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General Electric Company

General Electric Company

3135 Easton Turnpike
Fairfield, Connecticut 06828-0001
U.S.A.
Telephone: (203) 373-2211
Fax: (203) 373-3131
Web site: http://www.ge.com

Public Company
Incorporated:
1892
Employees: 305,000
Sales: $134.19 billion (2003)
Stock Exchanges: New York Boston London Euronext Paris
Ticker Symbol: GE NAIC: 325211 Plastics Material & Resin Manuf.; 325413 In-Vitro Diagnostic Substance Manuf.; 333415 Air-Conditioning & Warm Air Heating Equip. & Comm. & Industrial Refrigeration Equip. Manuf.; 333611 Turbine & Turbine Generator Set Units Manuf.; 334510 Electromedical & Electrotherapeutic Apparatus Manuf.; 334512 Automatic Environ. Control Manuf. for Residential, Comm., & Appl. Use; 334515 Instrument Manuf. for Measuring & Testing Electricity & Electrical Signals; 335110 Electric Lamp Bulb & Part Manuf.; 335121 Residential Electric Lighting Fixture Manuf.; 335122 Comm., Industrial, & Institutional Electric Lighting Fixture Manuf.; 335221 Household Cooking Appl. Manuf.; 335222 Household Refrig. & Home Freezer Manuf.; 335224 Household Laundry Equip. Manuf.; 335228 Other Major Household Appl. Manuf.; 335311 Power, Distribution, & Specialty Transformer Manuf.; 335312 Motor & Generator Manuf.; 335313 Switchgear & Switchboard Apparatus Manuf.; 335931 Current-Carrying Wiring Device Manuf.; 336321 Vehicular Lighting Equip. Manuf.; 336412 Aircraft Engines & Engine Parts Manuf.; 336510 Railroad Rolling Stock Manuf.; 512110 Motion Picture & Video Prod.; 512120 Motion Picture & Video Distribution; 515120 Television Broadcasting; 515210 Cable & Other Subscription Programming; 522110 Comm. Banking; 522210 Credit Card Issuing; 522220 Sales Financing; 522291 Consumer Lending; 522292 Real Estate Credit; 524130 Reinsurance Carriers; 532411 Comm. Air, Rail, & Water Trans. Equip. Rental & Leasing; 532420 Office Machinery & Equip. Rental & Leasing; 532490 Other Comm. & Industrial Machinery & Equip. Rental & Leasing; 541710 Research & Development in the Physical, Engineering, & Life Sciences; 713110 Amusement & Theme Parks

The history of General Electric Company is a significant part of the history of technology in the United States. General Electric (GE) has evolved from Thomas Edison's home laboratory into one of the largest companies in the world, following the evolution of electrical technology from the simplest early applications into the high-tech wizardry of the early 21st century. The company has also evolved into a conglomerate, with an increasing shift from technology to services, and with 11 main operating units: GE Advanced Materials, a specialist in high-performance engineered thermoplastics, silicon-based products, and fused quartz and ceramics used in a wide variety of industries; GE Consumer & Industrial, which is one of the world's leading appliance manufacturers, stands as a preeminent global maker of lighting products for consumer, commercial, and industrial customers, and also provides integrated industrial equipment, systems, and services; GE Energy, one of the largest technology suppliers to the energy industry; GE Equipment Services, which offers leases, loans, and other services to medium and large businesses around the world to help them manage their business equipment; GE Healthcare, a world leader in medical diagnostic and interventional imaging technology and services; GE Infrastructure, which is involved in high-technology protective and productivity solutions in such areas as water purification, facility safety, plant automation, and automatic environmental controls; GE Transportation, the largest producer of small and large jet engines for commercial and military aircraft in the world, as well as the number one maker of diesel freight locomotives in North America; NBC Universal (80 percent owned by GE), a global media and entertainment giant with a wide range of assets, including the NBC and Telemundo television networks, several cable channels, and the Universal Pictures film studio; GE Commercial Finance, which provides businesses, particularly in the mid-market segment, with an array of financial services and products, including loans, operating leases, and financing programs; GE Consumer Finance, a leading financial services provider, serving consumers, retailers, and auto dealer in about three dozen countries; and GE Insurance, which is involved in such areas as life insurance, asset management, mortgage insurance, and reinsurance. The staggering size of General Electric, which ranked fifth in the Fortune 500 in 2003, becomes even more evident through the revelation that each of the company's 11 operating units, if listed separately, would qualify as a Fortune 500 company. GE operates in more than 100 countries worldwide and generates approximately 45 percent of its revenues outside the United States. Over the course of its 110-plus years of innovation, General Electric has amassed more than 67,500 patents, and the firm's scientists have been awarded two Nobel Prizes and numerous other honors.

Late 19th Century: The Edison Era

Thomas Edison established himself in the 1870s as an inventor after devising, at the age of 23, an improved stock ticker. He subsequently began research on an electric light as a replacement for gas light, the standard method of illumination at the time. In 1876 Edison moved into a laboratory in Menlo Park, New Jersey. Two years later, in 1878, Edison established, with the help of his friend Grosvenor Lowry, the Edison Electric Light Company with a capitalization of $300,000. Edison received half of the new company's shares on the agreement that he work on developing an incandescent lighting system. The major problem Edison and his team of specialists faced was finding an easy-to-produce filament that would resist the passage of electrical current in the bulb for a long time. He triumphed only a year after beginning research when he discovered that common sewing thread, once carbonized, worked in the laboratory. For practical applications, however, he switched to carbonized bamboo.

Developing an electrical lighting system for a whole community involved more than merely developing an electric bulb; the devices that generated, transmitted, and controlled electric power also had to be invented. Accordingly, Edison organized research into all of these areas and in 1879, the same year that he produced an electric bulb, he also constructed the first dynamo, or direct-current (DC) generator.

The original application of electric lighting was on the steamship Columbia in 1880. In that same year, Edison constructed a three-mile-long trial electric railroad at his Menlo Park laboratory. The first individual system of electric lighting came in 1881, in a printing plant. But the first full-scale public application of the Edison lighting system was actually made in London, at the Holborn Viaduct. The first system in the United States came soon after when Pearl Street Station was opened in New York City. Components of the system were manufactured by different companies, some of which were organized by Edison; lamps came from the parent company, dynamos from the Edison Machine Works, and switches from Bergmann & Company of New York. In 1886 the Edison Machine Works was moved from New Jersey to Schenectady, New York.

While these developments unfolded at Edison's company, the Thomson-Houston Company was formed from the American Electric Company, founded by Elihu Thomson and Edwin Houston, who held several patents for their development of arc lighting. Some of their electrical systems differed from Edison's through the use of alternating-current (AC) equipment, which can transmit over longer distances than DC systems. By the early 1890s the spread of electrification was threatened by the conflict between the two technologies and by patent deadlocks, which prevented further developments because of patent-infringement problems.

By 1889, Edison had consolidated all of his companies under the name of Edison General Electric Company. Three years later, in 1892, this company was merged with the Thomson-Houston Electric Company to form the General Electric Company. Although this merger was the turning point in the electrification of the United States, it resulted in Edison's resignation from GE. He had been appointed to the board of directors but he attended only one board meeting, and sold all of his shares in 1894, though he remained a consultant to General Electric and continued to collect royalties on his patents. The president of the new company was Charles A. Coffin, a former shoe manufacturer who had been the leading figure at Thomson-Houston. Coffin remained president of General Electric until 1913, and was chairman thereafter until 1922. Meanwhile, also in 1892, GE's stock began trading on the New York Stock Exchange.

In 1884 Frank Julian Sprague, an engineer who had worked on electric systems with Edison, resigned and formed the Sprague Electric Railway and Motor Company, which built the first large-scale electric streetcar system in the United States, in Richmond, Virginia. In 1889 Sprague's company was purchased by Edison's. In the meantime, the two other major electric-railway companies in the United States had merged with Thomson-Houston, so that by the time General Electric was formed, it was the major supplier of electrified railway systems in the United States.

One year after the formation of General Electric, the company won a bid for the construction of large AC motors in a textile mill in South Carolina. The motors were the largest manufactured by General Electric at the time and were so successful that orders soon began to flow in from other industries such as cement, paper, and steel. In that same year, General Electric began its first venture into the field of power transmission with the opening of the Redlands-Mill Creek power line in California, and in 1894 the company constructed a massive power-transmission line at Niagara Falls. Meanwhile the company's electric-railroad ventures produced an elevated electric train surrounding the fairgrounds of the Chicago World's Fair in 1893. Electrification of existing rail lines began two years later.

Company Perspectives:

GE has always been a multi-business company. Over the past 125 years, GE has swiftly evolved to seize new opportunities created by changes in technology and the economy. Today GE is building new platforms in industries and markets with above-GDP growth that provide opportunities to apply GE technology and management expertise to accelerate that growth.

Early 20th Century: Bolstering Electrification Operations and Moving Beyond Them

By the turn of the century General Electric was manufacturing everything involved in the electrification of the United States: generators to produce electricity, transmission equipment to carry power, industrial electric motors, electric light bulbs, and electric locomotives. It is important to any understanding of the evolution of GE to realize that though it was diverse from the beginning, all of its enterprises centered on the electrification program. It is also worth noting that it operated in the virtual absence of competition. General Electric and the Westinghouse Electric Company had been competitors, but the companies entered into a patent pool in 1896.

In 1900 GE established the first industrial laboratory in the United States. Up to that point, research had been carried out in universities or in private laboratories similar to Edison's Menlo Park laboratory. Initially, the lab was set up in a barn behind the house of one of the researchers, but the lab was moved in 1900 to Schenectady, New York, after it was destroyed in a fire. The head of the research division was a professor from the Massachusetts Institute of Technology. The importance of research at General Electric cannot be underestimated, for GE has been awarded more patents over the years than any other company in the United States.

During the early decades of the 20th century General Electric made further progress in its established fields and also made its first major diversification. In 1903 General Electric bought the Stanley Electric Manufacturing Company of Pittsfield, Massachusetts, a manufacturer of transformers. Its founder, William Stanley, was the developer of the transformer.

By this time GE's first light bulbs were in obvious need of improvement. Edison's bamboo filament was replaced in 1904 by metalized carbon developed by the company's research lab. That filament, in turn, was replaced several years later by a tungsten-filament light bulb when William Coolidge, a GE researcher, discovered a process to render the durable metal more pliable. This light bulb was so rugged and well suited for use in automobiles, railroad cars, and street cars that it was still employed in the early 2000s. In 1913, two other innovations came out of the GE labs: Irving Langmuir discovered that gas-filled bulbs were more efficient and reduced bulb blackening. To this day virtually all bulbs over 40 watts are gas-filled.

Key Dates:

1878:
Thomas Edison establishes the Edison Electric Light Company.
1889:
Edison has, by this date, consolidated all of his companies under the name of the Edison General Electric Company.
1892:
Edison's company merges with the Thomson-Houston Electric Company to form General Electric Company (GE); company's stock begins trading on the New York Stock Exchange.
1894:
Edison sells all his shares in the company, remaining a consultant to GE.
1900:
GE establishes the first industrial laboratory in the United States.
1903:
Stanley Electric Manufacturing Company of Pittsfield, Massachusetts, a manufacturer of transformers, is acquired.
1906:
The first GE major appliance, an electric range, is introduced.
1918:
GE merges with Pacific Electric Heating Company, maker of the Hotpoint iron, and Hughes Electric Heating Company, maker of an electric range; company forms Edison Electric Appliance Company to sell products under the GE and Hotpoint brands.
1919:
GE, AT&T, and Westinghouse form the Radio Corporation of America (RCA) to develop radio technology.
1924:
GE exits from the utilities business following government antitrust action.
1930:
Company sells its holdings in RCA because of antitrust considerations.
1938:
GE introduces the fluorescent lamp.
1943:
General Electric Capital Corporation is established.
1949:
Under antitrust pressure, the company is forced to release its light bulb patents to other companies.
1955:
The U.S. Navy launches the submarine Seawolf, which is powered by a GE nuclear reactor.
1957:
GE receives a license from the Atomic Energy Commission to operate a nuclear power plant; an enormous appliance manufacturing site, Appliance Park, in Louisville, Kentucky, is completed.
1961:
The company pleads guilty to price fixing on electrical equipment and is fined nearly half a million dollars.
1976:
GE spends $2.2 billion to acquire Utah International, a major coal, copper, uranium, and iron miner and a producer of natural gas and oil.
1981:
John F. (Jack) Welch, Jr., becomes chairman and CEO.
1986:
Company acquires RCA, which includes the National Broadcasting Company (NBC), for $6.4 billion; Employers Reinsurance is also acquired for $1.1 billion, as well as an 80 percent stake in Kidder Peabody.
1987:
GE sells its own and RCA's television manufacturing businesses to the French company Thomson in exchange for Thomson's medical diagnostics business.
1994:
Company liquidates Kidder Peabody.
1998:
Revenues surpass $100 billion.
2000:
GE announces a $45 billion deal to take over Honeywell International Inc.
2001:
Honeywell deal is blocked by European Commission; Welch retires and is succeeded by Jeffrey R. Immelt; Heller Financial Inc., a global commercial finance company, is acquired for $5.3 billion.
2002:
NBC acquires Telemundo Communications Group Inc.
2004:
British health sciences firm Amersham plc is acquired for $9.5 billion; in $14 billion deal, GE buys Vivendi Universal Entertainment, which is combined with NBC to form NBC Universal.

The first high-vacuum, hot-cathode X-ray tube, known as the Coolidge tube, was also developed in 1913. Coolidge's research into tungsten had played an important role in the development of the X-ray tube. The device, which combined a vacuum with a heated tungsten filament and tungsten target, has been the foundation of virtually all X-ray tubes produced ever since, and its development laid the foundation for medical technology operations at General Electric.

Perhaps GE's most important development in the early part of this century was its participation in the development of the high-speed steam turbine in conjunction with English, Swedish, and other inventors. Until this invention, all electricity (except hydroelectric) had been produced by generators that turned at no more than 100 rpm, which limited the amount of electricity a single unit could produce. An independent inventor had come up with a design for a very-high-speed steam turbine before the turn of the century, but it took five years of research before GE could construct a working model. By 1901, however, a 500-kilowatt, 1,200-rpm turbine generator was operating. Orders for the turbines followed almost immediately, and by 1903 a 5,000-kilowatt turbine was in use at Chicago's Commonwealth Edison power company.

Such rapid progress led to rapid obsolescence as well, and the Chicago units were replaced within six years. As a result, GE shops in Schenectady were soon overflowing with business. By 1910 the volume of the company's trade in turbine generators had tripled and GE had sold almost one million kilowatts of power capacity. At the same time, General Electric scientists were also researching the gas turbine. Their investigations eventually resulted in the first flight of an airplane equipped with a turbine-powered supercharger.

In the early days of electric power, electricity was produced only during evening hours, because electric lighting was not needed during the day and there were no other products to use electricity. GE, as the producer of both electricity-generating equipment and electricity-consuming devices, naturally sought to expand both ends of its markets. The first major expansion of the General Electric product line was made in the first decade of the 20th century. Before the turn of the century, light bulbs and electric fans were GE's only consumer product. One of the first household appliances GE began to market was a toaster in 1905. The following year the company attempted to market an electric range. The unwieldy device consisted of a wooden table top equipped with electric griddles, pans, toasters, waffle irons, pots, and a coffeemaker, each with its own retractable cord to go into any one of 30 plugs. The range was followed by a commercial electric refrigerator in 1911 and by an experimental household refrigerator six years later.

At the same time two other companies in the United States were producing electric devices for the home. The Pacific Electric Heating Company produced the first electric appliance to be readily accepted by the public: the Hotpoint iron. The Hughes Electric Heating Company produced and marketed an electric range. In 1918 all three companies were prospering, but to avoid competition with one another, they agreed upon a merger. The new company combined GE's heating-device section with Hughes and Pacific to form the Edison Electric Appliance Company, whose products bore either the GE or the Hotpoint label.

GE's first diversification outside electricity came with its establishment of a research staff to investigate plastics. This occurred primarily at the prompting of Charles P. Steinmetz, a brilliant mathematician who had been with the company since the 1890s. All of the initial work by this group was devoted to coatings, varnishes, insulation, and other products related to electrical wiring, so that even this diversification was tied in to electrification.

A more radical branching of GE's activities occurred in 1912, when Ernst Alexanderson, a GE employee, was approached by a radio pioneer looking for a way to expand the range of wireless sets into higher frequencies. Alexanderson worked for almost a decade on the project before he succeeded in creating electromagnetic waves that could span continents, instead of the short distances to which radios had been limited. In 1922, General Electric introduced its own radio station, WGY, in Schenectady. In 1919, at the request of the government, GE formed, in partnership with AT&T and Westinghouse, the Radio Corporation of America (RCA) to develop radio technology. GE withdrew from the venture in 1930, when antitrust considerations came to the fore. General Electric also operated two experimental shortwave stations that had a global range.

Other developments at General Electric contributed to the progress of the radio. Irving Langmuir had developed the electron tube. This tube, necessary for amplifying the signals in Alexanderson's radio unit, was capable of operating at very high power. Other important developments by scientists at General Electric included the world's first practical loudspeaker and a method for recording complex sound on film that is still in use today.

Developments continued apace at GE in the electric motor field. In 1913 the U.S. Navy commissioned General Electric to build the first ship to be powered by turbine motors rather than steam. In 1915 the first turbine-propelled battleship sailed forth, and within a few years, all of the Navy's large ships were equipped with electric power. General Electric also owned several utility companies that generated electrical power, but in 1924 GE left the utilities business when the federal government brought antitrust action against the company.

During the Great Depression the company introduced a variety of consumer items such as mixers, vacuum cleaners, air conditioners, and washing machines. GE also introduced the first affordable electric refrigerator in the late 1920s. It was designed by a Danish toolmaker, Christian Steenstrup, who later supervised mechanical research at the GE plant in Schenectady. In addition, GE introduced its first electric dishwasher in 1932, the same year that consumer financing of personal appliances was introduced.

