General Electric then and now

General Electric (GE) is a name that, for the longest time,, was synonymous with innovation, technological advancements, and industry leadership worldwide. Founded by Thomas Edison in 1892, the company has obviously evolved dramatically over the last 130 years by remaining a symbol of American ingenuity.

A rich history

At the time of its incorporation, General Electric acquired the assets of Edison General Electric Company and two other electrical enterprises. Edison General was originally founded by Thomas Edison under the name the Edison Electric Light Company. His primary purpose for doing this was to promote his incandescent light bulb and other products. Edison maintained his affiliation with the company by way of his patent contributions and advisory roles.

As time went on, General Electric became of one of the world’s leading producers of the largest range of electrical, industrial and consumer goods. From the date of its incorporation to 1976, the company was responsible for producing the country’s first commercial power stations, the giant electric locomotive, the x-ray machine, voice radio broadcasts, electric home appliances, vacuum tubes, home television, plastic and silicone innovations, commercial jet engines, nuclear power, laser lights and medical devices.

It is no surprise then that General Electric became a driving force in reshaping the industrial and electrical landscape, impacting multiple sectors across the globe.

Between 1981 and 2001, the company’s CEO Jack Welch bought about the most significant growth and development, earning himself the reputation as one of the most esteemed CEOs in American business history. Through dramatic restructuring, extensive diversification, and the creation of a culture driven by performance and competition, General Electric value rose from US$14 billion in 1981 to US$600 billion over the next 20 years.

From 2001 onwards, General Electric consumer products notably accounted for a minority of its annual sales, despite being a household name across the US. In fact, a large part of its sales was attributed to the US Department of Defence. Product lines from this time onwards were comprised of infrastructure, healthcare, media and entertainment, consumer and industrial technologies and even finance.

Impact of the 2008 financial crisis

Replacing Welch as CEO in 2001 was Jeff Immelt who oversaw several acquisitions that have since received considerable criticism. This included the acquisition of real estate through the leveraging of GE Capital Funds, as well as the acquisition of subprime lender WMC Mortgage. This proved to be somewhat of a disaster as the 2008 financial crisis hit that was said to have been brought on by overleveraged investments in the real estate sector in the US combined with volatile subprime loans. As a result, GE share prices plunged by 80%+ between 2007 to the start of 2009. As the crisis eased, General Electric embarked on the challenging journey of restructuring, with the intent of steering focus to potential growth opportunities.

2017 – 2019

While GE celebrated its 125th anniversary in 2017, the year was unfortunately marked with substantial business volatility. At the start of the year, GE announced it would be cutting 12k jobs, and during the year, GE stock value dropped by 45%. In November of the same year, the company revealed a massive restructuring, and also halved its quarterly dividend from 24 cents to 12 cents per share. This was cut even further to 1 cent per share in December 2018. By 2019, after massive reduction of debt and divestment of unwanted subsidiaries and stakes, the share price rose 53%.

Covid-19 pandemic

Unfortunately, as was the case for corporations around the world, the COVID-19 pandemic hit GE to the point that by 15 May 2020, its GE stock dropped to US$43.92, a 28-year low. The impact of the pandemic was particularly severe in the case of GE being its aviation unit had been the company’s most profitable division, comprised of making airplane engines for Boeing (BA) and Airbus. Being the demand for these parts as well as maintenance services dropped substantially during this time, the division ended up cutting 10% of its US workforce in March 2022.

From 2020 onwards

By 2020, GE eventually split its business into 3 main components, energy solutions, jet engines and healthcare technologies, and by 2021 announced plans that it would divide operations into 3 public companies. These companies would focus on aviation (GE Aerospace), healthcare (GE HealthCare), and energy (GE Vernova).

General Electric today

GE is restructuring its business portfolio, with a primary focus on its aerospace segment which currently generates the highest profits and revenue. In January 2023, GE successfully spun off its healthcare division, now operating independently as GE HealthCare. Additionally, the company plans to spin off its renewable energy and power enterprises in the near future. The sale of its nuclear steam power business to Électricité de France S.A. is expected to conclude in late 2023, reflecting GE’s strategic realignment with the aerospace and related industries.

Aerospace division

General Electric’s aerospace division is responsible for the design, manufacture and maintenance of aircraft engines, integrated machine components, electric power systems, and mechanical aircraft systems, as well as aftermarket services.

In Q1 of 2023, the aerospace division saw a 46% year-over-year profit increase, eventually reaching US$1.3 billion. The division played a pivotal role in GE’s overall profitability, that is approximately 18% of total profits. This also includes profits generated by the corporate sector. Quarterly revenue also experienced incredible YoY growth (24.6%), coming in at almost US$7 billion. This was attributed to performance by the aerospace division which accounted for some 48.2% of total revenues.

Renewable energy division

The renewable energy division of GE specialises in the delivery of varied renewable energy generation products, services, and integrated solutions. This includes onshore and offshore wind blades, hydro power, energy storage, grid solutions and hybrid renewable systems. The division experienced an income loss of -US$414 million in the first quarter of 2023. However, this was up from the previous year’s figure of -US$434 million (i.e., a 5% improvement). In contrast, revenue for this division did fall, albeit slightly (1%), from US$2.87 billion to US$2.84 billion YoY. Regardless though, GE’s renewable energy division accounted for some 19.6% of the company’s total revenue.

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