Call it the Godzilla economy of the 1990s: A trend towards bigness is increasingly redefining many of the United States' most important industries.
In the past, merger waves were often marked by agglomeration - chemical companies buying printing plants, auto firms snapping up computer service providers, and other mixed-industry marriages.
But the 1990s now appear to be an age of frenzied conglomeration, with like firms scrambling to consolidate into market-bestriding supercompanies.
From banking to vehicles to telecommunications, managers now appear to see size as the key to survival, say analysts. In today's global, lightly regulated economy, many industries may be dominated more and more by huge low-cost producers.
"Everything is viewed in terms of economy of scale ... in autos, or any number of industries. Unless you are an integrated global company you could be left behind," says David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan.
To understand the importance of what's happening to the US and world economy, consider just the merger deals announced in the last few weeks.
The $67-billion Travelers Group-Citicorp nuptials announced April 6 is the biggest proposed merger corporate history. The melding of NationsBank and Bank America, announced April 13, would result in the country's biggest bank.
Within just the last few days, the Daimler-Benz-Chrysler deal would produce the world's fifth-largest auto maker. SBC Communications' proposed acquisition of Ameritech would be the biggest merger in communications history. In snapping up a fellow Baby Bell phone company, SBC would also go a long way toward reconstituting the old nationwide AT&T local phone system.
To some extent all these proposed deals are a leap into the unknown, points out Philip S. Garon, a partner at investment firm Faegre & Benson LLP in Minneapolis.
That's because the economy simply has no experience with such megadeals. The five biggest mergers ever have all been announced since last fall and are all still pending.
Right now "we have the most concentrated period of consolidation in history," says Mr. Garon.
The roaring stock market is one reason for the merger trend. Strong share prices provide many firms the cash to shop for someone to acquire, or join with.
If a firm wants to get bigger, points out Garon, is is now much cheaper to buy somebody else's infrastructure and brand name than to start from scratch.
And right now lots of chief executive officers are indeed looking to get bigger. Many currently seem to accept a "winner-take-all" theory of economic competition, in which the falling of trade and regulatory barriers, combined with the speed of new information technologies, means the mature industries will be increasingly dominated by only a few firms.
In fact, a new book co-authored by George Mason marketing professor Raj Sisodia argues for the "rule of three," which holds that three giant firms will invariably end up with at least 60 percent of the market of mature industries.
Thus hamburgers are dominated by McDonald's, Burger King, and Wendy's. Nike, Adidas, and Reebok are the sneaker world's Big Three. Kellogg, General Mills, and Post make most of the breakfast cereal found on US supermarket shelves.
Not all analysts agree with the "rule of three" narrow strictures. The auto industry probably has room for five or six world producers, even though right now the globe has about twice as much auto production capacity as it needs.
But many agree that whatever the number, only a few firms will rule many economic sectors in the future.
"We might as well have [all US firms] merge together," says James Brock, a professor of management at Miami University, Oxford, Ohio. "It's starting to look like the centrally planned Soviet economy."
Professor Brock - a critic of many mergers - says lax antitrust enforcement is another reason for the trend. He says that the history of mergers shows that they actually result in few gains of efficiency or innovation. Ameritech was going to compete with SBC in products, says Brock. Now that battle likely won't happen.
The melding of cultures required by mergers -- even those within the same industry -- can be considerable, say other analysts. "What we have found in the past is that companies who planned long ahead for integration are the ones who have performed best," says Garon.
Biggest mergers involving US Firms
1. Travelers Group and Citicorp announce a merger April 6. Each company is valued at $67.7 billion.
2. SBC Communications Inc. said yesterday it plans to buy Ameritech Corp. for $62 billion.
3. NationsBank Corp. and BankAmerica Corp. announce a $57.7 billion merger April 13.
4. Daimler-Benz announces plans May 7 to buy Chrysler Corp. for $39.3 billion.
5. WorldCom Inc. agrees on Nov. 10, 1997, to buy MCI Communications Inc. for $37 billion.