Also in 1932 the first Nobel Prize ever awarded to a scientist not affiliated with a university went to Irving Langmuir for his work at GE on surface chemistry, research that had grown out of his earlier work on electron tubes. The years that followed witnessed a steady stream of innovation in electronics from the GE labs. These included the photoelectric-relay principle, rectifier tubes that eliminated batteries from home receivers, the cathode-ray tube, and glass-to-metal seals for vacuum tubes. Many of these developments in electronics were crucial to the growth of radio broadcasting.

The broadcasting division of General Electric achieved a breakthrough in the late 1930s. The company had been developing a mode of transmission known as frequency modulation (FM) as an alternative to the prevailing amplitude modulation (AM). In 1939 a demonstration conducted for the Federal Communications Commission proved that FM had less static and noise. GE began broadcasting in FM the following year.

Of course, the light bulb was not forgotten in this broadening of research activity at General Electric. The world's first mercury-vapor lamp was introduced in 1934, followed four years later by the fluorescent lamp. The latter produced light using half the power of incandescent bulbs, with about twice the lifespan. Less than a year after the introduction of the fluorescent light, General Electric introduced the sealed-beam automotive headlight.

Even though production of convenience items for the consumer halted during World War II, the war proved profitable for General Electric, whose revenues quadrupled during the war. The president of General Electric at the time, Charles Wilson, joined the War Production Board in 1942. GE produced more than 50 different types of radar for the armed forces and over 1,500 marine power plants for the Navy and merchant marine. The company, using technology developed by the Englishman Frank Whittle, also conducted research on jet engines for aircraft. The Bell XP-59, the first U.S. jet aircraft, flew in 1942 powered by General Electric engines. By the end of the war this technology helped General Electric develop the nation's first turboprop engine.

Postwar Growth and Difficulties

When production of consumer goods resumed immediately after the war, GE promptly found itself in another antitrust battle. The government discovered that GE controlled 85 percent of the light bulb industry55 percent through its own output and the other 30 percent through licensees. In 1949 the court forced GE to release its patents to other companies.

In this period the first true product diversifications came out of GE's research labs. In the 1940s a GE scientist discovered a way to produce large quantities of silicone, a material GE had been investigating for a long time. In 1947 GE opened a plant to produce silicones, which allowed the introduction of many products using silicone as a sealant or lubricant.

Meanwhile, as research innovation blossomed and postwar business boomed, the company began an employee relations policy known as "Boulwarism," from Lemuel Boulware, the manager who established the policy. The policy, which eliminated much of the bargaining involved in labor-management relations, included the extension by GE to union leaders of a nonnegotiable contract offer.

During the late 1940s General Electric embarked on a study of nuclear power and constructed a laboratory specifically for the task. Company scientists involved in an earlier attempt to separate U-235 from natural uranium were developing nuclear power plants for naval propulsion by 1946. In 1955 the Navy launched the submarine Seawolf, the world's first nuclear-powered vessel, with a reactor developed by General Electric. In 1957 the company received a license from the Atomic Energy Commission to operate a nuclear-power reactor, the first license granted in the United States for a privately owned generating station. That same year GE's consumer appliance operations got a big boost when an enormous manufacturing site, Appliance Park, in Louisville, Kentucky, was completed. The flow of new GE productshair dryers, skillets, electronic ovens, self-cleaning ovens, electric knivescontinued.

Other innovations to come from GE labs during the 1950s included an automatic pilot for jet aircraft, Lexan polycarbonate resin, the first all-transistor radio, jet turbine engines, gas turbines for electrical power generation, and a technique for fabricating diamonds.

Antitrust problems continued to vex the company throughout the postwar years. In 1961 the Justice Department indicted 29 companies, of which GE was the biggest, for price fixing on electrical equipment. All the defendants pleaded guilty. GE's fine was almost half a million dollars, damages it paid to utilities who had purchased price-fixed equipment came to at least $50 million, and three GE managers received jail sentences and several others were forced to leave the company.

During the 1960s and 1970s GE grew in all fields. In 1961 it opened a research center for aerospace projects, and by the end of the decade had more than 6,000 employees involved in 37 projects related to the moon landing. In the 1950s General Electric entered the computer business. This venture, however, proved to be such a drain on the company's profits that GE sold its computer business to Honeywell in 1971.

By the late 1960s, GE's management began to feel that the company had become too large for its existing structures to accommodate. Accordingly, the company instituted a massive organizational restructuring. Under this restructuring program, the number of distinct operating units within the company was cut from more than 200 to 43. Each new section operated in a particular market and was headed by a manager who reported to management just beneath the corporate policy board. The sections were classified into one of three categoriesgrowth, stability, or no-growthto facilitate divestment of unprofitable units.

When this reorganization was complete, General Electric made what was at the time the largest corporate purchase ever. In December 1976 GE paid $2.2 billion for Utah International, a major coal, copper, uranium, and iron miner and a producer of natural gas and oil. The company did 80 percent of its business in foreign countries. Within a year Utah International was contributing 18 percent of GE's total earnings.

In the meantime, GE scientist Ivar Giaever was a corecipient of the 1973 Nobel Prize in Physics for his discoveries in the area of superconductive tunneling. Giaever became the second GE employee to be honored with a Nobel Prize.

The divestiture of its computer business had left GE without any capacity for manufacturing integrated circuits and the high-technology products in which they are used. In 1975 a study of the company's status concluded that GE, one of the first U.S. electrical companies, had fallen far behind in electronics. As a result, GE spent some $385 million to acquire Intersil, a semiconductor manufacturer; Calma, a producer of computer graphics equipment; and four software producers. The company also spent more than $100 million to expand its microelectronics facilities.

Other fields in which GE excelled were in trouble by the mid-1970s, most notably nuclear power. As plant construction costs skyrocketed and environmental concerns grew, the company's nuclear power division began to lose money. GE's management, however, was convinced that the problem was temporary and that sales would pick up in the future. When by 1980 General Electric had received no new orders for plants in five years, nuclear power began to look more and more like a prime candidate for divestment. GE eventually pulled out of all aspects of the nuclear power business except for providing service and fuel to existing plants and conducting research on nuclear energy.

Though General Electric's growth was tremendous during the 1970s and earnings tripled between 1971 and 1981, the company's stock performance was mediocre. GE had become so large and was involved in so many activities that some regarded its fortunes as capable only of following the fortunes of the country as a whole.

19812001: The Jack Welch Era

GE's economic problems were mirrored by its managerial reshuffling. When John F. (Jack) Welch, Jr., became chairman and CEO in 1981, General Electric entered a period of radical change. Over the next several years, GE bought 338 businesses and product lines for $11.1 billion and sold 232 for $5.9 billion. But Welch's first order of business was to return much of the control of the company to the periphery. Although he decentralized management, he retained predecessor Reginald Jones's system of classifying divisions according to their performance. His goal was to make GE number one or two in every field of operation.

One branch of GE's operations that came into its own during this period was the General Electric Credit Corporation, founded in 1943. Between 1979 and 1984, its assets doubled, to $16 billion, primarily because of expansion into such markets as the leasing and selling of heavy industrial goods, inventories, real estate, and insurance. In addition, the leasing operations provided the parent company with tax shelters from accelerated depreciation on equipment developed by GE and then leased by the credit corporation.

Factory automation became a major activity at GE during the early 1980s. GE's acquisitions of Calma and Intersil were essential to this program. In addition, GE entered into an agreement with Japan's Hitachi, Ltd. to manufacture and market Hitachi's industrial robots in the United States. GE itself spent $300 million to robotize its locomotive plant in Erie, Pennsylvania. Two years later GE's aircraft engine business also participated in an air force plant-modernization program and GE later manufactured the engines for the controversial B-1B bomber.

In 1986 General Electric made several extremely important purchases. The largestin fact, the largest for the company to that datewas the $6.4 billion purchase of the Radio Corporation of American (RCA), the company GE had helped to found in 1919. RCA's National Broadcasting Company (NBC), the leading U.S. television network, brought GE into the broadcasting business in full force. Although both RCA and GE were heavily involved in consumer electronics, the match was regarded by industry analysts as beneficial, because GE had been shifting from manufacturing into service and high technology. After the merger, almost 80 percent of GE's earnings came from services and high technology, compared to 50 percent six years earlier. GE divested itself of RCA's famous David Sarnoff Research Center, because GE's labs made it redundant. In 1987 GE also sold its own and RCA's television manufacturing businesses to the French company Thomson in exchange for Thomson's medical diagnostics business.

GE justified the merger by citing the need for size to compete effectively with large Japanese conglomerates. Critics, however, claimed that GE was running from foreign competition by increasing its defense contracts (to almost 20 percent of its total business) and its service business, both of which were insulated from foreign competition.

In 1986 GE also purchased the Employers Reinsurance Corporation, a financial services company, from Texaco, for $1.1 billion, and an 80 percent interest in Kidder Peabody and Company, an investment banking firm, for $600 million, greatly broadening its financial services division. Although Employer's Reinsurance contributed steadily to GE's bottom line following its purchase, Kidder Peabody lost $48 million in 1987, in part because of the settlement of insider trading charges. Kidder Peabody did come back in 1988 to contribute $46 million in earnings, but the acquisition still troubled some analysts. GE owned 100 percent of Kidder Peabody by 1990.

General Electric's operations were divided into three business groups in the early 1990s: technology, service, and manufacturing. Its manufacturing operations, traditionally the core of the company, accounted for roughly one-third of the company's earnings. Still, GE continued to pour more than $1 billion annually into research and development of manufactured goods. Much of that investment was directed at energy conservationmore efficient light bulbs, jet engines, and electrical power transmission methods, for example.

In 1992 GE signaled its intent to step up overseas activity with the purchase of 50 percent of the European appliance business of Britain's General Electric Company (GEC). The two companies also made agreements related to their medical, power systems, and electrical distribution businesses. Welch said that his aim was to make GE the nation's largest company. To that end, General Electric continued to restructure its existing operations in an effort to become more competitive in all of its businesses. Most importantly, the company launched an aggressive campaign to become dominant in the growing financial services sector.

GE's aggressive initiatives related to financial services reflected the fact that the service sector represented more than three-quarters of the U.S. economy going into the mid-1990s. Furthermore, several service industries, including financial, were growing rapidly. GE's revenues from its giant NBC and GE Capital divisions, for example, rose more than 12 percent annually from about $14.3 billion in 1988 to more than $25 billion in 1994. Encouraged by those gains, GE's merger and acquisition activity intensified. For example, in 1994 the company offered a $2.2 billion bid for Kemper Corp., a diversified insurance and financial services company (it retracted the bid in 1995). GE's sales from services as a percentage of total revenues increased from 30 percent in 1988 to nearly 45 percent in 1994, and neared 60 percent by 1996. The troubled Kidder Peabody unit remained a drag on GE's services operations, leading to the company's late 1994 decision to liquidate the unit. As part of the liquidation, GE sold some Kidder Peabody assets and operations to Paine Webber Group Inc. for $657 million.

In contrast to its service businesses, GE's total manufacturing receipts remained stagnant at about $35 billion. Nevertheless, restructuring was paying off in the form of fat profit margins in many of its major product divisions. Importantly, GE made significant strides with its Aircraft Engine Group. Sales fell from $8 billion in 1991 to less than $6 billion in 1995, but profit margins rose past 18 percent after dipping to just 12 percent in 1993. Reflective of restructuring efforts in other GE divisions, the company accomplished the profit growth by slashing the engineering workforce from 10,000 to 4,000 and reducing its overall Aircraft Engine Group payroll by about 50 percent, among other cost-cutting moves.

Despite a global economic downturn in the early 1990s, GE managed to keep aggregate sales from its technology, service, and manufacturing operations stable at about $60 billion annually. More importantly, net income surged steadily from $3.9 billion in 1989 to $5.9 billion in 1994, excluding losses in the latter year from Kidder Peabody operations. In 1994, in fact, General Electric was the most profitable of the largest 900 U.S. corporations, and was trailed by General Motors, Ford, and Exxon. Revenues reached $70 billion by 1995, the same year that the company's market value exceeded $100 billion for the first time.

The late 1990s saw General Electric reach a number of milestones. In 1996 the company celebrated its 100th year as part of the Dow Jones Index; GE was the only company remaining from the original list. That year, NBC joined with Microsoft Corporation in launching MSNBC, a 24-hour cable television news channel and Internet news service. Overall revenues exceeded the $100 billion mark for the first time in 1998, while the continuing stellar growth at GE Capital led that unit to generate nearly half of GE's revenues by the end of the decade.

Acquisitions in the late 1990s centered on two of the company's growth initiatives: services and globalization. In 1996 the GE Appliances division acquired a 73 percent interest in DAKO S.A., the leading manufacturer of gas ranges in Brazil. GE Capital Services expanded in Japan through the 1996 purchase of an 80 percent stake in Marubeni Car System Co., an auto leasing firm; the 1998 acquisitions of Koei Credit and the consumer finance business of Lake Corporation; and the 1998 formation of GE Edison Life following the purchase of the sales operations of Toho Mutual Life Insurance, which made GE Capital the first foreign company involved in the Japanese life insurance market. In early 1999 GE Capital made its largest deal in Japan to date with the purchase of the leasing business of Japan Leasing Corporation, a business with $7 billion in leasing assets. Then in late 1999 GE Capital agreed to purchase the remaining assets of Toho Mutual for ¥240 billion ($2.33 billion); Toho had collapsed during 1999 after suffering huge losses from the thousands of old, unprofitable policies in its portfolio, and a large portion of its liabilities were to be covered by Japan's life insurance association. Expansion also continued in Europe for GE Capital, highlighted by the 1997 acquisition of Woodchester, one of the largest financial services companies in Ireland. Overall, GE spent some $30 billion during the 1990s in completing more than 130 European acquisitions.

Under Welch's leadership, General Electric in the late 1990s also adopted "six sigma," a quality control and improvement initiative pioneered by Motorola, Inc. and AlliedSignal Inc. The program aimed to cut costs by reducing errors or defects. GE claimed that by 1998 six sigma was yielding $1 billion in annual savings. The company also continued to restructure as necessary, including taking a $2.3 billion charge in late 1997 to close redundant facilities and shift production to cheaper labor markets. During 1999 General Electric adopted a fourth growth initiative, e-business (globalization, services, and six sigma being the other three). Like many longstanding companies, GE reacted cautiously when the Internet began its late 1990s explosion. But once he was convinced of the new medium's potential, Welch quickly adopted e-commerce as a key to the company's future growth. Among the early ventures was a plan to begin selling appliances through Home Depot, Inc.'s web site, a move aimed at revitalizing lagging appliance sales.

In late 1999 Welch announced that he planned to retire in April 2001, but he did not name a successor. At the time, General Electric was one of the world's fastest growing and most profitable companies, and boasted a market capitalization of $505 billion, second only to Microsoft Corporation. Revenues for 1999 increased 11 percent to $111.63 billion while net income rose 15 percent to $10.72 billion. These figures also represented huge gains since Welch took over in 1981, when the company posted profits of $1.6 billion on sales of $27.2 billion.

Welch was not done yet, however. In October 2000 he swooped in to break up a planned $40 billion merger of United Technologies Corporation and Honeywell International Inc. The Honeywell board accepted GE's $45 billion bid, which was set to be the largest acquisition in the company's history. Honeywell was coveted for its aerospace unit, a $9.9 billion business involved in flight-control systems, onboard environmental controls, and repair services. The addition of this unit was expected to significantly boost the GE Aircraft Engines unit, creating a global aerospace giant. Welch agreed to stay on at General Electric through the end of 2001 in order to see the acquisition through to fruition. He did, however, name a successor soon after this deal was announced. In November 2000 Jeffrey R. Immelt won the succession battle and was named president and chairman-elect. Immelt, who joined GE in 1982, had most recently served as president and CEO of GE Medical Systems, a unit with revenues of $12 billion. Immelt's two chief rivals in the race to become only the ninth CEO in GE's long history, W. James McNerney Jr., head of GE Aircraft Engines, and Robert L. Nardelli, head of GE Power Systems, soon left the company to become CEOs of 3M Company and Home Depot, respectively.

Rather than serving as a capstone for a much admired reign of leadership, the Honeywell deal instead provided a sour ending for the Welch era. In the summer of 2001 the European Commission blocked the deal on antitrust grounds as 11th-hour negotiations between the European regulators and GE executives broke down. Welch finally retired soon thereafter, with Immelt taking over as chairman and CEO in September 2001.

The Immelt Era: 2001 and Beyond

Meanwhile, one last major deal was initiated prior to the leadership handover. In July 2001 General Electric's GE Capital unit agreed to pay $5.3 billion for Heller Financial Inc., a global commercial finance company based in Chicago that had total assets of about $19.5 billion. This deal, the second largest in GE history, behind only the 1986 deal for RCA, was consummated in October 2001. Also during 2001, GE Lighting had the largest product launch in its history when it introduced the GE Reveal line of light bulbs, which were touted as providing "a cleaner, crisper light" because the bulbs filtered out the duller yellow rays commonly produced by standard incandescent light bulbs. GE began feeling the effects of the economic downturn that year as revenues fell nearly 3 percent, to $125.68 billion; profits nevertheless increased 7.5 percent, reaching $13.68 billion, though that was a far cry from the yearly 13 to 15 percent increases that Wall Street came to expect from GE during the Welch era.

Immelt began to place his imprint in earnest on GE in 2002 through major restructurings and several significant acquisitions. Midyear he launched a reorganization of GE Capital. The financial services unit was divided into four separate units to streamline management, increase oversight, and improve transparency. The new units were: GE Commercial Finance, GE Consumer Finance, GE Equipment Management (involved in equipment leasing and loans), and GE Insurance. Also during 2002, the GE Appliances and GE Lighting units were combined into a new GE Consumer Products unit. On the acquisitions front, NBC widened its media holdings through the April 2002 acquisition of Hialeah, Floridabased Telemundo Communications Group Inc. for $2.7 billion and the $1.25 billion purchase of the Bravo cable network, completed in December of that year. Telemundo owned the second largest Spanish-language television network, as well as nine U.S. TV stations and the leading TV station in Puerto Rico. NBC hoped to tap into the growing Hispanic market via the deal. Bravo was known for its intelligent, arts-oriented programming such as Inside the Actors Studio, and it provided NBC with its first entertainment-oriented cable property. Also during 2002, GE Specialty Materials acquired BetzDearborn, a leading maker of water treatment chemicals, from Hercules Inc. for $1.8 billion. In addition, GE Industrial Systems spent about $777 million for Interlogix, Inc, an Austin, Texas-based manufacturer of electronic security products and systems for commercial, industrial, and residential use. All told, General Electric spent approximately $9 billion on industrial acquisitions alone during 2002. Concerns about whether the company could continue its stellar earnings performance and about its accounting practices sent GE's stock sharply lower in 2002. The stock ended the year trading at $24.35 per share, less than half of the high price for 2001. Once again, profits rose modestly, to $14.12 billion, or about 3 percent.

