After Cutting Losses, GE Refocuses On Manufacturing

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The New York Times published a profile of Jeffrey Immelt, GE’s CEO, last Sunday titled “G.E. Goes With What It Knows: Making Stuff, lauding his singular efforts to bring the company back from focusing on its financial divisions, instead putting the emphasis on gasp! actually making and building things.

Yep, you know that when one of the “bluest of blue-chip companies has to get out the media megaphone to announce its “come to Jesus moment realizing that manufacturing, the cornerstone of the past that the company was built on is now the wave of the future something is changing in the air.

Indeed, Steve Lohr, the Times’ veteran business reporter, invokes the term (as well as the feeling of) “change in the profile almost as many times as there are numbers of GE products “drive change, “drive growth and change, “efforts to push large-scale change but, alas, as the saying goes: the more things change, the more they stay the same. The issue here isn’t change at all. A return to manufacturing simply seems imminent, so going back to an old classic shouldn’t feel any different at all.

But, after a decade or more of so many companies getting on the financial services bandwagon, it seemed natural for builders and makers like those at GE to get caught up in the financial world.

“The big buildup of GE Capital occurred during the tenure of Mr. Immelt’s famous predecessor, Jack Welch, Lohr writes. “But while Mr. Immelt, who took over in 2001, spun off the unit’s insurance business, he also bulked up on commercial real estate and other loans. In 2004, G.E. even bought a subprime lender in California, WMC Mortgage, which it shed in 2007 for a $1 billion loss.

We’ve long known that many companies in the metals sphere realize building things is the key to future economic stability look no further than Nucor, whose progressive and extremely effective corporate culture needs no significant overhaul.

Ultimately, it’s good for metals suppliers that CEOs are re-emphasizing manufacturing and exporting, not divesting valuable resources by padding meaningless financial investment. GE is undoubtedly one of the largest metals buying companies in the world, with their hands in so many sectors of global infrastructure aviation, power generation, transportation, oil and gas, water supply, health care, appliances, media the list goes on. Their Commercial Aviation Services arm alone has a fleet of over 1,800 owned and managed aircraft with approximately 245 airlines in over 75 countries, according to their Web site. GE is also America’s largest exporter after Boeing, with commercial and military clients, so their role as buyer/producer/seller of metal products, especially in the aviation sector, is far-reaching.

With someone as “influential as Immelt leading the way as an industrial advocate (as a member of the White House’s Economic Recovery Advisory Board, he has called for a doubling of the country’s manufacturing employment, to 20 percent of the workforce, Lohr writes in the Times article), hopefully manufacturing will thrive in new ways in the next decade as long as we can create and sufficiently sustain increased demand of US exports worldwide. And that’s not simply up to just one company, or one heady, ambitious CEO.

–Taras Berezowsky

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