued executive caution are
slowing the recovery.

"What's best for an individual firm may not be best for
the overall economy," says Lynn Reaser, chief economist at Point Loma
Nazarene University in San Diego.