Taking advantage of the economic downturn to acquire desirable assets from distressed sellers, GE's deal-making appetite grew only larger in 2003. That year was the company's biggest acquisition year yet, with deals worth a collective $30 billion either completed or announced. In August the company agreed to buy Transamerica Finance Corporation's commercial lending business from Aegon N.V. of The Netherlands for $5.4 billion. The deal, which added about $8.5 billion in assets to the GE Commercial Finance unit, closed in January 2004. Also during the summer of 2003 GE sold three of its slower growing insurance businesses: Financial Guaranty Insurance Co., Tokyo-based GE Edison Life Insurance Co., and GE's U.S.-based auto and homeowners insurance unit. About $4.5 billion was raised through these divestments.

As part of its effort to shift emphasis to higher growth fields, General Electric completed two significant acquisitions in healthcare. In October 2003, Instrumentarium Corp. was acquired for $2.3 billion. Based in Finland, Instrumentarium was a major medical-equipment maker with a product line that featured devices for anesthesia, critical care, and patient monitoring. That same month, GE agreed to buy Amersham plc, a British firm specializing in diagnostics agents used during scans of the body for disease, gene-sequencing tools, and protein separation for high-tech drug development. Consummated in April 2004 and valued at about $9.5 billion, the purchase of Amersham stood, very briefly, as the largest acquisition in General Electric history. Following the Amersham acquisition, GE Medical Systems, now a $14 billion business, was renamed GE Healthcare. Based in the United Kingdomthe first GE unit to be headquartered outside the United StatesGE Healthcare was headed by Amersham's former chief executive, William Castell; Castell was also named a GE vice-chairman, the first outsider to be so named.

Meanwhile, also in October 2003, General Electric announced an even larger deal, a $14 billion acquisition of Vivendi Universal Entertainment (VUE), the U.S. unit of the French group Vivendi Universal S.A. Among VUE's assets were the Universal Pictures movie studio, the specialty film unit Focus Features, the Universal Television production outfit, cable channels USA Network and Sci-Fi Channel, and theme parks in California, Florida, Japan, and Spain. Upon completion of the deal in May 2004, NBC was merged with VUE to form NBC Universal, which was 80 percent owned by GE and 20 percent by Vivendi. This expansion into entertainment content mimicked earlier combinations involving the ABC and CBS television networks.

Continuing his transformative leadership, Immelt reorganized GE's 13 business units into 11 focused on specific markets and customers. The reorganization, effective at the beginning of 2004, brought similar businesses together in an effort to increase sales and cut costs. The most significant of the changes included combining the firm's aircraft engines business and its rail-related operations in a new GE Transportation unit; merging most of GE Industrial Systems with GE Consumer Products to form GE Consumer & Industrial, which focused on lighting products, appliances, and integrated industrial equipment, systems, and services; and forming GE Infrastructure from certain operations of GE Industrial Systems and GE Specialty Materials. Also in January 2004, GE continued disposing of its insurance operations. That month, General Electric launched an initial public offering (IPO) of about one-third of the stock of the newly formed Genworth Financial, Inc., which consisted of the bulk of GE's life and mortgage insurance businesses. The IPO was planned for completion by mid-2004, after which GE planned to make Genworth fully independent within three years. What was left of GE Insurance was mainly its reinsurance business, which was long rumored to be another candidate for divestment.

Overall, through the myriad moves engineered during just a few years in charge, Immelt was seeking to cut General Electric's reliance on financial services and mature industrial businesses in favor of such higher growth areas as healthcare and entertainment. He was also building operations in fast-growing economies such as China's. By 2005, GE was aiming to outsource $5 billion of parts and services from China and simultaneously grow sales in China to a like figure. Further divestments were also expected, and there had long been speculation that the slow-growing lighting and appliances businesses were prime candidates. Through initiatives such as these, Immelt hoped to return General Electric to double-digit earnings growth by 2005.

Principal Subsidiaries

American Silicones, Inc.; Bently Nevada, LLC; Caribe GE International Electric Meters Corp. (Puerto Rico); Cardinal Cogen, Inc.; Datex-Ohmeda, Inc.; Elano Corporation; GEAE Technology, Inc.; GE CGR Europe (France); GE Drives and Controls, Inc.; GE Druck Holdings Limited; GE Electric Canada, Inc.; GE Energy Europe, BV (Netherlands); GE Energy Parts Inc.; GE Energy Products, Inc.; GE Energy Services, Inc.; GE Energy Services-Dallas, LP; GE Engine Services Distribution, LLC; GE Engine Services, Inc.; GE Fanuc Automation Corporation (50%); GE Gas Turbines (Greenville) L.L.C.; GE Hungary Co., Ltd.; GE Interlogix, Inc.; GE Investment, Inc.; GE Keppel Energy Services Pte., Inc. (Singapore); GE Medical Global Technology Co., LLC; GE Medical Systems Information Technologies, Inc.; GE Medical Systems, Inc.; GE Packaged Power L.P.; GE Petrochemicals, Inc.; GE Plastic Finishing, Inc.; GE Plastics España ScPA (Spain & Canary Islands, Balearic Island); GE Plastics Pacific Pte. Ltd. (Singapore); GE Polymerland, Inc.; GE Power Systems Licensing Inc.; GE Quartz, Inc.; GE Silicones WV, LLC; GE Superabrasives, Inc.; GE Transportation Parts, LLC; GE Transportation Services, LLC; GE Transportation Systems Global Signaling, LLC; GEA Products LP; General Electric International (Benelux) BV (Netherlands); General Electric International, Inc.; Granite Services, Inc.; National Broadcasting Company; Nuclear Fuel Holding Co., Inc.; Nuovo Pignone Holding S.p.A. (Italy); OEC Medical Systems Inc.; PII Limited (U.K.); Reuter-Stokes, Inc.; Sensing Solutions, Inc.; Viceroy, Inc.; General Electric Capital Services, Inc.; General Electric Capital Corporation; GE Global Insurance Holding Corporation.

Principal Operating Units

GE Advanced Materials; GE Commercial Finance; GE Consumer Finance; GE Consumer & Industrial; GE Energy; GE Equipment Services; GE Healthcare; GE Infrastructure; GE Insurance; GE Transportation; NBC Universal (80%).

Principal Competitors

ABB Ltd.; ALSTOM; American International Group, Inc.; AREVA Group; BASF Aktiengesellschaft; CIGNA Corporation; CIT Group Inc.; Citigroup Inc.; AB Electrolux; General Motors Corporation; General Re Corporation; Halliburton Company; Honeywell International Inc.; Household International, Inc.; J.P. Morgan Chase & Co.; Matsushita Electric Industrial Co., Ltd.; Maytag Corporation; MBNA Corporation; The News Corporation Limited; Robert Bosch GmbH; Rolls-Royce plc; Royal Philips Electronics N.V.; Siemens AG; Time Warner Inc.; Toshiba Corporation; Tyco International Ltd.; United Technologies Corporation; Viacom Inc.; The Walt Disney Company; Whirlpool Corporation.

Further Reading

Banks, Howard, "General Electric: Going with the Winners," Forbes, March 26, 1984, pp. 97+.

Berman, Dennis K., and Kathryn Kranhold, "GE to Pay $900 Million to Buy Bomb-Detection Firm InVision," Wall Street Journal, March 16, 2004, p. A6.

Bernstein, Aaron, Susan Jackson, and John Byrne, "Jack Cracks the Whip Again," Business Week, December 15, 1997, pp. 3435.

Bongiorno, Lori, "Hot Damn, What a Year!," Business Week, March 6, 1995, pp. 98100.

Brady, Diane, "The Education of Jeff Immelt," Business Week, April 29, 2002, pp. 8084, 8687.

, "How GE Locked Up That Boeing Order," Business Week, August 9, 1999, pp. 72, 7475.

, "Will Jeff Immelt's New Push Pay Off for GE?," Business Week, October 13, 2003, pp. 9496, 98.

Brady, Diane, and Kerry Capell, "GE Breaks the Mold to Spur Innovation," Business Week, April 26, 2004, p. 88.

Brown, Ken, and Kathryn Kranhold, "GE's Immelt Faces Hurdles After Acquisitions," Wall Street Journal, October 13, 2003, p. C1.

Byrne, John A., " 'Jack': A Close-up Look at How America's #1 Manager Runs GE," Business Week, June 8, 1998, pp. 9095, 9899, 102, 10406, 11011.

Byrne, John A., and Jennifer Reingold, "Who Will Step into Jack Welch's Shoes?," Business Week, December 21, 1998, pp. 3738.

Carley, William M., "Power Ranger: GE Taps Trains Chief in Effort to Shore Up Troubled Energy Unit," Wall Street Journal, May 6, 1996, pp. A1+.

Carlson, W. Bernard, Innovation As a Social Process: Elihu Thomson and the Rise of General Electric, 18701900, New York: Cambridge University Press, 1991, 377 p.

Colvin, Geoffrey, "The Ultimate Manager," Fortune, November 22, 1999, pp. 18587.

"A Conversation with Roberto Goizueta and Jack Welch," Fortune, December 11, 1995, pp. 9699, 102.

Cox, James A., A Century of Light, New York: Benjamin, 1979, 224 p.

Curran, John, "GE Capital: Jack Welch's Secret Weapon," Fortune, November 10, 1997, pp. 11620, 124, 126, 130, 132, 134.

Deogun, Nikhil, and Matt Murray, "GE Capital to Acquire Heller Financial," Wall Street Journal, July 30, 2001, p. A3.

Doherty, Jacqueline, "Turning on the Lights," Barron's, February 24, 2003, pp. 19+.

Farrell, John, "GE Cuts Number in Layoff Plans," Capital District Business Review, October 31, 1994, p. 5.

Finn, Edwin A., Jr., "General Eclectic," Forbes, March 23, 1987, pp. 74+.

Freudenheim, Milt, "GE, Seeking to Spur Growth, Will Sell Many Insurance Assets," New York Times, November 19, 2003, p. C1.

Gapper, John, and Dan Roberts, "Man of the Year: Jeffrey Immelt," Financial Times, December 27, 2003, p. 11.

"GE Monkeys with Its Money Machine," Fortune, February 21, 1994, p. 81.

"GE: Not Recession Proof, but Recession Resistant," Forbes, March 15, 1975, p. 26.

"General Electric: The Financial Wizards Switch Back to Technology," Business Week, March 16, 1981, pp. 110+.

Grant, Linda, "GE's 'Smart Bomb' Strategy," Fortune, July 21, 1997, pp. 10910.

Griffiths, Dave, "GE + RCA = A Powerhouse Defense Contractor," Business Week, January 27, 1986, pp. 116+.

Grover, Ronald, and Mark Landler, "NBC Is No Longer a Feather in GE's Cap," Business Week, June 3, 1991, pp. 88+.

Hammond, John Winthrop, Men and Volts: The Story of General Electric, Philadelphia: Lippincott, 1941, 436 p.

Harris, Marilyn A., et al., "Can Jack Welch Reinvent GE?," Business Week, June 30, 1986, pp. 62+.

"The Jack and Jeff Show Loses Its Lustre," Economist, May 4, 2002, pp. 5759.

"Jack Welch's Lessons for Success," Fortune, January 25, 1993, p. 86.

Koenig, Peter, "If Europe's Dead, Why Is GE Investing Billions There?," Fortune, September 9, 1996, pp. 11418.

Kranhold, Kathryn, "GE, amid Slow Growth, Streamlines," Wall Street Journal, December 5, 2003, p. A6.

, "With New Chief, GE Healthcare Breaks Tradition," Wall Street Journal, April 8, 2004, pp. B1, B10.

Kranhold, Kathryn, and Charles Fleming, "GE Agrees to Pay Aegon $5.4 Billion for Finance Units," Wall Street Journal, August 6, 2003, p. A3.

Laing, Jonathan R., "Riding into the Sunset: Can Jack Welch's Successor at General Electric Hope to Inherit His Magic Touch?," Barron's, February 15, 1999, pp. 2324, 2627.

Lunsford, J. Lynn, and Kathryn Kranhold, "GE, Rolls-Royce Gain Boeing Deal," Wall Street Journal, April 7, 2004, pp. A3, A12.

McClenahen, John S., "CEO of the Decade," Industry Week, November 15, 1999, p. 38.

Miller, John Anderson, Men and Volts at War: The Story of General Electric in World War II, New York: McGraw-Hill, 1947, 272 p.

Mitchell, Russell, "Jack Welch: How Good a Manager?," Business Week, December 14, 1987, pp. 92+.

Moore, Pamela L., and Nanette Byrnes, "The Man Who Would Be Welch," Business Week, December 11, 2000, pp. 9497.

Moore, Pamela L., et al., "GE-Honeywell: How Jack Stumbled," Business Week, April 16, 2001, p. 122.

Morrison, Ann M., "Trying to Bring GE to Life," Fortune, January 25, 1982, pp. 50+.

Murray, Matt, "GE Capital Is Split into Four Parts," Wall Street Journal, July 29, 2002, p. A3.

, "GE Chairman Sets His Departure Date for 2001: Successor Remains Unclear," Wall Street Journal, November 3, 1999, p. B12.

, "GE Whiz: For Welch's Successor, Filling Legend's Shoes Is Only One Challenge," Wall Street Journal, November 28, 2000, pp. A1+.

, "Last Conglomerate: Can House That Jack Built Stand When He Goes?," Wall Street Journal, April 13, 2000, pp. A1+.

, "Late to the Web, GE Now Views Internet As Key to New Growth," Wall Street Journal, June 22, 1999, p. B1.

Murray, Matt, et al., "Extended Tour: On Eve of Retirement, Jack Welch Decides to Stick Around a Bit," Wall Street Journal, October 23, 2000, pp. A1+.

Norman, James R., "General Electric Is Stalking Big Game Again," Business Week, March 16, 1987, pp. 112+.

O'Boyle, Thomas F., At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit, New York: Knopf, 1998, 449 p.

Pare, Terence P., "GE As a Service Company," Fortune, April 18, 1994, p. 16.

, "Jack Welch's Nightmare on Wall Street," Fortune, September 5, 1994, p. 40.

Peers, Martin, Bruce Orwall, and John Carreyrou, "It's Official: Vivendi, GE Make Deal," Wall Street Journal, September 3, 2003, p. A3.

Petre, Peter, "What Welch Has Wrought at GE," Fortune, July 7, 1986, pp. 42+.

Reich, Leonard S., "Lighting the Path to Profit: GE's Control of the Electric Lamp Industry, 18921941," Business History Review, summer 1992, pp. 305+.

Schatz, Ronald W., The Electrical Workers: A History of Labor at General Electric and Westinghouse, 19231960, Urbana: University of Illinois Press, 1983, 279 p.

Sherman, Stratford P., "Inside the Mind of Jack Welch," Fortune, March 27, 1989, pp. 38+.

Silverman, Rachel Emma, "GE Goes Back to Future," Wall Street Journal, May 7, 2002, p. B1.

Slater, Robert, The New GE: How Jack Welch Revived an American Institution, Homewood, Ill.: Business One Irwin, 1993, 295 p.

Smart, Tim, "GE's Money Machine," Business Week, March 8, 1993, pp. 62+.

, "Jack Welch's Cyber-Czar," Business Week, August 5, 1996, pp. 8283.

, "Jack Welch's Encore," Business Week, October 28, 1996, pp. 15460.

, "Just Imagine If Times Were Good," Business Week, April 17, 1995, pp. 7879.

Smart, Tim, Pete Engardio, and Geri Smith, "GE's Brave New World," Business Week, November 8, 1993, pp. 64+.

Stewart, Thomas A., "GE Keeps Those Ideas Coming," Fortune, August 12, 1991, pp. 40+.

, "See Jack. See Jack Run Europe," Fortune, September 27, 1999, pp. 12427, 130, 132, 136.

Tichy, Noel M., and Stratford Sherman, Control Your Destiny or Someone Else Will: How Jack Welch Is Making General Electric the World's Most Competitive Corporation, New York: Doubleday, 1993, 384 p.

Useem, Jerry, "It's All Yours, Jeff. Now What?," Fortune, September 17, 2001, pp. 6468.

Vogel, Todd, "Big Changes Are Galvanizing General Electric," Business Week, December 18, 1989, pp. 100+.

Warner, Melanie, "Can GE Light Up the Market Again?," Fortune, November 11, 2002, pp. 10810+.

Welch, Jack, with John A. Byrne, Jack: Straight from the Gut, New York: Warner, 2001, 479 p.

Wise, George, Willis R. Whitney, General Electric, and the Origins of U.S. Industrial Research, New York: Columbia University Press, 1985, 375 p.

Dave Mote

update: David E. Salamie

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Mote, Dave. "General Electric Company." International Directory of Company Histories. 2004. Encyclopedia.com. 1 Jul. 2016 <http://www.encyclopedia.com>.

