The Editorial / Columns

The Editorial: An Epiphany for GE

Jeffrey R. Immelt, chairman and CEO of General Electric, now believes that his company must rely more on manufacturing and less on financial services. We could not agree more.

In the Christian tradition, Jan. 6-the 12th day of Christmas-is the Epiphany, the day celebrating the visit of the three wise men to the Christ Child.

Last year, a wise man of a different sort, Jeffrey R. Immelt, chairman and CEO of General Electric, had an epiphany of his own, one that will dramatically affect the future of his company and, perhaps, the nation as a whole.

In a Dec. 5 interview with Steve Lohr of the New York Times, Immelt recounts how badly GE was affected by the financial crisis. Losses from its financial services division, GE Capital, threatened to pull down the entire company. GE cut its dividend for the first time since the Great Depression, lost its triple-A credit rating, and required a $3 billion infusion from investor Warren Buffet.

Having avoided disaster, the company revamped its strategy. Immelt now believes that GE must rely more on manufacturing and less on financial services. That may seem like an odd proposition for one of the top five manufacturers in the United States, but prior to the financial meltdown, GE was actually the nation’s largest nonbank financial company.

Immelt acted quickly on his vision. Last January, for example, GE announced that it would refurbish a factory in Schenectady, NY, to manufacture next-generation energy storage systems for the rail, marine, mining, telecommunications and utility industries.

In April, the company moved production of heat pumps from China to its plant in Louisville, KY. By 2012, GE will add production of an energy-efficient washer and dryer to the facility, creating 830 jobs.

In October, GE said it would invest more than $60 million to expand manufacturing of energy-efficient lighting products in Bucyrus, OH, creating 130 new jobs. That same month, the company announced plans to invest $432 million to establish four centers of excellence for refrigeration design and manufacturing in the United States. The investment is expected to create 500 jobs by 2014.

What’s more, Immelt believes that manufacturing must be a central part of reviving the U.S. economy as a whole. As a member of President Obama’s Economic Recovery Advisory Board, Immelt has advocated doubling manufacturing employment in America.

We applaud GE for returning to its roots and investing in U.S. manufacturing, and we encourage all U.S. corporations, large and small, to do the same. “Many bought into the idea that America could go from a technology-based, export-oriented powerhouse to a services-led, consumption-based economy-and somehow still expect to prosper,” says Immelt. “That idea was flat wrong.”

We could not agree more.
Editor in Chief

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