GE Overview

[Connors]

GE Overview

A History of GE

The year 1876 marked America's centennial. For most Americans it was a time for looking backward with pride. For others it was a time to look forward to the possibilities that lay ahead. The electrical exhibits at the Centennial Exposition in Philadelphia marked the beginning of an era where people sought new targets for invention.

Later that year, Thomas Alva Edison would open a new and better equipped laboratory in Menlo Park, New Jersey, where he could explore the possibilities of the dynamo and other electrical devices that he had seen in the Exposition. Out of the laboratory was to come perhaps the greatest invention of all - a successful incandescent electric lamp.

By 1890, Edison had organized his various businesses into the Edison General Electric Company. The Thomson-Houston Company and the various companies that had merged to form it were led by Charles A. Coffin, a former shoe manufacturer from Lynn, Massachusetts. These mergers with competitors and the patent rights owned by each company put them into a dominant position in the electrical industry. As businesses expanded, it had become increasingly difficult for either company to produce complete electrical installations relying solely on their own technology. In 1892, these two major companies combined to form the General Electric Company.

Several of Edison's early business offerings are in fact still part of GE today, including lighting, transportation, industrial products, power transmission and medical equipment. The first GE Appliances electric fans were produced at the Ft. Wayne electric works as early as the 1890s, while a full line of heating and cooking devices were developed in 1907. GE Aircraft Engines, the division's name only since 1987, actually began its story in 1917 when the U.S. government began its search for a company to develop the first airplane engine "booster" for the fledgling U.S. aviation industry. Thomas Edison's experiments with plastic filaments for light bulbs in 1893 led to the first GE Plastics department, created in 1930.

GE's leaders through the years have built a diverse portfolio of leading businesses; a stream of powerful Company-wide initiatives that drives growth and reduces cost; financial strength and Controllership that allow it to capitalize on opportunities through numerous cycles; and a set of common values that allows it to face any environment with confidence.

The Schenectady Museum maintains an archive of historical GE information and photography in its Hall of History.

If interested, contact:

Hall of Electrical History
15 Nott Terrace Heights
Schenectady, New York 12308
518-382-7890

John F. Welch, Jr. Chairman & CEO, 1981 - 2001

Mr. Welch, a native of Salem, Massachusetts, served as Chairman and Chief Executive Officer of General Electric from 1981-2001.

Mr. Welch was born in Salem in 1935. He received his B.S. degree in chemical engineering from the University of Massachusetts in 1957 and his M.S. and Ph.D. degrees in chemical engineering from the University of Illinois in 1960.

In 1960, Mr. Welch joined GE as a chemical engineer for its Plastics division in Pittsfield, Massachusetts. He was elected the company's youngest Vice President in 1972 and was named Vice Chairman in 1979. In December 1980 it was announced that he would succeed Reginald H. Jones and in April 1981 he became the eighth Chairman and CEO. Mr. Welch retired as Chairman and CEO of General Electric in September 2001.

In September 2001, Mr. Welch published his autobiography, "Jack, Straight From The Gut." The book quickly jumped to the #1 spot on bestseller lists from "The New York Times," "The Wall Street Journal," Amazon.com, "USA Today" Non-Fiction and the Association of Independent Booksellers.

In addition to his new role as author, Mr. Welch serves as a consultant to a small group of Fortune 500 business CEOs.

Throughout the economic cycles, GE’s long-term financial goals are: organic revenue growth of 2?3X GDP; greater than 10% annual earnings growth; operating cash flow exceeding earnings growth; and a return on average total capital of 20%.