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Mote, Dave. "General Electric Company." International Directory of Company Histories. 2004. Retrieved July 01, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3429000047.html

General Electric Company

General Electric Company

3135 Easton Turnpike
Fairfield, Connecticut 06431-0001
U.S.A.
Telephone: (203) 373-2211
Fax: (203) 373-3131
Web site: http://www.ge.com

Public Company
Incorporated: 1892
Employees: 293,000
Sales: $111.63 billion (1999)
Stock Exchanges: New York Boston London
Ticker Symbol: GE
NAIC: 233310 Mfg. & Industrial Building Construction; 325211 Plastics Material & Resin Mfg.; 333415 Air-Conditioning & Warm Air Heating Equip. & Commercial & Industrial Refrigeration Equip. Mfg.; 333611 Turbine & Turbine Generator Set Unit Mfg.; 334290 Other Communications Equip. Mfg.; 334510 Electromedical & Electrotherapeutic Apparatus Mfg.; 334515 Instrument Mfg. for Measuring & Testing Electricity & Electrical Signals; 335110 Electric Light Bulb & Part Mfg.; 335121 Residential Electric Lighting Fixture Mfg.; 335122 Commercial, Industrial, & Institutional Electric Lighting Fixture Mfg.; 335222 Household Refrigerator & Home Freezer Mfg.; 335224 Household Laundry Equip. Mfg.; 335311 Power, Distribution, & Specialty Transformer Mfg.; 335312 Motor & Generator Mfg.; 335313 Switchgear & Switchboard Apparatus Mfg.; 335912 Primary Battery Mfg.; 335931 Current-Carrying Wiring Device Mfg.; 336321 Vehicular Lighting Equip. Mfg.; 336412 Aircraft Engines & Engine Parts Mfg.; 336510 Railroad Rolling Stock Mfg.; 512110 Motion Picture & Video Production; 512120 Motion Picture & Video Distribution; 513120 Television Broadcasting; 513210 Cable Networks; 522210 Credit Card Issuing; 522220 Sales Financing; 522291 Consumer Lending; 522292 Real Estate Credit; 523920 Portfolio Management; 524113 Direct Life Insurance Carriers; 524126 Direct Property & Casualty Insurance Carriers; 524130 Reinsurance Carriers; 532420 Office Machinery & Equip. Rental & Leasing; 532490 Other Commercial & Industrial Machinery & Equip. Rental & Leasing; 541330 Engineering Services; 561790 Other Services to Buildings & Dwellings

The history of General Electric Company is a significant part of the history of technology in the United States. General Electric (GE) has evolved from Thomas Edisons home laboratory into one of the largest companies in the world, following the evolution of electrical technology from the simplest early applications into the high-tech wizardry of the turn of the millennium. The company has also involved into a conglomerate, with an increasing shift from technology to services, and with ten main operating units: GE Aircraft Engines, the largest producer of small and large jet engines for commercial and military aircraft in the world; GE Appliances, one of the worlds leading appliance manufacturers; GE Capital Services, which provides its clients with an array of financial services, including various types of insurance, mutual funds and annuities, consumer and commercial financing, credit services, and equipment management; GE Industrial Systems, a leading supplier of products related to electrical power and equipment; GE Lighting, a preeminent global maker of lighting products for consumer, commercial, and industrial customers; GE Medical Systems, a world leader in medical diagnostic imaging technology and services; National Broadcasting Company, one of the four major U.S. broadcast television networks, which has interests in numerous other media ventures; GE Plastics, a specialist in high-performance engineered plastics used in the office equipment, automotive, building and construction, and high-tech industries; GE Power Systems, which is a world leader in gas, steam, and hydroelectric turbines and generators for power production and other applications; and GE Transportation Systems, the number one maker of diesel freight locomotives in North America. GE operates in more than 100 countries worldwide, and generates approximately 43 percent of its revenues outside the United States.

Late 19th Century: The Edison Era

Thomas Edison established himself in the 1870s as an inventor after devising, at the age of 23, an improved stock ticker. He subsequently began research on an electric light as a replacement for gas light, the standard method of illumination at the time. In 1876 Edison moved into a laboratory in Menlo Park, New Jersey. Two years later, in 1878, Edison established, with the help of his friend Grosvenor Lowry, the Edison Electric Light Company with a capitalization of $300,000. Edison received half of the new companys shares on the agreement that he work on developing an incandescent lighting system. The major problem Edison and his team of specialists faced was finding an easy-to-produce filament that would resist the passage of electrical current in the bulb for a long time. He triumphed only a year after beginning research when he discovered that common sewing thread, once carbonized, worked in the laboratory. For practical applications, however, he switched to carbonized bamboo.

Developing an electrical lighting system for a whole community involved more than merely developing an electric bulb; the devices that generated, transmitted, and controlled electric power also had to be invented. Accordingly, Edison organized research into all of these areas and in 1879, the same year that he produced an electric bulb, he also constructed the first dynamo, or direct-current generator.

The first application of electric lighting was on the steamship Columbia in 1880. In that same year, Edison constructed a three-mile-long trial electric railroad at his Menlo Park laboratory. The first individual system of electric lighting came in 1881, in a printing plant. But the first full-scale public application of the Edison lighting system was actually made in London, at the Holborn Viaduct. The first system in the United States came soon after when Pearl Street Station was opened in New York City. Components of the system were manufactured by different companies, some of which were organized by Edison; lamps came from the parent company, dynamos from the Edison Machine Works, and switches from Bergmann & Company of New York. In 1886 the Edison Machine Works was moved from New Jersey to Schenectady, New York.

While these developments unfolded at Edisons company, the Thomson-Houston Company was formed from the American Electric Company, founded by Elihu Thomson and Edwin Houston, who held several patents for their development of arc lighting. Some of their electrical systems differed from Edisons through the use of alternating-current (AC) equipment, which can transmit over longer distances than DC systems. By the early 1890s the spread of electrification was threatened by the conflict between the two technologies and by patent deadlocks, which prevented further developments because of patent-infringement problems.

By 1889, Edison had consolidated all of his companies under the name of the Edison General Electric Company. Three years later, in 1892, this company was merged with the Thomson-Houston Electric Company to form the General Electric Company. Although this merger was the turning point in the electrification of the United States, it resulted in Edisons resignation from GE. He had been appointed to the board of directors but he attended only one board meeting, and sold all of his shares in 1894, though he remained a consultant to General Electric and continued to collect royalties on his patents. The president of the new company was Charles A. Coffin, a former shoe manufacturer who had been the leading figure at Thomson-Houston. Coffin remained president of General Electric until 1913, and was chairman thereafter until 1922.

In 1884, Frank Julian Sprague, an engineer who had worked on electric systems with Edison, resigned and formed the Sprague Electric Railway and Motor Company, which built the first large-scale electric streetcar system in the United States, in Richmond, Virginia. In 1889 Spragues company was purchased by Edisons. In the meantime, the two other major electric-railway companies in the United States had merged with Thomson-Houston, so that by the time General Electric was formed, it was the major supplier of electrified railway systems in the United States.

One year after the formation of General Electric, the company won a bid for the construction of large AC motors in a textile mill in South Carolina. The motors were the largest manufactured by General Electric at the time and were so successful that orders soon began to flow in from other industries such as cement, paper, and steel. In that same year, General Electric began its first venture into the field of power transmission with the opening of the Redlands-Mill Creek power line in California, and in 1894 the company constructed a massive power-transmission line at Niagara Falls. Meanwhile the companys electric-railroad ventures produced an elevated electric train surrounding the fairgrounds of the Chicago Worlds Fair in 1893. Electrification of existing rail lines began two years later.

Early 20th Century: Bolstering Electrification Operations and Moving Beyond Them

By the turn of the century General Electric was manufacturing everything involved in the electrification of the United States: generators to produce electricity, transmission equipment to carry power, industrial electric motors, electric light bulbs, and electric locomotives. It is important to any understanding of the evolution of GE to realize that though it was diverse from the beginning, all of its enterprises centered on the electrification program. It is also worth noting that it operated in the virtual absence of competition. General Electric and the Westinghouse Electric Company had been competitors, but the companies entered into a patent pool in 1896.

Company Perspectives:

We begin this century with a GE totally focused on the customer, utterly energized and rejuvenated by e-Business, and driven by the relentless beat of a unique operating system and social architecture. This Company is poised to move forward to levels of performance, growth and excitement undreamed of in the past.

In 1900 GE established the first industrial laboratory in the United States. Up to that point, research had been carried out in universities or in private laboratories similar to Edisons Menlo Park laboratory. Initially, the lab was set up in a barn behind the house of one of the researchers, but the lab was moved in 1900 to Schenectady, New York, after it was destroyed in a fire. The head of the research division was a professor from the Massachusetts Institute of Technology. The importance of research at General Electric cannot be underestimated, for GE has been awarded more patents over the years than any other company in the United States.

During the early decades of the 20th century General Electric made further progress in its established fields, and also made its first major diversification. In 1903 General Electric bought the Stanley Electric Manufacturing Company of Pittsfield, Massachusetts, a manufacturer of transformers. Its founder, William Stanley, was the developer of the transformer.

By this time GEs first light bulbs were in obvious need of improvement. Edisons bamboo filament was replaced in 1904 by metalized carbon developed by the companys research lab. That filament, in turn, was replaced several years later by a tungsten-filament light bulb when William Coolidge, a GE researcher, discovered a process to render the durable metal more pliable. This light bulb was so rugged and well suited for use in automobiles, railroad cars, and street cars that it was still employed in the 1990s. In 1913, two other innovations came out of the GE labs: Irving Langmuir discovered that gas-filled bulbs were more efficient and reduced bulb blackening. To this day virtually all bulbs over 40 watts are gas-filled.

The first high-vacuum, hot-cathode X-ray tube, known as the Coolidge tube, was also developed in 1913. Coolid GEs research into tungsten had played an important role in the development of the X-ray tube. The device, which combined a vacuum with a heated tungsten filament and tungsten target, has been the foundation of virtually all X-ray tubes produced ever since, and its development laid the foundation for medical technology operations at General Electric.

Perhaps GEs most important development in the early part of this century was its participation in the development of the high-speed steam turbine in conjunction with English, Swedish, and other inventors. Until this invention, all electricity (except hydroelectric) had been produced by generators that turned at no more than 100 rpm, which limited the amount of electricity a single unit could produce. An independent inventor had come up with a design for a very-high-speed steam turbine before the turn of the century, but it took five years of research before GE could construct a working model. By 1901, however, a 500-kilowatt, 1,200-rpm turbine generator was operating. Orders for the turbines followed almost immediately, and by 1903 a 5,000-kilowatt turbine was in use at Chicagos Commonwealth Edison power company.

Such rapid progress led to rapid obsolescence as well, and the Chicago units were replaced within six years. As a result, GE shops in Schenectady were soon overflowing with business. By 1910 the volume of the companys trade in turbine generators had tripled and GE had sold almost one million kilowatts of power capacity. At the same time, General Electric scientists were also researching the gas turbine. Their investigations eventually resulted in the first flight of an airplane equipped with a turbine-powered supercharger.

Key Dates:

1878:
Thomas Edison establishes the Edison Electric Light Company.
1889:
Edison has, by this date, consolidated all of his companies under the name of the Edison General Electric Company.
1892:
Edisons company merges with the Thomson-Houston Electric Company to form the General Electric Company (GE).
1894:
Edison sells all his shares in the company, remaining a consultant to GE.
1900:
GE establishes the first industrial laboratory in the United States.
1903:
Stanley Electric Manufacturing Company of Pitts-field, Massachusetts, a manufacturer of transformers, is acquired.
1906:
The first GE major appliance, an electric range, is introduced.
1918:
GE merges with Pacific Electric Heating Company, maker of the Hotpoint iron, and Hughes Electric Heating Company, maker of an electric range; and forms the Edison Electric Appliance Company to sell products under the GE and Hotpoint brands.
1919:
GE, AT&T, and Westinghouse form the Radio Corporation of America (RCA) to develop radio technology.
1924:
GE exits from the utilities business following government antitrust action.
1930:
Company sells its holdings in RCA because of antitrust considerations.
1938:
GE introduces the fluorescent lamp.
1943:
General Electric Capital Corporation is established.
1949:
Under antitrust pressure, the company is forced to release its light bulb patents to other companies.
1955:
The U.S. Navy launches the submarine Seawolf, which is powered by a GE nuclear reactor.
1957:
GE receives a license from the Atomic Energy Commission to operate a nuclear power plant; an enormous appliance manufacturing site, Appliance Park, in Louisville, Kentucky, is completed.
1961:
The company pleads guilty to price fixing on electrical equipment and is fined nearly half a million dollars.
1976:
GE spends $2.2 billion to acquire Utah International, a major coal, copper, uranium, and iron miner and a producer of natural gas and oil.
1981:
John F. (Jack) Welch, Jr., becomes chairman and CEO.
1986:
Company acquires RCA, which includes the National Broadcasting Company (NBC), for $6.4 billion; Employers Reinsurance is also acquired for $1.1 billion, as well as an 80 percent stake in Kidder Peabody.
1994:
Company liquidates Kidder Peabody.
1998:
Revenues surpass the $100 billion mark.

In the early days of electric power, electricity was produced only during evening hours, since electric lighting was not needed during the day and there were no other products to use electricity. GE, as the producer of both electricity-generating equipment and electricity-consuming devices, naturally sought to expand both ends of its markets. The first major expansion of the General Electric product line was made in the first decade of the 20th century. Before the turn of the century, light bulbs and electric fans were GEs only consumer product. One of the first household appliances GE began to market was a toaster in 1905. The following year the company attempted to market an electric range. The unwieldy device consisted of a wooden table top equipped with electric griddles, pans, toasters, waffle irons, pots, and a coffee maker, each with its own retractable cord to go into any one of 30 plugs. The range was followed by a commercial electric refrigerator in 1911 and by an experimental household refrigerator six years later.

At the same time two other companies in the United States were producing electric devices for the home. The Pacific Electric Heating Company produced the first electric appliance to be readily accepted by the public: the Hotpoint iron. The Hughes Electric Heating Company produced and marketed an electric range. In 1918 all three companies were prospering, but to avoid competition with one another, they agreed upon a merger. The new company combined GEs heating-device section with Hughes and Pacific to form the Edison Electric Appliance Company, whose products bore either the GE or the Hotpoint label.

GEs first diversification outside electricity came with its establishment of a research staff to investigate plastics. This occurred primarily at the prompting of Charles P. Steinmetz, a brilliant mathematician who had been with the company since the 1890s. All of the initial work by this group was devoted to coatings, varnishes, insulation, and other products related to electrical wiring, so that even this diversification was tied in to electrification.

A more radical branching of GEs activities occurred in 1912, when Ernst Alexanderson, a GE employee, was approached by a radio pioneer looking for a way to expand the range of wireless sets into higher frequencies. Alexanderson worked for almost a decade on the project before he succeeded in creating electromagnetic waves that could span continents, instead of the short distances to which radios had been limited. In 1922, General Electric introduced its own radio station, WGY, in Schenectady. In 1919, at the request of the government, GE formed, in partnership with AT&T and Westinghouse, the Radio Corporation of America (RCA) to develop radio technology. GE withdrew from the venture in 1930, when antitrust considerations came to the fore. General Electric also operated two experimental shortwave stations that had a global range.

Other developments at General Electric contributed to the progress of the radio. Irving Langmuir had developed the electron tube. This tube, necessary for amplifying the signals in Alexandersons radio unit, was capable of operating at very high power. Other important developments by scientists at General Electric included the worlds first practical loudspeaker and a method for recording complex sound on film that is still in use today.

Developments continued apace at GE in the electric motor field. In 1913 the U.S. Navy commissioned General Electric to build the first ship to be powered by turbine motors rather than steam. In 1915 the first turbine-propelled battleship sailed forth, and within a few years, all of the navys large ships were equipped with electric power. General Electric also owned several utility companies that generated electrical power, but in 1924 GE left the utilities business when the federal government brought antitrust action against the company.

During the Great Depression the company introduced a variety of consumer items such as mixers, vacuum cleaners, air conditioners, and washing machines. GE also introduced the first affordable electric refrigerator in the late 1920s. It was designed by a Danish toolmaker, Christian Steenstrup, who later supervised mechanical research at the GE plant in Schenectady. In addition, GE introduced its first electric dishwasher in 1932, the same year that consumer financing of personal appliances was introduced.

Also in 1932 the first Nobel Prize ever awarded to a scientist not affiliated with a university went to Irving Langmuir for his work at GE on surface chemistry, research that had grown out of his earlier work on electron tubes. The years that followed witnessed a steady stream of innovation in electronics from the GE labs. These included the photoelectric-relay principle, rectifier tubes that eliminated batteries from home receivers, the cathode-ray tube, and glass-to-metal seals for vacuum tubes. Many of these developments in electronics were crucial to the growth of radio broadcasting.

The broadcasting division of General Electric achieved a breakthrough in the late 1930s. The company had been developing a mode of transmission known as frequency modulation (FM) as an alternative to the prevailing amplitude modulation (AM). In 1939 a demonstration conducted for the Federal Communications Commission proved that FM had less static and noise. GE began broadcasting in FM the following year.

Of course, the light bulb was not forgotten in this broadening of research activity at General Electric. The worlds first mercury-vapor lamp was introduced in 1934, followed four years later by the fluorescent lamp. The latter produced light using half the power of incandescent bulbs, with about twice the lifespan. Less than a year after the introduction of the fluorescent light, General Electric introduced the sealed-beam automotive headlight.

Even though production of convenience items for the consumer halted during World War II, the war proved profitable for General Electric, whose revenues quadrupled during the war. The president of General Electric at the time, Charles Wilson, joined the War Production Board in 1942. GE produced more than 50 different types of radar for the armed forces and over 1,500 marine power plants for the navy and merchant marine. The company, using technology developed by the Englishman Frank Whittle, also conducted research on jet engines for aircraft. The Bell XP-59, the first U.S. jet aircraft, flew in 1942 powered by General Electric engines. By the end of the war this technology helped General Electric develop the nations first turboprop engine.

Postwar Growth and Difficulties

When production of consumer goods resumed immediately after the war, GE promptly found itself in another antitrust battle. The government discovered that GE controlled 85 percent of the light bulb industry55 percent through its own output and the other 30 percent through licensees. In 1949 the court forced GE to release its patents to other companies.

In this period the first true product diversifications came out of GEs research labs. In the 1940s a GE scientist discovered a way to produce large quantities of silicone, a material GE had been investigating for a long time. In 1947 GE opened a plant to produce silicones, which allowed the introduction of many products using silicone as a sealant or lubricant.

