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What Happened to GE? (2021)

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Re: What Happened to GE? (2021)

#21

Post by [deleted] »

analog31 wrote: post #8
tharne wrote: post #5

What happened to GE? Simple. Jack Welch killed the golden goose. During his tenure he shifted focus and money away from long-term R&D in the name of boosting quarterly profits. Product development took a back seat to selling "services", i.e. focus more on selling contracts around maintaining your turbines than you do on developing and manufacturing good turbines in the first place. I won't even get into the heavy bor…

There was a time when American corporations discovered that financial services were more profitable than manufacturing. The biggest division of GM was GMAC. The "profits" were at least partially fraudulent -- division managers cooking the books in order to make their numbers. I seem to recall that some of them went to prison.

[deleted]

Re: What Happened to GE? (2021)

#22

Post by yodon »

rcyeh wrote: post #14
jrmg wrote: post #11

When researching washing machines recently, I was surprised to see that probably the most innovative mass-market systems available right now are from GE. They’ve brought out a heat-pump based low-energy use combined washer/dryer* that supposedly performs great - something that can’t be said for existing combo or low energy systems. I was surprised to see innovative appliances from GE! I thought they had been reduced…

GE no longer owns or operates the GE Appliances business. Haier bought GE Appliances in 2016. https://en.wikipedia.org/wiki/GE_Appliances

Haier is a remarkable company. It's not an accident that GE appliances took off after Haier purchased it.

Re: What Happened to GE? (2021)

#23

Post by redandblack »

thfuran wrote: post #20
permanent wrote: post #15

Earlier quoted context omitted.

While GE price has gone up in the last 2 years, your statement doesn't take account for a reverse split—a 1-for-8 stock split in 2021. https://www.forbes.com/advisor/investing/ge-stock-split/#:~:... .

How does a reverse split work for holders of fewer shares than the ratio?

Usually cash for the remaining value at the split-stock price level

Re: What Happened to GE? (2021)

#24

Post by mc32 »

tharne wrote: post #5

What happened to GE? Simple. Jack Welch killed the golden goose. During his tenure he shifted focus and money away from long-term R&D in the name of boosting quarterly profits. Product development took a back seat to selling "services", i.e. focus more on selling contracts around maintaining your turbines than you do on developing and manufacturing good turbines in the first place. I won't even get into the heavy bor…

I’m under the impression of having read that Immelt inherited some semi cooked books and had to undo some of those things. Under Jack the accounting was not up to par.

Re: What Happened to GE? (2021)

#26

Post by roenxi »

tharne wrote: post #5

What happened to GE? Simple. Jack Welch killed the golden goose. During his tenure he shifted focus and money away from long-term R&D in the name of boosting quarterly profits. Product development took a back seat to selling "services", i.e. focus more on selling contracts around maintaining your turbines than you do on developing and manufacturing good turbines in the first place. I won't even get into the heavy bor…

Wasn't Welch the one who was using "sack 10% of the managers each year" as a strategy? That one was obviously long-term stupid; I can see it being healthy for maybe a cycle or 2, but after that it would just kill off all the intangibles of management. At some level, every company relies on a culture of people doing the right thing to thrive over the long term.

Although I do think that it is a mistake to just pin blame on Welch for that. There is a pretty solid amount of evidence that the WWII-era-boom US started falling apart from the early 1970s; there were a lot of ugly trends that took hold after US traditional oil production peaked. One of the symptoms is that nobody important seems to see a model where the States are a world class manufacturer. If nobody sees a way to run manufacturing companies at as high-performance entities then it won't happen. There is a lot of blame to be assigned to the space between the CEOs.

That is to say, my thesis is that management is optimising correctly in context - but they are in a context where US manufacturing excellence doesn't make as much sense as it once did.

Re: What Happened to GE? (2021)

#28

Post by meepmorp »

tharne wrote: post #5

What happened to GE? Simple. Jack Welch killed the golden goose. During his tenure he shifted focus and money away from long-term R&D in the name of boosting quarterly profits. Product development took a back seat to selling "services", i.e. focus more on selling contracts around maintaining your turbines than you do on developing and manufacturing good turbines in the first place. I won't even get into the heavy bor…

The interesting part is that Jack Welch wasn't an MBA - he was a (PhD) chemical engineer who'd worked at GE for his whole life after getting out of grad school. He'd had several management positions in the company before he got to CEO, so it's not like he didn't understand how the company worked and kinds of things it did.

Re: What Happened to GE? (2021)

#29

Post by redandblack »

for the curious on Jack Welch's management style - https://www.performyard.com/articles/jack-welch-management-s...

There were many fans/followers through out US corporate boards - just like sports coach lineage, there were Jack's lieutenants taking over US corps. I have not followed their success/failures. All I remember was my then boss's total admiration for his management approach - I did not stick around.

I always assumed he caught the great bond bull market run at the right time and GE Capital made him the captain of US industry - his is one of the main reasons of US decline in manufacturing. If not for silicon valley - we/US will be in a poor state

Re: What Happened to GE? (2021)

#30

Post by redandblack »

tharne wrote: post #7
nuclearnice1 wrote: post #4

> For example, Gryta and Mann report that GE would sometimes artificially boost quarterly profits by selling an asset (e.g., a diesel train) to a friendly bank, knowing that it could then buy back the asset at a time of GE’s choosing. So fraud?

It's fraud, but it's legal in the same way insider trading is legal so long as you're a member of congress.

Remember Lehman CFO did the same at month/quarter end using repos - not ethical, but legal
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