here is how ge performed in 2006: ·                          Continuing revenues increased 10% to $163.4 billion. Organic revenue growth was 9%. ·                          Earnings from continuing operations grew 11% to $20.7 billion. Earnings in four of six businesses grew by more than 10%. Industrial operating profit expanded 40 basis points to 15.2%. ·                          Cash flow from operating activities (CFOA) was $24.6 billion, up 14%. Industrial cash flow grew 7%. Return on average total capital (ROTC) was 18.4%, up 180 basis points from 2005. ·                          The Board of Directors increased the dividend 12% for GE’s 31st consecutive annual increase. In addition, GE repurchased $8.1 billion of stock as part of its $25 billion program. At year end, GE’s dividend yield was 3%, a 50% premium to that of the S&P 500. In all, GE returned more than $18 billion to GE shareowners in 2006. ·                          Total return for GE shareowners (stock price appreciation assuming reinvested dividends) was 9% versus the S&P 500’s total return of 16%. Over the last three years, GE’s total shareowner return was 30%, equivalent to that of the S&P 500. At year end, GE traded at a forward price/earnings ratio (PE) of 16.8X, a 10% premium to the S&P 500. ·                          GE continued to earn the respect of the business world. GE was named FORTUNE magazine’s “Most Admired Company” for the second straight year, and GE ranked second in Barron’s annual survey of the world’s most respected companies. ·                          GE has substantial financial strength. The Company remained one of only six “Triple-A”-rated U.S. industrial companies. Our global pension plans have more than $60 billion in assets, a surplus of nearly $9 billion. The Company expects to meet its obligations to pensioners with no significant increase in funding for the foreseeable future. ·                          GE invested $15 billion in its intellectual foundation including products, services, marketing and programming. The Company filed 2,650 patents, representing an increase of 19% versus 2001. The GE brand is one of the most valuable in the world.

Back to top

Previous    6 of 6

In the article,

In 1999,

Over $ 100 billion revenue

16.7% Operating Margin

EPS 14% increase

FORTUNE…Most admired company

Financial Times…Most respected company in the world

Founded 1878, by Edison

Generation, Distribution, Electric Power

Power Generation, Household Appliances, Lighting

Aircraft engines, Medical systems, Diesel locomotives

1930s…centralized, tightly controlled

1950s…decentralization, delegation, empowerment

1960s…strategic planning

1973, under Reg Jones

10 Groups, 46 Divisions, 190 Depts, 43 Strategic bus units

=eSBU-based structure and sophisticated planning processes

Over burdened 43 strategic planse Sectors representing macrobusiness agglomerations such as consumer products, power systems, or technical products

1^st STAGE: NEURON JACK in early and mid-80s

Jack Welch’s

Facing with the recession, Jack did

RESTRUCTURING

Fix, Sell, or Close “To be No.1 or 2”

3 categories:

CORE (re-investing n productivity and quality)

HIGH-TECH(staying on the leading edge by R & D)

SERVICES(add outstanding people and make contiguous acquisitions)

->The most profitable, highly diversified company on earth..

Sold out: air-conditioning, housewares, coal mining, and consumer electric business

1981-1990           Sold 200 bus units, $ 11 billion capital freed up , 25% of 1980 sales

1981-1991           370 acquisitions, investment of 21 billion dollars

LEAN and AGILE: DESTAFFING and DOWNSIZING

50% reduction of 200 person strategic planning

GETTING RID OF “BUREAUCRACY” …shirtsleeves sessions

BUDGETING PROCES..PROACTIVE….eval‎uated against external competitively

Criteria

DELAYERING….Hierarchical levels from nine to four

DOWNSIZING

Elimination of 59290 salaried and 64160 hourly positions,,additional 122,700 by divestiture

NEURON JACK…replaced 12 of 14 bus heads in 1986

2^nd STAGE-late 80s + early 90s

WORK-OUT

Open forum New England town meetings

40-100 employees invited

BEST PRACTICE

How things done thru benchmarking

GLOBALIZATION

Paolo Fresco for international operation in 1992 as a vice-chairman

Joint venture with German Bosch, Partnership with Toshiba, Acquisiton of Sovac

Investment in Europe,

Mexican Peso Crisis

LEADER DEVELOPMENT

Life-time employment vs incentive-based

4 types of leaders

3^rd STAGE

BOUNDLESS BEHAVIOR

Knowledge Management

Re-engineering/PI

Open Mind/NBC-merger

STRETCH

SERVICE BIZ

CLOSING-OUT STAGE

6-SIGMA

FOUR E’s

Energy, ENERGIZE, EDGE, EXECUTION

e-BIZ