Meanwhile, as research innovation blossomed and postwar business boomed, the company began an employee relations policy known asBoulwarism,from Lemuel Boulware, the manager who established the policy. The policy, which eliminated much of the bargaining involved in labor-management relations, included the extension by GE to union leaders of a non-negotiable contract offer.

During the late 1940s General Electric embarked on a study of nuclear power and constructed a laboratory specifically for the task. Company scientists involved in an earlier attempt to separate U-235 from natural uranium were developing nuclear power plants for naval propulsion by 1946. In 1955 the navy launched the submarine Seawolf, the worlds first nuclear-powered vessel, with a reactor developed by General Electric. In 1957 the company received a license from the Atomic Energy Commission to operate a nuclear-power reactor, the first license granted in the United States for a privately owned generating station. That same year GEs consumer-appliance operations got a big boost when an enormous manufacturing site, Appliance Park, in Louisville, Kentucky, was completed. The flow of new GE productshair dryers, skillets, electronic ovens, self-cleaning ovens, electric knivescontinued.

Other innovations to come from GE labs during the 1950s included an automatic pilot for jet aircraft, Lexan polycarbonate resin, the first all-transistor radio, jet turbine engines, gas turbines for electrical power generation, and a technique for fabricating diamonds.

Antitrust problems continued to vex the company throughout the postwar years. In 1961 the Justice Department indicted 29 companies, of which GE was the biggest, for price fixing on electrical equipment. All the defendants pleaded guilty. GEs fine was almost half a million dollars, damages it paid to utilities who had purchased price-fixed equipment came to at least $50 million, and three GE managers received jail sentences and several others were forced to leave the company.

During the 1960s and 1970s GE grew in all fields. In 1961 it opened a research center for aerospace projects, and by the end of the decade had more than 6,000 employees involved in 37 projects related to the moon landing. In the 1950s General Electric entered the computer business. This venture, however, proved to be such a drain on the companys profits that GE sold its computer business to Honeywell in 1971.

By the late 1960s, GEs management began to feel that the company had become too large for its existing structures to accommodate. Accordingly, the company instituted a massive organizational restructuring. Under this restructuring program, the number of distinct operating units within the company was cut from more than 200 to 43. Each new section operated in a particular market and was headed by a manager who reported to management just beneath the corporate policy board. The sections were classified into one of three categoriesgrowth, stability, or no-growthto facilitate divestment of unprofitable units.

When this reorganization was complete, General Electric made what was at the time the largest corporate purchase ever. In December 1976 GE paid $2.2 billion for Utah International, a major coal, copper, uranium, and iron miner and a producer of natural gas and oil. The company did 80 percent of its business in foreign countries. Within a year Utah International was contributing 18 percent of GEs total earnings.

The divestiture of its computer business had left GE without any capacity for manufacturing integrated circuits and the high-technology products in which they are used. In 1975 a study of the companys status concluded that GE, one of the first U.S. electrical companies, had fallen far behind in electronics. As a result, GE spent some $385 million to acquire Intersil, a semiconductor manufacturer; Calma, a producer of computer-graphics equipment; and four software producers. The company also spent more than $100 million to expand its microelectronics facilities.

Other fields in which GE excelled were in trouble by the mid-1970s, most notably nuclear power. As plant construction costs skyrocketed and environmental concerns grew, the companys nuclear-power division began to lose money. GEs management, however, was convinced that the problem was temporary and that sales would pick up in the future. When by 1980 General Electric had received no new orders for plants in five years, nuclear power began to look more and more like a prime candidate for divestment. GE eventually pulled out of all aspects of the nuclear-power business except for providing service and fuel to existing plants and conducting research on nuclear energy.

Though General Electrics growth was tremendous during the 1970s and earnings tripled between 1971 and 1981, the companys stock performance was mediocre. GE had become so large and was involved in so many activities that some regarded its fortunes as capable only of following the fortunes of the country as a whole.

1981 and Beyond: The Jack Welch Era

GEs economic problems were mirrored by its managerial reshuffling. When John F. (Jack) Welch, Jr., became chairman and CEO in 1981, General Electric entered a period of radical change. Over the next several years, GE bought 338 businesses and product lines for $11.1 billion and sold 232 for $5.9 billion. But Welchs first order of business was to return much of the control of the company to the periphery. Although he decentralized management, he retained predecessor Reginald Joness system of classifying divisions according to their performance. His goal was to make GE number one or two in every field of operation.

One branch of GEs operations that came into its own during this period was the General Electric Credit Corporation, founded in 1943. Between 1979 and 1984, its assets doubled, to $16 billion, due primarily to expansion into such markets as the leasing and selling of heavy industrial goods, inventories, real estate, and insurance. In addition, the leasing Operations provided the parent company with tax shelters from accelerated depreciation on equipment developed by GE and then leased by the credit corporation.

Factory automation became a major activity at GE during the early 1980s. GEs acquisitions of Calma and Intersil were essential to this program. In addition, GE entered into an agreement with Japans Hitachi to manufacture and market Hitachis industrial robots in the United States. GE itself spent $300 million to robotize its locomotive plant in Erie, Pennsylvania. Two years later GEs aircraft-engine business also participated in an air force plant-modernization program and GE later manufactured the engines for the controversial B-1B bomber.

In 1986 General Electric made several extremely important purchases. The largest was the $6.4 billion purchase of the Radio Corporation of American (RCA), the company GE had helped to found in 1919. RCAs National Broadcasting Company (NBC), the leading U.S. television network, brought GE into the broadcasting business in full force. Although both RCA and GE were heavily involved in consumer electronics, the match was regarded by industry analysts as beneficial, since GE had been shifting from manufacturing into service and high technology. After the merger, almost 80 percent of GEs earnings came from services and high technology, compared to 50 percent six years earlier. GE divested itself of RCAs famous David Sarnoff Research Center, since GEs labs made it redundant. In 1987 GE also sold its own and RCAs television-manufacturing businesses to the French company Thomson in exchange for Thomsons medical diagnostics business.

GE justified the merger by citing the need for size to compete effectively with large Japanese conglomerates. Critics, however, claimed that GE was running from foreign competition by increasing its defense contracts (to almost 20 percent of its total business) and its service business, both of which were insulated from foreign competition.

In 1986 GE also purchased the Employers Reinsurance Corporation, a financial services company, from Texaco, for $1.1 billion, and an 80 percent interest in Kidder Peabody and Company, an investment banking firm, for $600 million, greatly broadening its financial services division. Although Employers Reinsurance contributed steadily to GEs bottom line following its purchase, Kidder Peabody lost $48 million in 1987, in part due to the settlement of insider trading charges. Kidder Peabody did come back in 1988 to contribute $46 million in earnings, but the acquisition still troubled some analysts. GE owned 100 percent of Kidder Peabody by 1990.

General Electrics operations were divided into three business groups in the early 1990s: technology, service, and manufacturing. Its manufacturing operations, traditionally the core of the company, accounted for roughly one-third of the companys earnings. Still, GE continued to pour more than $1 billion annually into research and development of manufactured goods. Much of that investment was directed at energy conservationmore efficient light bulbs, jet engines, and electrical power transmission methods, for example.

In 1992 GE signaled its intent to step up overseas activity with the purchase of 50 percent of the European appliance business of Britains General Electric Company (GEC). The two companies also made agreements related to their medical, power systems, and electrical distribution businesses. Welch said that his aim was to make GE the nations largest company. To that end, General Electric continued to restructure its existing operations in an effort to become more competitive in all of its businesses. Most importantly, the company launched an aggressive campaign to become dominant in the growing financial services sector.

GEs aggressive initiatives related to financial services reflected the fact that the service sector represented more than three-quarters of the U.S. economy going into the mid-1990s. Furthermore, several service industries, including financial, were growing rapidly. GEs revenues from its giant NBC and GE Capital divisions, for example, rose more than 12 percent annually from about $14.3 billion in 1988 to more than $25 billion in 1994. Encouraged by those gains, GEs merger and acquisition activity intensified. For example, in 1994 the company offered a $2.2 billion bid for Kemper Corp., a diversified insurance and financial services company (it retracted the bid in 1995). GEs sales from services as a percentage of total revenues increased from 30 percent in 1988 to nearly 45 percent in 1994, and neared 60 percent by 1996. The troubled Kidder Peabody unit remained a drag on GEs services operations, leading to the companys late 1994 decision to liquidate the unit. As part of the liquidation, GE sold some Kidder Peabody assets and operations to Paine Webber Group Inc. for $657 million.

In contrast to its service businesses, GEs total manufacturing receipts remained stagnant at about $35 billion. Nevertheless, restructuring was paying off in the form of fat profit margins in many of its major product divisions. Importantly, GE made significant strides with its Aircraft Engine Group. Sales fell from $8 billion in 1991 to less than $6 billion in 1995, but profit margins rose past 18 percent after dipping to just 12 percent in 1993. Reflective of restructuring efforts in other GE divisions, the company accomplished the profit growth by slashing the engineering workforce from 10,000 to 4,000 and reducing its overall Aircraft Engine Group payroll by about 50 percent, among other cost-cutting moves.

Despite a global economic downturn in the early 1990s, GE managed to keep aggregate sales from its technology, service, and manufacturing operations stable at about $60 billion annually. More importantly, net income surged steadily from $3.9 billion in 1989 to $5.9 billion in 1994, excluding losses in the latter year from Kidder Peabody operations. In 1994, in fact, General Electric was the most profitable of the largest 900 U.S. corporations, and was trailed by General Motors, Ford, and Exxon. Revenues reached $70 billion by 1995, the same year that the companys market value exceeded $100 billion for the first time.

The late 1990s saw General Electric reach a number of milestones. In 1996 the company celebrated its 100th year as part of the Dow Jones Index; GE was the only company remaining from the original list. That year, NBC joined with Microsoft Corporation in launching MSNBC, a 24-hour cable television news channel and Internet news service. Overall revenues exceeded the $100 billion mark for the first time in 1998, while the continuing stellar growth at GE Capital led that unit to generate nearly half of GE s revenues by the end of the decade.

Acquisitions in the late 1990s centered on two of the companys growth initiatives: services and globalization. In 1996 the GE Appliances division acquired a 73 percent interest in DAKO S.A., the leading manufacturer of gas ranges in Brazil. GE Capital Services expanded in Japan through the 1996 purchase of an 80 percent stake in Marubeni Car System Co., an auto leasing firm; the 1998 acquisitions of Koei Credit and the consumer finance business of Lake Corporation; and the 1998 formation of GE Edison Life following the purchase of the sales operations of Toho Mutual Life Insurance, which made GE Capital the first foreign company involved in the Japanese life insurance market. In early 1999 GE Capital made its largest deal in Japan to date with the purchase of the leasing business of Japan Leasing Corporation, a business with $7 billion in leasing assets. Then in late 1999 GE Capital agreed to purchase the remaining assets of Toho Mutual for ¥240 billion (US$2.33 billion); Toho had collapsed during 1999 after suffering huge losses from the thousands of old, unprofitable policies in its portfolio, and a large portion of its liabilities were to be covered by Japans life insurance association. Expansion also continued in Europe for GE Capital, highlighted by the 1997 acquisition of Woodchester, one of the largest financial services companies in Ireland. Overall, GE spent some $30 billion during the 1990s in completing more than 130 European acquisitions.

Under Welchs leadership, General Electric in the late 1990s also adoptedsix sigma,a quality control and improvement initiative pioneered by Motorola, Inc. and AlliedSignal Inc. The program aimed to cut costs by reducing errors or defects. GE claimed that by 1998 six sigma was yielding $1 billion in annual savings. The company also continued to restructure as necessary, including taking a $2.3 billion charge in late 1997 to close redundant facilities and shift production to cheaper labor markets. During 1999 General Electric adopted a fourth growth initiative, e-business (globalization, services, and six sigma being the other three). Like many longstanding companies, GE reacted cautiously when the Internet began its late 1990s explosion. But once he was convinced of the new mediums potential, Welch quickly adopted e-commerce as a key to the companys future growth. Among the early ventures was a plan to begin selling appliances through Home Depot Inc.s web site, a move aimed at revitalizing lagging appliance sales.

In late 1999 Welch announced that he planned to retire in April 2001 but he did not name a successor. At the time, General Electric was one of the worlds fastest growing and most profitable companies, and boasted a market capitalization of $505 billion, second only to Microsoft. Revenues for 1999 increased 11 percent to $111.63 billion while net income rose 15 percent to $10.72 billion. These figures also represented huge gains since Welch took over in 1981, when the company posted profits of $ 1.6 billion on sales of $27.2 billion. According to Barrons, $100 invested in GE stock in 1981 would have been worth $4,676 in early 1999. GE and Welch were consistently mentioned as among the most admired companies and managers, respectively, in the world. It appeared likely that Welch, only the eighth CEO in GEs long history, would leave his successor a mighty challenge: continuing one of the most remarkable periods of achievement for a company in all of business history.

Principal Subsidiaries

Caribe General Electric Products, Inc.; GE Aircraft Engines Maintenance Services, Ltd. Wales (U.K.); GE Appliances Parts LLC; GE Energy Parts, Inc.; GE Engine Services Distribution, LLC; GE Fanuc Automation North America Inc. (55%); GE Information Services, Inc.; GE Lighting Tungsram RT (Hungary); GE Plastics Pacific Pte. Ltd. (Singapore); GE Power Systems Licensing Inc.; GE Quartz Inc.; GE Superabrasives Ireland (Bermuda); GE Yokogawa Medical Systems, Ltd. (Japan; 75%); General Electric Canadian Holdings Limited (Canada); General Electric Capital Services, Inc.; General Electric Capital Corporation; GE Global Insurance Holding Corporation; General Electric International, Inc.; General Electric Plastics B.V. (Netherlands); National Broadcasting Company, Inc.; Nuovo Pignone SpA (Italy; 92%); RCA Thomson Licensing Corporation (96%).

Principal Operating Units

GE Aircraft Engines; GE Appliances; GE Capital Services; GE Industrial Systems; GE Lighting; GE Medical Systems; National Broadcasting Company; GE Plastics; GE Power Systems; GE Transportation Systems.

Principal Competitors

ABB Ltd.; Agilent Technologies, Inc.; American International Group, Inc.; Alstom S.A.; Bank of America Corporation; Caterpillar Inc.; CIGNA Corporation; Cooper Industries, Inc.; Elec-trolux AB; General Motors Corporation; General Re Corporation; GTE Corporation; Hitachi, Ltd.; ITT Industries, Inc.; Johnson Controls, Inc.; Koninklijke Philips Electronics N.V.; Matsushita Electric Industrial Co., Ltd.; Maytag Corporation; Mitsubishi Group; Mitsui Group; The News Corporation Limited; Polaroid Corporation; Raytheon Company; Rockwell International Corporation; Rohm and Haas Company; Rolls-Royce pic; Siemens AG; Textron Inc.; Thyssen Krupp AG; Time Warner Inc.; Toshiba Corporation; United Technologies Corporation; U.S. Industries, Inc.; Viacom Inc.; The Walt Disney Company; Whirlpool Corporation.

Further Reading

Banks, Howard, General Electric: Going with the Winners, Forbes, March 26, 1984, pp. 97 +.

Bernstein, Aaron, Susan Jackson, and John Byrne, Jack Cracks the Whip Again, Business Week, December 15, 1997, pp. 34-35.

Bongiorno, Lori, Hot Damn, What a Year!, Business Week, March 6,1995, pp. 98-100.

Brady, Diane, How GE Locked Up That Boeing Order, Business Week, August 9, 1999, pp. 72, 74-75.

Byrne, John A., JackA Close-up Look at How Americas #1 Manager Runs GE, Business Week, June 8, 1998, pp. 90-95, 98-99, 102, 104-6, 110-11.

Byrne, John A., and Jennifer Reingold, Who Will Step into Jack Welchs Shoes?, Business Week, December 21, 1998, pp. 37-38.

Carley, William M., Power Ranger: GE Taps Trains Chief in Effort to Shore Up Troubled Energy Unit, Wall Street Journal, May 6, 1996, pp. A1 +.

Carlson, W. Bernard, Innovation As a Social Process: Elihu Thomson and the Rise of General Electric, 1870-1900, New York: Cambridge University Press, 1991, 377 p.

Colvin, Geoffrey, The Ultimate Manager, Fortune, November 22, 1999, pp. 185-87.

A Conversation with Roberto Goizueta and Jack Welch, Fortune, December 11, 1995, pp. 96-99, 102.

Cox, James A., A Century of Light, New York: Benjamin, 1979, 224 p.

Curran, John, GE Capital: Jack Welchs Secret Weapon, Fortune, November 10, 1997, pp. 116-20, 124, 126, 130, 132, 134.

Farrell, John, GE Cuts Number in Layoff Plans, Capital District Business Review, October 31, 1994, p. 5.

Finn, Edwin A., Jr., General Eclectic, Forbes, March 23, 1987, pp. 74 +.

GE Monkeys with Its Money Machine, Fortune, February 21, 1994, p. 81.

GE: Not Recession Proof, but Recession Resistant, Forbes, March 15, 1975, p. 26.

Grant, Linda, GEssmart Bomb Strategy, Fortune, July 21, 1997, pp. 109-110.

Griffiths, Dave, GE + RCA = A Powerhouse Defense Contractor, Business Week, January 27, 1986, pp. 116 +.

Grover, Ronald, and Mark Landler, NBC Is No Longer a Feather in GEs Cap, Business Week, June 3, 1991, pp. 88 +.

Hammond, John Winthrop, Men and Volts: The Story of General Electric, Philadelphia: Lippincott, 1941, 436 p.

Harris, Marilyn A., et al., Can Jack Welch Reinvent GE?, Business Week, June 30, 1986, pp. 62 +.

Jack Welchs Lessons for Success, Fortune, January 25,1993, p. 86.

Koenig, Peter, If Europes Dead, Why Is GE Investing Billions There?, Fortune, September 9, 1996, pp. 114-18.

Laing, Jonathan R., Riding into the Sunset: Can Jack Welchs Successor at General Electric Hope to Inherit His Magic Touch?, Barrons, February 15, 1999, pp. 23-24, 26-27.

McClenahen, John S., CEO of the Decade, Industry Week, November 15, 1999, p. 38.

Miller, John Anderson, Men and Volts at War: The Story of General Electric in World War II, New York: McGraw-Hill, 1947, 272 p.

Mitchell, Russell, Jack Welch: How Good a Manager?, Business Week, December 14, 1987, pp. 92 +.

Morrison, Ann M., Trying to Bring GE to Life, Fortune, January 25, 1982, pp. 50 +.

Murray, Matt, GE Chairman Sets His Departure Date for 2001: Successor Remains Unclear, Wall Street Journal, November 3, 1999, p. B12.

, Late to the Web, GE Now Views Internet As Key to New Growth, Wall Street Journal, June 22, 1999, p. Bl.

Norman, James R., General Electric Is Stalking Big Game Again, Business Week, March 16, 1987, pp. 112 +.

OBoyle, Thomas F., At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit, New York: Knopf, 1998, 449 p.

Pare, Terence P., GE As a Service Company, Fortune, April 18, 1994, p. 16.

, Jack Welchs Nightmare on Wall Street, Fortune, September 5, 1994, p. 40.

Petre, Peter, What Welch Has Wrought at GE, Fortune, July 7,1986, pp. 42 +.

Schatz, Ronald W., The Electrical Workers: A History of Labor at General Electric and Westinghouse, 1923-1960, Urbana: University of Illinois Press, 1983, 279 p.

Sherman, Stratford P., Inside the Mind of Jack Welch, Fortune, March 27, 1989, pp. 38 +.

Slater, Robert, The New GE: How Jack Welch Revived an American Institution, Homewood, 111.: Business One Irwin, 1993, 295 p.

Smart, Tim, GEs Money Machine, Business Week, March 8, 1993, pp. 62 +.

, Jack Welchs Cyber-Czar, Business Week, August 5, 1996, pp. 82-83.

, Jack Welchs Encore, Business Week, October 28, 1996, pp. 154-60.

, Just Imagine If Times Were Good, Business Week, April 17, 1995, pp. 78-79.

Smart, Tim, Pete Engardio, and Gerì Smith, GEs Brave New World, Business Week, November 8, 1993, pp. 64 +.

Stewart, Thomas A., GE Keeps Those Ideas Coming, Fortune, August 12, 1991, pp. 40 +.

, See Jack. See Jack Run Europe, Fortune, September 27,1999, pp. 124-27, 130, 132, 136.

Tichy, Noel M., and Stratford Sherman, Control Your Destiny or Someone Else Will: How Jack Welch Is Making General Electric the Worlds Most Competitive Corporation, New York: Doubleday, 1993, 384 p.

Vogel, Todd, Big Changes Are Galvanizing General Electric, Business Week, December 18, 1989, pp. 100 +.

Wise, George, Willis R. Whitney, General Electric, and the Origins of U.S. Industrial Research, New York: Columbia University Press, 1985, 375 p.

Dave Mote

updated by David E. Salamie

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General Electric Company

General Electric Company

3135 Easton Turnpike
Fairfield, Connecticut 06431
U.S.A.
(203) 373-2211
Fax: (203) 373-2071

Public Company
Incorporated: 1892
Employees: 222,000
Sales: $60.1 billion
Stock Exchanges: New York Boston London Tokyo
SICs: 3511 Steam, Gas, & Hydraulic Turbines, & Turbine Generator Set Units; 3612 Power Distribution & Specialty Transformers; 6141 Personal Credit Institutions; 6159 Miscellaneous Business Credit Institutions; 6411 Insurance Agents, Brokers, & Service

The history of General Electric is a significant part of the history of technology in America. GE has evolved from Thomas Edisons home laboratory into one of the largest companies in the world, following the evolution of electrical technology from the simplest early applications into the high-tech wizardry of the late twentieth century.

Thomas Edison established himself in the 1870s as an inventor after devising, at the age of 23, an improved stock ticker. He subsequently began research on an electric light as a replacement for gas light, the standard method of illumination at the time. In 1876 Edison moved into a laboratory in Menlo Park, New Jersey. Two years later, in 1878, Edison established, with the help of his friend Grosvenor Lowry, the Edison Electric Light Company with a capitalization of $300,000. Edison received half of the new companys shares on the agreement that he work on developing an incandescent lighting system. The major problem Edison and his team of specialists faced was finding an easy-to-produce filament that would resist the passage of electrical current in the bulb for a long time. He triumphed only a year after beginning research when he discovered that common sewing thread, once carbonized, worked in the laboratory. For practical applications, however, he switched to carbonized bamboo.

Developing an electrical lighting system for a whole community involved more than merely developing an electric bulb; the devices that generated, transmitted, and controlled electric power also had to be invented. Accordingly, Edison organized research into all of these areas and in 1879, the same year that he produced an electric bulb, he also constructed the first dynamo, or direct-current generator.

The first application of electric lighting was on the steam ship Columbia in 1880. In that same year, Edison constructed a three-mile-long trial electric railroad at his Menlo Park laboratory. The first individual system of electric lighting came in 1881, in a printing plant. However, the first full-scale public application of the Edison lighting system was actually made in London, at the Holborn Viaduct. The first system in the United States came soon after when Pearl Street Station was opened in New York City. Components of the system were manufactured by different companies, some of which were organized by Edison; lamps came from the parent company, dynamos from the Edison Machine Works, and switches from Bergmann & Company of New York. In 1886, the Edison Machine Works was moved from New Jersey to Schenectady, New York.

While these developments unfolded at Edisons company, the Thomson-Houston Company was formed from the American Electric Company, founded by Elihu Thomson and Edwin Houston, who held several patents for their development of arc lighting. Some of their electrical systems differed from Edisons through the use of alternating-current (AC) equipment, which can transmit over longer distances than DC systems. By the early 1890s the spread of electrification was threatened by the conflict between the two technologies and by patent deadlocks, which prevented further developments because of patent-infringement problems.

By 1889, Edison had consolidated all of his companies under the name of the Edison General Electric Company. Three years later, in 1892, this company was merged with the Thomson-Houston Electric Company to form the General Electric Company. Although this merger was the turning point in the electrification of the United States, it resulted in Edisons resignation from GE. He had been appointed to the board of directors but he attended only one board meeting, and sold all of his shares in 1894, although he remained a consultant to General Electric and continued to collect royalties on his patents. The president of the new company was Charles A. Coffin, a former shoe manufacturer who had been the leading figure at Thomson-Houston. Coffin remained president of General Electric until 1913, and was chairman thereafter until 1922.

In 1884, Frank Julian Sprague, an engineer who had worked on electric systems with Edison, resigned and formed the Sprague Electric Railway and Motor Company, which built the first large-scale electric streetcar system in the United States, in Richmond, Virginia. In 1889 Spragues company was purchased by Edisons. In the meantime, the two other major electric-railway companies in the United States had merged with Thomson-Houston, so that by the time General Electric was formed, it was the major supplier of electrified railway systems in the United States.

One year after the formation of General Electric, the company won a bid for the construction of large AC motors in a textile mill in South Carolina. The motors were the largest manufactured by General Electric at the time and were so successful that orders soon began to flow in from other industries like cement, paper, and steel. In that same year, General Electric began its first venture into the field of power transmission with the opening of the Redlands-Mill Creek power line in California, and in 1894 the company constructed a massive power-transmission line at Niagara Falls. Meanwhile the companys electric-railroad ventures produced an elevated electric train surrounding the fairgrounds of the Chicago Worlds Fair in 1893. Electrification of existing rail lines began two years later.

By the turn of the century General Electric was manufacturing everything involved in the electrification of the United States: generators to produce electricity, transmission equipment to carry power, industrial electric motors, electric light bulbs, and electric locomotives. It is important to any understanding of the evolution of GE to realize that though it was diverse from the beginning, all of its enterprises centered on the electrification program. It is also worth noting that it operated in the virtual absence of competition. General Electric and the Westinghouse Electric Company had been competitors, but the companies entered into a patent pool in 1896.

In 1900 GE established the first industrial laboratory in the United States. Up to that point, research had been carried out in universities or in private laboratories similar to Edisons Menlo Park laboratory. Initially, the lab was set up in a barn behind the house of one of the researchers, but the lab was moved in 1900 to Schenectady, New York, after it was destroyed in a fire. The head of the research division was a professor from the Massachusetts Institute of Technology. The importance of research at General Electric cannot be underestimated, for GE has been awarded more patents over the years than any other company in the United States.

During the early decades of the twentieth century General Electric made further progress in its established fields, and also made its first major diversification. In 1903 General Electric bought the Stanley Electric Manufacturing Company of Pitts-field, Massachusetts, a manufacturer of transformers. Its founder, William Stanley, was the developer of the transformer.

By this time GEs first light bulbs were in obvious need of improvement. Edisons bamboo filament was replaced in 1904 by metalized carbon developed by the companys research lab. That filament, in turn, was replaced several years later by a tungsten-filament light bulb when William Coolidge, a GE researcher, discovered a process to render the durable metal more pliable. This light bulb was so rugged and well suited for use in automobiles, railroad cars, and street cars that it was still in use in the 1990s. In 1913, two other innovations came out of the GE labs: Irving Langmuir discovered that gas-filled bulbs were more efficient and reduced bulb blackening. To this day virtually all bulbs over 40 watts are gas filled.

The first high-vacuum, hot-cathode X-ray tube, known as the Coolidge tube, was also developed in 1913. Coolidges research into tungsten had played an important role in the development of the X-ray tube. The device, which combined a vacuum with a heated tungsten filament and tungsten target, has been the foundation of virtually all X-ray tubes produced ever since, and its development laid the foundation for medical technology operations at General Electric.

Perhaps GEs most important development in the early part of this century was its participation in the development of the highspeed steam turbine in conjunction with English, Swedish, and other inventors. Until this invention, all electricity (except hydroelectric) had been produced by generators that turned at no more than 100 rpm, which limited the amount of electricity a single unit could produce. An independent inventor had come up with a design for a very-high-speed steam turbine before the turn of the century, but it took five years of research before GE could construct a working model. By 1901, however, a 500-kilowatt, 1,200-rpm turbine generator was operating. Orders for the turbines followed almost immediately, and by 1903 a 5,000-kilowatt turbine was in use at Chicagos Commonwealth Edison power company.

Such rapid progress led to rapid obsolescence as well, and the Chicago units were replaced within six years. As a result, GE shops in Schenectady were soon overflowing with business. By 1910 the volume of the companys trade in turbine generators had tripled and GE had sold almost one million kilowatts of power capacity. At the same time, General Electric scientists were also researching the gas turbine. Their investigations eventually resulted in the first flight of an airplane equipped with a turbine-powered supercharger.

In the early days of electric power, electricity was produced only during evening hours, since electric lighting was not needed during the day and there were no other products to use electricity. GE, as the producer of both electricity-generating equipment and electricity-consuming devices, naturally sought to expand both ends of its markets. The first major expansion of the General Electric product line was made in the first decade of the twentieth century. Before the turn of the century, light bulbs and electric fans were GEs only consumer product. One of the first household appliances GE began to market was a toaster in 1905. The following year the company attempted to market an electric range. The unwieldy device consisted of a wooden table top equipped with electric griddles, pans, toasters, waffle irons, pots, and a coffee maker, each with its own retractable cord to go into any one of 30 plugs. The range was followed by a commercial electric refrigerator in 1911 and by an experimental household refrigerator six years later.

At the same time two other companies in the United States were producing electric devices for the home. The Pacific Electric Heating Company produced the first electric appliance to be readily accepted by the public: the Hotpoint iron. The Hughes Electric Heating Company produced and marketed an electric range. In 1918 all three companies were prospering, but to avoid competition with one another, they agreed upon a merger. The new company combined GEs heating-device section with Hughes and Pacific to form the Edison Electric Appliance Company, whose products bore either the GE or the Hotpoint label.

GEs first diversification outside electricity came with its establishment of a research staff to investigate plastics. This occurred primarily at the prompting of Charles P. Steinmetz, a brilliant mathematician who had been with the company since the 1890s. All of the initial work by this group was devoted to coatings, varnishes, insulation, and other products related to electrical wiring, so that even this diversification was tied in to electrification.

A more radical branching of GEs activities occurred in 1912, when Ernst Alexanderson, a GE employee, was approached by a radio pioneer looking for a way to expand the range of wireless sets into higher frequencies. Alexanderson worked for almost a decade on the project before he succeeded in creating electromagnetic waves that could span continents, instead of the short distances to which radios had been limited. In 1922, General Electric introduced its own radio station, WGY, in Schenectady. In 1919, at the request of the government, GE formed the Radio Corporation of America (RCA) to develop radio technology. GE withdrew from the venture in 1930, when antitrust considerations came to the fore. General Electric also operated two experimental shortwave stations that had a global range.

Other developments at General Electric contributed to the progress of the radio. Irving Langmuir had developed the electron tube. This tube, necessary for amplifying the signals in Alexandersons radio unit, was capable of operating at very high power. Other important developments by scientists at General Electric included the worlds first practical loudspeaker and a method for recording complex sound on film that is still in use today.

Developments continued apace at GE in the electric motor field. In 1913, the United States Navy commissioned General Electric to build the first ship to be powered by turbine motors rather than steam. In 1915 the first turbine-propelled battleship sailed forth, and within a few years, all of the navys large ships were equipped with electric power. General Electric also owned several utility companies that generated electrical power, but in 1924 GE left the utilities business when the federal government brought antitrust action against the company.

During the Depression the company introduced a variety of consumer items like mixers, vacuum cleaners, air conditioners, and washing machines. GE also introduced the first affordable electric refrigerator in the late 1920s. It was designed by a Danish toolmaker, Christian Steenstrup, who later supervised mechanical research at the GE plant in Schenectady. And GE introduced its first electric dishwasher in 1932, the same year that consumer financing of personal appliances was introduced.

Also in 1932 the first Nobel Prize ever awarded to a scientist not affiliated with a university went to Irving Langmuir for his work at GE on surface chemistry, research that had grown out of his earlier work on electron tubes. The years that followed witnessed a steady stream of innovation in electronics from the GE labs. These included the photoelectric-relay principle, rectifier tubes that eliminated batteries from home receivers, the cathode-ray tube, and glass-to-metal seals for vacuum tubes. Many of these developments in electronics were crucial to the growth of radio broadcasting.

The broadcasting division of General Electric achieved a breakthrough in the late 1930s. The company had been developing a mode of transmission known as frequency modulation (FM) as an alternative to the prevailing amplitude modulation (AM). In 1939 a demonstration conducted for the Federal Communications Commission proved that FM had less static and noise. GE began broadcasting in FM the following year.

Of course, the light bulb was not forgotten in this broadening of research activity at General Electric. The worlds first mercury-vapor lamp was introduced in 1934, followed four years later by the fluorescent lamp. The latter produced light using half the power of incandescent bulbs, with about twice the life span. Less than a year after the introduction of the fluorescent light, General Electric introduced the sealed-beam automotive headlight.

Even though production of convenience items for the consumer halted during World War II, the war proved profitable for General Electric, whose revenues quadrupled during the war. The president of General Electric at the time, Charles Wilson, joined the War Production Board in 1942. GE produced more than 50 different types of radar for the armed forces and over 1,500 marine power plants for the navy and merchant marine. The company, using technology developed by the Englishman Frank Whittle, also conducted research on jet engines for aircraft. The Bell XP-59, the first American jet aircraft, flew in 1942 powered by General Electric engines. By the end of the war this technology helped General Electric develop the nations first turboprop engine.

When production of consumer goods resumed immediately after the war, GE promptly found itself in another antitrust battle. The government discovered that GE controlled 85 percent of the light bulb industry55 percent through its own output and the other 30 percent through licensees. In 1949 the court forced GE to release its patents to other companies.

In this period the first true product diversifications came out of GEs research labs. In the 1940s a GE scientist discovered a way to produce large quantities of silicone, a material GE had been investigating for a long time. In 1947 GE opened a plant to produce silicones, which allowed the introduction of many products using silicone as a sealant or lubricant.

Meanwhile, as research innovation blossomed and postwar business boomed, the company began an employee relations policy known as Boulwarism, from Lemuel Boulware, the manager who established the policy. The policy, which eliminated much of the bargaining involved in labor-management relations, included the extension by GE to union leaders of a non-negotiable contract offer.

During the late 1940s General Electric embarked on a study of nuclear power and constructed a laboratory specifically for the task. Company scientists involved in an earlier attempt to separate U-235 from natural uranium were developing nuclear power plants for naval propulsion by 1946. In 1955 the navy launched the submarine Seawolf, the worlds first nuclear-powered vessel, with a reactor developed by General Electric. And in 1957 the company received a license from the Atomic Energy Commission to operate a nuclear-power reactor, the first license granted in the United States for a privately-owned generating station. That same year GEs consumer-appliance operations got a big boost when an enormous manufacturing site, Appliance Park, in Louisville, Kentucky was completed. The flow of new GE productshair dryers, skillets, electronic ovens, self-cleaning ovens, electric knivescontinued.

Other innovations to come from GE labs during the 1950s included an automatic pilot for jet aircraft, Lexan polycarbonate resin, the first all-transistor radio, turbine engines for jet aircraft, gas turbines for electrical power generation, and a technique for fabricating diamonds.

Antitrust problems continued to vex the company throughout the postwar years. In 1961 the Justice Department indicted 29 companies, of which GE was the biggest, for price fixing on electrical equipment. All the defendants pleaded guilty. GEs fine was almost half a million dollars, damages it paid to utilities who had purchased price-fixed equipment came to at least $50 million, and three GE managers received jail sentences and several others were forced to leave the company.

During the 1960s and 1970s GE grew in all fields. In 1961 it opened a research center for aerospace projects, and by the end of the decade had more than 6,000 employees involved in 37 projects related to the moon landing. In the 1950s General Electric entered the computer business. This venture, however, proved to be such a drain on the companys profits that GE sold its computer business to Honeywell in 1971.

By the late 1960s, GEs management began to feel that the company had become too large for its existing structures to accommodate. Accordingly, the company instituted a massive organizational restructuring. Under this restructuring program, the number of distinct operating units within the company was cut from more than 200 to 43. Each new section operated in a particular market and was headed by a manager who reported to management just beneath the corporate policy board. The sections were classified into one of three categoriesgrowth, stability, or no-growthto facilitate divestment of unprofitable units.

When this reorganization was complete, General Electric made what was at the time the largest corporate purchase ever. In December of 1976 GE paid $2.2 billion for Utah International, a major coal, copper, uranium, and iron miner and a producer of natural gas and oil. The company did 80 percent of its business in foreign countries. Within a year Utah International was contributing 18 percent of GEs total earnings.

The divestiture of its computer business had left GE without any capacity for manufacturing integrated circuits and the high-technology products in which they are used. In 1975 a study of the companys status concluded that GE, one of the first American electrical companies, had fallen far behind in electronics. As a result, GE spent some $385 million to acquire firms in the field: Intersil, a semiconductor manufacturer; Calma, a producer of computer-graphics equipment; and four software producers. The company also spent more than $100 million to expand its microelectronics facilities.

Other fields in which GE excelled were in trouble by the mid 1970s, most notably nuclear power. As plant construction costs skyrocketed and environmental concerns grew, the companys nuclear-power division began to lose money. GEs management, however, was convinced that the problem was temporary and that sales would pick up in the future. When by 1980 General Electric had received no new orders for plants in five years, nuclear power began to look more and more like a prime candidate for divestment. GE eventually pulled out of all aspects of the nuclear-power business except for providing service and fuel to existing plants and conducting research on nuclear energy.

Though General Electrics growth was tremendous during the 1970s and earnings tripled between 1971 and 1981, the companys stock performance was mediocre. GE had become so large and was involved in so many activities that some regarded its fortunes as capable only of following the fortunes of the country as a whole.

GEs economic problems were mirrored by its managerial reshuffling. When John F. (Jack) Welch Jr. became president in 1981, General Electric entered a period of radical change. GE bought 338 businesses and product lines for $11.1 billion and sold 232 for $5.9 billion. But Welchs first order of business was to return much of the control of the company to the periphery. Although he decentralized management, he retained predecessor Reginald Joness system of classifying divisions according to their performance. His goal was to make GE number one or two in every field of operation.

One branch of GEs operations that came into its own during this period was the General Electric Credit Corporation, founded in 1943. Between 1979 and 1984, its assets doubled, to $16 billion, due primarily to expansion into such markets as the leasing and selling of heavy industrial goods, inventories, real estate, and insurance. In addition, the leasing operations provided the parent company with tax shelters from accelerated depreciation on equipment developed by GE and then leased by the credit corporation.

Factory automation became a major activity at GE during the early 1980s. GEs acquisitions of Calma and Intersil were essential to this program. In addition, GE entered into an agreement with Japans Hitachi to manufacture and market Hitachis industrial robots in the United States. GE itself spent $300 million to robotize its locomotive plant in Erie, Pennsylvania. Two years later GEs aircraft-engine business also participated in an air force plant-modernization program and GE later manufactured the engines for the controversial B-1B bomber.

In 1986 General Electric made several extremely important purchases. The largest was the $6.4 billion purchase of the Radio Corporation of American (RCA), the company GE had helped to found in 1919. RCAs National Broadcasting Company (NBC), the leading American television network, brought GE into the broadcasting business in full force. Although both RCA and GE were heavily involved in consumer electronics, the match was regarded by industry analysts as beneficial, since GE had been shifting from manufacturing into service and high technology. After the merger, almost 80 percent of GEs earnings came from services and high technology, compared to 50 percent six years earlier. GE divested itself of RCAs famous David Sarnoff Research Center, since GEs labs made it redundant. In 1987 GE also sold its own and RCAs television-manufacturing businesses to the French company Thomson in exchange for Thomsons medical diagnostics business.

GE justified the merger by citing the need for size to compete effectively with large Japanese conglomerates. Critics, however, claimed that GE was running from foreign competition by increasing its defense contracts (to almost 20 percent of its total business) and its service business, both of which are insulated from foreign competition.

In 1986 GE also purchased the Employers Reinsurance Corporation, a financial-services company, from Texaco, for $1.1 billion, and an 80 percent interest in Kidder Peabody and Company, an investment-banking firm, for $600 million, greatly broadening its financial services division. Although Employers Reinsurance has contributed steadily to GEs bottom line since its purchase, Kidder Peabody lost $48 million in 1987, in part due to the settlement of insider trading charges. Kidder Peabody did come back in 1988 to contribute $46 million in earnings, but the acquisition still troubled some analysts.

General Electrics operations were divided into three business groups in the early 1990s: technology, service, and manufacturing. Its manufacturing operations, traditionally the core of the company, accounted for roughly one-third of the companys earnings. Still, GE continued to pour more than $1 billion annually into research and development of manufactured goods. Much of that investment was directed at energy conservation more efficient light bulbs, jet engines, and electrical power transmission methods, for example.

In 1992 GE signaled its intent to step up overseas activity with the purchase of 50 percent of the European appliance business of Britains General Electric Company (GEC). The two companies also made agreements related to their medical, power systems, and electrical distribution businesses. Welch said that his aim was to make GE the nations largest company. To that end, General Electric continued to restructure its existing operations in an effort to become more competitive in all of its businesses. Most importantly, the company launched an aggressive campaign to become dominant in the growing financial services sector.

GEs aggressive initiatives related to financial services reflected the fact that the service sector represented more than three-quarters of the U.S. economy going into the mid 1990s. Furthermore, several service industries, including financial, were growing rapidly. GEs revenues from its giant NBC and GE Capital divisions, for example, rose more than 12 percent annually from about $14.3 billion in 1988 to more than $25 billion in 1994. Encouraged by those gains, GEs merger and acquisition activity intensified. For example, in 1994 the company offered a $2.2 billion bid for Kemper Corp., a diversified insurance and financial services company (It retracted the bid in 1995). GEs sales from services as a percentage of total revenues increased from 30 percent in 1988 to nearly 45 percent in 1994, and were expected to surpass 50 percent in 1996.

In contrast to its service businesses, GEs total manufacturing receipts remained stagnant at about $35 billion. Nevertheless, restructuring was paying off in the form of fat profit margins in many of its major product divisions. Importantly, GE made significant strides with its Aircraft Engine Group. Sales fell from $8 billion in 1991 to less than $6 billion in 1995, but profit margins rose past 18 percent after dipping to just 12 percent in 1993. Reflective of restructuring efforts in other GE divisions, the company accomplished the profit growth by slashing the engineering work force from 10,000 to 4,000 and reducing its overall Aircraft Engine Group payroll by about 50 percent, among other cost-cutting moves.

Despite a global economic downturn in the early 1990s, GE managed to keep aggregate sales from its technology, service, and manufacturing operations stable at about $60 billion annually. More importantly, net income surged steadily from $3.9 billion in 1989 to $5.9 billion in 1994, excluding losses in the latter year from Kidder, Peabody operations, which were discontinued. In 1994, in fact, General Electric was the most profitable of the largest 900 U.S. corporations, and was trailed by General Motors, Ford, and Exxon. Going into 1995, ongoing efforts by Welch to boost productivity, increase service sales, and expand internationally boded well for GEs long-term future.

Principal Subsidiaries

GE Aircraft Engine Group; GE Capital Corp.; Employers Reinsurance; National Broadcasting Company.

Further Reading

Bongiorno, Lori, Hot Damn, What a Year! Business Week, March 6, 1995, pp. 98100.

Farrell, John, GE Cuts Number in Layoff Plans, Capital District Business Review, October 31, 1994, p. 5.

Hammond, John Winthrop, Men and Volts, Philadelphia: Lippincott, 1941.

Pare, Terence P., GE as a Service Company, Fortune, April 18, 1994, p. 16.

Schatz, Ronald W., The Electrical Workers: A History of Labor at General Electric and Westinghouse, Urbana: University of Illinois Press, 1983.

Smart, Tim, Just Imagine if Times Were Good, Business Week, April 17, 1995, pp. 7879.

Wise, George W. R., Whitney, General Electric and the Origins of U.S. Industrial Research, New York: Columbia University Press, 1985.

updated by Dave Mote

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"General Electric Company." International Directory of Company Histories. 1996. Retrieved July 01, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-2841600071.html

General Electric Company

General Electric Company

3135 Easton Turnpike
Fairfield, Connecticut 06431
U.S.A.
(203) 373-2211

Public Company
Incorporated: 1892
Employees: 298,000
Sales: $50.09 billion
Stock Index: New York Boston London Tokyo

The history of General Electric is a significant part of the history of technology in America. GE has evolved from Thomas Edisons home laboratory into one of the largest companies in the world, following the evolution of electrical technology from the simplest early applications into the high-tech wizardry of the late 20th century.

Thomas Edison established himself in the 1870s as an inventor after devising, at the age of 23, an improved stock ticker. He subsequently began research on an electric light as a replacement for gas light, the standard method of illumination at the time. In 1876 Edison moved into a laboratory in Menlo Park, New Jersey. Two years later, in 1878, Edison established, with the help of his friend Grosvenor Lowry, the Edison Electric Light Company with a capitalization of $300,000. Edison received half of the new companys shares on the agreement that he work on developing an incandescent lighting system. The major problem Edison and his team of specialists faced was finding an easy-to-produce filament that would resist the passage of electrical current in the bulb for a long time. He triumphed only a year after beginning research when he discovered that common sewing thread, once carbonized, worked in the laboratory. For practical applications, however, he switched to carbonized bamboo.

Developing an electrical lighting system for a whole community involved more than merely developing an electric bulb; the devices that generated, transmitted, and controlled electric power also had to be invented. Accordingly, Edison organized research into all of these areas and in 1879, the same year that he produced an electric bulb, he also constructed the first dynamo, or direct-current generator.

The first application of electric lighting was on the steam ship Columbia in 1880. In that same year, Edison constructed a three-mile-long trial electric railroad at his Menlo Park laboratory. The first individual system of electric lighting came in 1881, in a printing plant. However, the first full-scale public application of the Edison lighting system was actually made in London, at the Holborn Viaduct. The first system in the United States came soon after when Pearl Street Station was opened in New York City. Components of the system were manufactured by different companies, some of which were organized by Edison; lamps came from the parent company, dynamos from the Edison Machine Works, and switches from Bergmann & Company of New York. In 1886, the Edison Machine Works was moved from New Jersey to Schenectady, New York.

While these developments unfolded at Edisons company, the Thomson-Houston Company was formed from the American Electric Company, founded by Elihu Thomson and Edwin Houston, who held several patents for their development of arc lighting. Some of their electrical systems differed from Edisons through the use of alternating-current (AC) equipment, since AC systems can transmit over longer distances than DC systems. By the early 1890s the spread of electrification was threatened by the conflict between the two technologies and by patent deadlocks, which prevented further developments because of patent-infringement problems.

By 1889, Edison had consolidated all of his companies under the name of the Edison General Electric Company. Three years later, in 1892, this company was merged with the Thomson-Houston Electric Company to form the General Electric Company. Although this merger was the turning point in the electrification of the United States, it resulted in Edisons resignation from GE. He had been appointed to the board of directors but he attended only one board meeting, the year the company was founded, and sold all of his shares in 1894, although he remained a consultant to General Electric and continued to collect royalties on his patents. The president of the new company was Charles A. Coffin, a former shoe manufacturer who had been the leading figure at Thomson-Houston. Coffin remained president of General Electric until 1913, and chairman thereafter until 1922.

In 1884, Frank Julian Sprague, an engineer who had worked on electric systems with Edison, resigned and formed the Sprague Electric Railway and Motor Company, which built the first large-scale electric streetcar system in the United States, in Richmond, Virginia. In 1889 Spragues company was purchased by Edisons. In the meantime, the two other major electric-railway companies in the United States had merged with Thomson-Houston, so that by the time General Electric was formed, it was the major supplier of electrified railway systems in the United States.

One year after the formation of General Electric, the company won a bid for the construction of large AC motors in a textile mill in South Carolina. The motors were the largest manufactured by General Electric at the time and were so successful that orders soon began to flow in from other industries like cement, paper, and steel. In that same year, General Electric began its first venture into the field of power transmission with the opening of the Redlands-Mill Creek power line in California, and in 1894 the company constructed a massive power-transmission line at Niagara Falls.

Meanwhile the companys electric-railroad ventures produced an elevated electric train surrounding the fairgrounds of the Chicago Worlds Fair in 1893. Electrification of existing rail lines began two years later.

By the turn of the century General Electric was manufacturing everything involved in the electrification of the United States: generators to produce electricity, transmission equipment to carry power, industrial electric motors, electric light bulbs, and electric locomotives. It is important to any understanding of the evolution of GE to realize that though it was diverse from the beginning, all of its enterprises centered around the electrification program. It is also worth noting that it operated in the virtual absence of competition. General Electric and the Westinghouse Electric Company had been competitors, but the companies entered into a patent pool in 1896.

In 1900 GE established the first industrial laboratory in the United States. Up to that point, research had been carried out in universities or in private laboratories similar to Edisons Menlo Park laboratory. Initially, the lab was set up in a barn behind the house of one of the researchers, but the lab was moved in 1900 to Schenectady, New York, after it was destroyed in a fire. The head of the research division was a professor from the Massachusetts Institute of Technology. The importance of research at General Electric cannot be underestimatedGE has been awarded more patents over the years than any other company in the United States.

During the early decades of the 20th century General Electric made further progress in its established fields, and also made its first major diversification. In 1903 General Electric bought the Stanley Electric Manufacturing Company of Pittsfield, Massachusetts, a manufacturer of transformers. Its founder, William Stanley, was the developer of the transformer.

By this time GEs first light bulbs were in obvious need of improvement. Edisons bamboo filament was replaced in 1904 by metalized carbon developed by the companys research lab. That filament, in turn, was replaced several years later by a tungsten-filament light bulb when William Coolidge, a GE researcher, discovered a process to render the durable metal more pliable. This light bulb was so rugged and well suited for use in automobiles, railroad cars, and street cars that it is still in use today. In 1913, two other innovations came out of the GE labs: Irving Langmuir discovered that gas-filled bulbs were more efficient and reduced bulb blackening. To this day virtually all bulbs over 40 watts are gas filled.

The first high-vacuum, hot-cathode X-ray tube, known as the Coolidge tube, was also developed in 1913. Coolidges research into tungsten had played an important role in the development of the X-ray tube. The device, which combined a vacuum with a heated tungsten filament and tungsten target, is the foundation of virtually all X-ray tubes produced ever since, and its development laid the foundation for medical technology operations at General Electric.

Perhaps GEs most important development in the early part of this century was its participation in the development of the high-speed steam turbine in conjunction with English, Swedish, and other inventors. Until this invention, all electricity (except hydroelectric) had been produced by generators that turned at no more than 100 rpm, which limited the amount of electricity a single unit could produce. An independent inventor had come up with a design for a very-high-speed steam turbine before the turn of the century, but it took five years of research before GE could construct a working model. By 1901, however, a 500-kilowatt, 1,200-rpm turbine generator was operating. Orders for the turbines followed almost immediately, and by 1903 a 5,000-kilowatt turbine was in use at Chicagos Commonwealth Edison power company.

Such rapid progress led to rapid obsolescence as wellthe Chicago units were replaced within six years. As a result, GE shops in Schenectady were soon overflowing with business. By 1910 the volume of the companys trade in turbine generators had tripled and GE had sold almost one million kilowatts of power capacity.

At the same time, General Electric scientists were also researching the gas turbine. Their investigations eventually resulted in the first flight of an airplane equipped with a turbine-powered supercharger.

In the early days of electric power, electricity was produced only during evening hours, since electric lighting was not needed during the day and there were no other products to use electricity. GE, as the producer of both electricity-generating equipment and electricity-consuming devices, naturally sought to expand both ends of its markets. The first major expansion of the General Electric product line was made in the first decade of the 20th century. Before the turn of the century, light bulbs and electric fans were GEs only consumer product. One of the first household appliances GE began to market was a toaster in 1905. The following year the company attempted to market an electric range. The unwieldy device consisted of a wooden table top equipped with electric griddles, pans, toasters, waffle irons, pots, and a coffee maker, each with its own retractable cord to go into any one of 30 plugs. The range was followed by a commercial electric refrigerator in 1911 and by an experimental household refrigerator six years later.

At the same time two other companies in the United States were producing electric devices for the home. The Pacific Electric Heating Company produced the first electric appliance to be readily accepted by the public: the Hotpoint iron. The Hughes Electric Heating Company produced and marketed an electric range. In 1918 all three companies were prospering, but to avoid competition with one another, they agreed upon a merger. The new company combined GEs heating-device section with Hughes and Pacific to form the Edison Electric Appliance Company, whose products bore either the GE or the Hotpoint label.

GEs first diversification outside electricity came with its establishment of a research staff to investigate plastics. This occurred primarily at the prompting of Charles P. Steinmetz, a brilliant mathematician who had been with the company since the 1890s. All of the initial work by this group was devoted to coatings, varnishes, insulation, and other products related to electrical wiring, so that even this diversification was tied in to electrification.

A more radical branching of GEs activities occurred in 1912, when Ernst Alexanderson, a GE employee, was approached by a radio pioneer looking for a way to expand the range of wireless sets into higher frequencies. Alexanderson worked for almost a decade on the project before he succeeded in creating electromagnetic waves that could span continents, instead of the short distances to which radios had been limited. In 1922, General Electric introduced its own radio station, WGY, in Schenectady. In 1919, at the request of the government, GE formed the Radio Corporation of America (RCA) to develop radio technology. GE withdrew from the venture in 1930, when antitrust considerations came to the fore. General Electric also operated two experimental shortwave stations that had a global range.

Other developments at General Electric contributed to the progress of the radio. Irving Langmuir had developed the electron tube. This tube, necessary for amplifying the signals in Alexandersons radio unit, was capable of operating at very high power. Other important developments by scientists at General Electric included the worlds first practical loudspeaker and a method for recording complex sound on film that is still in use today.

Developments continued apace at GE in the electricmotor field. In 1913, the United States Navy commissioned General Electric to build the first ship to be powered by turbine motors rather than steam. In 1915 the first turbine-propelled battleship sailed forth, and within a few years, all of the navys large ships were equipped with electric power.

General Electric also owned several utility companies that generated electrical power, but in 1924 GE left the utilities business when the federal government brought antitrust action against the company.

During the Depression the company introduced a variety of consumer items like mixers, vacuum cleaners, air conditioners, and washing machines. GE also introduced the first affordable electric refrigerator in the late 1920s. It was designed by a Danish toolmaker, Christian Steenstrup, who later supervised mechanical research at the GE plant in Schenectady. And GE introduced its first electric dishwasher in 1932, the same year that consumer financing of personal appliances was introduced.

Also in 1932 the first Nobel Prize ever awarded to a scientist not affiliated with a university went to Irving Langmuir for his work at GE on surface chemistry, research that had grown out of his earlier work on electron tubes. The years that followed witnessed a steady stream of innovation in electronics from the GE labs. These included the photoelectric-relay principle, rectifier tubes that eliminated batteries from home receivers, the cathode-ray tube, and glass-to-metal seals for vacuum tubes. Many of these developments in electronics were crucial to the growth of radio broadcasting.

The broadcasting division of General Electric achieved a breakthrough in the late 1930s. The company had been developing a mode of transmission known as frequency modulation (FM) as an alternative to the prevailing amplitude modulation (AM). In 1939 a demonstration conducted for the Federal Communications Commission proved that FM had less static and noise. GE began broadcasting in FM the following year.

Of course, the light bulb was not forgotten in this broadening of research activity at General Electric. The worlds first mercury-vapor lamp was introduced in 1934, followed four years later by the fluorescent lamp. The latter produced light using half the power of incandescent bulbs, with about twice the life span. Less than a year after the introduction of the fluorescent light, General Electric introduced the sealed-beam automotive headlight.

Even though production of convenience items for the consumer halted during World War II, the war proved profitable for General Electric, whose revenues quadrupled during the war. The president of General Electric at the time, Charles Wilson, joined the War Production Board in 1942. GE produced more than 50 different types of radar for the armed forces and over 1,500 marine power plants for the navy and merchant marine. The company, using technology developed by the Englishman Frank Whittle, also conducted research on jet engines for aircraft. The Bell XP-59, the first American jet aircraft, flew in 1942 powered by General Electric engines. By the end of the war this technology helped General Electric develop the nations first turboprop engine.

When production of consumer goods resumed immediately after the war, GE promptly found itself in another antitrust battle. The government discovered that GE controlled 85% of the light bulb industry55% through its own output and the other 30% through licensees. In 1949 the court forced GE to release its patents to other companies.

In this period the first true product diversifications came out of GEs research labs. In the 1940s a GE scientist discovered a way to produce large quantities of silicone, a material GE had been investigating for a long time. In 1947 GE opened a plant to produce silicones, which allowed the introduction of many products using silicone as a sealant or lubricant.

Meanwhile, as research innovation blossomed and postwar business boomed, the company began an employee relations policy known as Boulwarism, from Lemuel Boulware, the manager who established the policy. The policy, which eliminated much of the bargaining involved in labor-management relations, included the extension by GE to union leaders of a non-negotiable contract offer.

During the late 1940s General Electric embarked on a study of nuclear power and constructed a laboratory specifically for the task. Company scientists involved in an earlier attempt to separate U-235 from natural uranium were developing nuclear power plants for naval propulsion by 1946. In 1955 the navy launched the submarine Seawolf, the worlds first nuclear-powered vessel, with a reactor developed by General Electric. And in 1957 the company received a license from the Atomic Energy Commission to operate a nuclear-power reactor, the first license granted in the United States for a privately owned generating station.

That same year GEs consumer-appliance operations got a big boost when an enormous manufacturing site, Appliance Park, in Louisville, Kentucky was completed. The flow of new GE productshair dryers, skillets, electronic ovens, self-cleaning ovens, electric knivescontinued.

Other innovations to come from GE labs during the 1950s included an automatic pilot for jet aircraft, Lexan polycarbonate resin, the first all-transistor radio, turbine engines for jet aircraft, gas turbines for electrical power generation, and a technique for fabricating diamonds.

Antitrust problems continued to vex the company throughout the postwar years. In 1961 the Justice Department indicted 29 companies, of which GE was the biggest, for price fixing on electrical equipment. All the defendants pleaded guilty. GEs fine was almost half a million dollars, damages it paid to utilities who had purchased price-fixed equipment came to at least $50 million, and three GE managers received jail sentences and several others were forced to leave the company.

During the 1960s and 1970s GE grew in all fields. In 1961 it opened a research center for aerospace projects, and by the end of the decade had more than 6,000 employees involved in 37 projects related to the moon landing. In the 1950s General Electric entered the computer business. This venture, however, proved to be such a drain on the companys profits that GE sold its computer business to Honeywell in 1971.

By the late 1960s, GEs management began to feel that the company had become too large for its existing structures to accommodate. Accordingly, the company instituted a massive organizational restructuring. Under this restructuring program, the number of distinct operating units within the company was cut from more than 200 to 43. Each new section operated in a particular market and was headed by a manager who reported to management just beneath the corporate policy board. The sections were classified into one of three categoriesgrowth, stability, or no-growthto facilitate divestment of unprofitable units.

When this reorganization was complete, General Electric made what was at the time the largest corporate purchase ever. In December, 1976 GE paid $2.2. billion for Utah International, a major coal, copper, uranium, and iron miner and a producer of natural gas and oil. The company did 80% of its business in foreign countries. Within a year Utah International was contributing 18% of GEs total earnings.

The divestiture of its computer business had left GE without any capacity for manufacturing integrated circuits and the high-technology products in which they are used. In 1975 a study of the companys status concluded that GE, one of the first American electrical companies, had fallen far behind in electronics. As a result, GE spent some $385 million to acquire firms in the field: Intersil, a semiconductor manufacturer; Calma, a producer of computer-graphics equipment; and four software producers. The company also spent more than $100 million to expand its microelectronics facilities.

Other fields in which GE excelled were in trouble by the mid-1970s, most notably nuclear power. As plant construction costs skyrocketed and environmental concerns grew, the companys nuclear-power division began to lose money. GEs management, however, was convinced that the problem was temporary and that sales would pick up in the future. When, by 1980, General Electric had received no new orders for plants in five years, nuclear power began to look more and more like a prime candidate for divestment. GE eventually pulled out of all aspects of the nuclear-power business except for providing service and fuel to existing plants and conducting research on nuclear energy.

Though General Electrics growth was tremendous during the 1970s (earnings tripled between 1971 and 1981), the companys stock performance was mediocre. GE had become so large and was involved in so many activities that some regarded its fortunes as capable only of following the fortunes of the country as a whole.

GEs economic problems were mirrored by its managerial reshuffling. When John F. (Jack) Welch Jr. became president in 1981, General Electric entered a period of radical change. GE bought 338 businesses and product lines for $11.1 billion and sold 232 for $5.9 billion. But Welchs first order of business was to return much of the control of the company to the periphery. Although he decentralized management, he retained predecessor Reginald Joness system of classifying divisions according to their performance. His goal was to make GE number one or two in every field of operation.

One branch of GEs operations that came into its own during this period was the General Electric Credit Corporation, founded in 1943. Between 1979 and 1984, its assets doubled, to $16 billion, due primarily to expansion into such markets as the leasing and selling of heavy industrial goods, inventories, real estate, and insurance. In addition, the leasing operations provided the parent company with tax shelters from accelerated depreciation on equipment developed by GE and then leased by the credit corporation.

Factory automation became a major activity at GE during the early 1980s. GEs acquisitions of Calma and Intersil were essential to this program. In addition, GE entered into an agreement with Japans Hitachi to manufacture and market Hitachis industrial robots in the United States. GE itself spent $300 million to robotize its locomotive plant in Erie, Pennsylvania. Two years later GEs aircraft-engine business also participated in an air force plant-modernization programGE manufactured the engines for the controversial B-1B bomber.

In 1984 GE sold Utah International to the Broken Hill Proprietary Company of Australia, keeping the companys Ladd Petroleum Corporation affiliate. Ladd provides more than 50% of the natural gas GEs plants consume in the United States.

In 1986 General Electric made several extremely important purchases. The largest was $6.4 billion for the Radio Corporation of American (RCA), the company GE had helped to found in 1919. RCAs National Broadcasting Company (NBC), the leading American television network, brought GE into the broadcasting business in full force. Although both RCA and GE were heavily involved in consumer electronics, the match was regarded by industry analysts as beneficial, since GE had been shifting from manufacturing into service and high technology. After the merger, almost 80% of GEs earnings came from services and high technology, compared to 50% six years earlier. GE divested itself of RCAs famous David Sarnoff Research Center, since GEs labs made it redundant. In 1987 GE also sold its own and RCAs television-manufacturing businesses to the French company Thomson, in exchange for Thomsons medical diagnostics business.

GE justified the merger by citing the need for size to compete effectively with large Japanese conglomerates. Critics, however, claimed that GE was running from foreign competition by increasing its defense contracts (to almost 20% of its total business) and its service business, both areas that are insulated from foreign competition.

In 1986 GE also purchased the Employers Reinsurance Corporation, a financial-services company, from Texaco, for $1.1 billion, and an 80% interest in Kidder Peabody and Company, an investment-banking firm, for $600 million, greatly broadening its financial services division. Although Employers Reinsurance has contributed steadily to GEs bottom line since its purchase, Kidder Peabody lost $48 million in 1987, in part due to the settlement of insider trading charges. Kidder Peabody did come back in 1988 to contribute $46 million in earnings, but the acquisition still troubles some analysts.

General Electrics operations are now divided into three groups: technology businesses, service businesses, and core manufacturing businesses; because of the restructuring, core manufacturing now accounts for only one-third of the companys earnings. But research and development is still of such importance that in 1988 GE spent $1.2 billion of its own funds on it, and another $2.4 billion in customer-provided research funding. Many current research projects are in energy conservationmore efficient light bulbs, jet engines, and electrical power transmission methods, for example.

In early 1989 GE made a major move to prepare for Europes unified market in 1992 when it agreed to buy 50% of the European appliance business of Britains General Electric Company (GEC). The two companies also made agreements in their medical, power systems, and electrical distribution businesses. Welch has said that his aim is to make GE the nations largest company. Achieving such a goal would entail more massive acquisitions, since GE cannot hope to grow expotentially by itself. Whatever comes of this ambition, however, GEs sheer size gives it a measure of stability and the power to keep a tenacious grasp on its markets.

Principal Subsidiaries:

GE Fanuc Automation; Kidder Peabody Inc.; Employers Reinsurance; National Broadcasting Company; Ladd Petroleum.

Further Reading:

Hammond, John Winthrop. Men and Volts, Lippincott, 1941, Philadelphia; Schatz, Ronald W. The Electrical Workers: A History of Labor at General Electric and Westinghouse, Urbana, University of Illinois Press, 1983; Wise, George W. R. Whitney, General Electric and the Origins of U.S. Industrial Research, New York, Columbia University Press, 1985.

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General Electric Company

GENERAL ELECTRIC COMPANY


The General Electric Company (GE) is the fifth largest business in the United States. Headquartered in Fairfield, Connecticut, GE was valued at more than $350 billion in the late 1990s. The company's operations span many different areas, including manufacturing, technology, network and cable television, financial services, leasing, loan and information services, electricity distribution hardware, plastics and silicone production, medical diagnostic equipment, and utility, industrial, and marine power systems. GE does business in over 100 countries and maintains approximately 250 plants worldwide.

Established in 1892, GE was the result of a merger between the Thomson-Houston Company and the Edison General Electric Company. Charles Coffin was GE's first president, and inventor Thomas Edison (18471931) served as a director until 1894. Lightbulbs, elevators, trolleys, electric motors, generators, and locomotives were among GE's earliest products. In 1900 GE built a research laboratory in New York. The laboratory contributed to a number of breakthroughs, including X-ray tubes, high-speed steam public utilities, photoelectric relay (to control the flow of electricity), gas-filled incandescent lamps, and electrically propelled ships.

GE soon began diversifying its business. In 1918 the company purchased Hughes Electric Heating Company, the maker of an electric cooking range, and Pacific Electric Heating Company, the manufacturer of America's then most widely used appliance, the iron. The following year it teamed with Westinghouse Electric and American Telegraph and Telephone (AT&T) to found the Radio Corporation of America (RCA). In 1922 it debuted one of the country's first radio stations, WGY, in Schenectady, New York. Over the next 20 years GE introduced a series of appliances that quickly became fixtures in the American home. Refrigerators, toasters, food mixers, fans, air conditioners, vacuum cleaners, and washing machines were perennial money makers for the company.

Other advances included GE's 1940 development of frequency modulation (FM) radio transmission, considered a vast improvement over the existing amplitude modulation (AM) mode. GE's innovation proved to be an asset to Allied forces during World War II (19391945). The company produced more than 50 different types of radar for the armed services, and more than 1,500 marine power plants for the Navy. America's first jet airplane, the Bell XP-59, and its largest battleship, the North Carolina, were both powered by GE parts and ingenuity. In the late 1940s GE initiated a project to harness nuclear power for civilian and military use. This project bore fruit in 1955, when the Navy unveiled its first nuclear submarine powered by a GE reactor. Two years later the Atomic Energy Commission granted GE a license to operate the first privately owned nuclear reactor. By the end of the 1950s GE was boasting record profits.

GE's dominance in so many areas raised a number of anti-trust concerns. Both competitors and the federal government made efforts to ensure that GE did not hold a monopoly in any one industry. Between 1911 and 1967 GE was named as a defendant in 65 anti-trust lawsuits and formal complaints. Some of the legal actions resolved themselves without great cost, as when GE sold its interest in RCA in 1930 to loosen its grip on the fledgling recording industry. Other lawsuits were more injurious to the company. For example, in 1961 the U.S. Department of Justice indicted GE for fixing prices of electrical equipment. GE was fined nearly $500,000 and required to pay damages of approximately $50 million. Three GE managers faced jail sentences and other executives were forced to quit.

Despite its recurring anti-trust problems, GE continued to enjoy success, tripling its earnings during the 1970s. In 1976 GE made what was then the largest corporate purchase in U.S. history, paying $2.2 billion for Utah International, a major mining company and producer of natural gas and oil. The 1980s marked a period of transition for the company. In 1981 John (Jack) Welch took over as president with the goal of making GE number one or number two in every field of operation. He decentralized operations and sold $10 billion worth of the company's less profitable business, including its air-conditioning, housewares, and semiconductor sectors.

GE used the proceeds from these sales to purchase Employers Reinsurance, a financial services group, in 1984; RCA and the National Broadcast Company (NBC) in 1986; CGR medical equipment in 1987; and investment bankers Kidder, Peabody in 1990. The Employers Reinsurance acquisition made the company's financial services division, known as GE Capital, enormously profitable. The NBC acquisition paid dividends in the 1990s, when it aired a number of critically acclaimed and popular primetime programs on network television and debuted CNBC and MSNBC on cable.

GE's fortune and profitability continued to climb in the late 1990s. In 1997 the company reported revenues of $90.8 million. That same year GE became the first company in the world with a market value exceeding $200 billion. Since surpassed by the Microsoft Corporation's $479 billion market value, GE held on to second place with a market value of approximately $375 billion as of April 1999.

Regardless of its profit margin in any particular year, GE has a strong reputation for community involvement. In 1994 GE received the President's Volunteer Action Award for its charitable work. A year later its College Bound program for underprivileged youth received national recognition. In 1996 the company and its employees donated $75 million to philanthropic organizations around the world. At the end of the twentieth century GE announced that during 1998 its employees had logged 1.3 million volunteer hours doing various acts of good will in communities where the company is present.

See also: Thomas Edison

FURTHER READING

"General Electric Company." Hoover's Online, [cited May 1, 1999] available from the World Wide Web @ www.hoovers.com.

"General Electric Company's Homepage," [cited May 1, 1999] available from the World Wide Web @ www.ge.com.

"GE Top Dog on Forbes List." Sun-Sentinel, April 2, 1999.

Microsoft Encarta Online Encyclopedia, available from the World Wide Web @ encarta.msn.com/EncartaHome.asp/.

Slater, Robert I. The New GE: How Jack Welch Revived an American Institution. Homewood, Illinois: Business One Irwin, 1993.

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General Electric

General Electric

BIBLIOGRAPHY

General Electric is one of the largest corporations in the United States. Formed in 1892 from the merger of two U.S. electrical manufacturing companies, Edison General Electric Company and Thomson-Houston Electric Company, by 2006 General Electric had become a $163 billion corporation. General Electric today is a multinational diversified company operating in more than 100 countries in sectors as diverse as aviation and nuclear power, industrial and domestic electrical appliances, personal and industrial finance, and media and entertainment. Despite the level of diversification, its traditional electrical manufacturing activities linked to aviation and energy contributed almost 30 percent of sales in 2006 (General Electric 2006). General Electric continues to be one of the worlds largest producers of jet engines, supplying Boeing and Lockheed Martin, among others.

General Electrics rise to dominance derived from the companys ability to restrict market competition through cartelization in the newly expanding consumer markets of the Second Industrial Revolution, and its ability to gain access to large, secure government markets, especially those linked to electricity generation and military equipment. General Electric was at the forefront of the development of international cartels before World War II, instigating market sharing and price-fixing through the creation of rings regulated by the International Electrical Association (Barjot 1995). Despite challenges by U.S. antitrust authorities after World War II, international cooperation and market sharing continued (Mirow and Maurer 1982). In the area of military technology, General Electric developed extensive capabilities as a result of high U.S. government defense expenditure during the cold war, and it continues to benefit from the rises in defense expenditure by every government since Ronald Reagans; in 2005 its defense contracts amounted to $2.2 billion.

Large protected markets provided the backdrop for diversification into the financial and media sectors. Thus, in the areas of media and entertainment General Electric succeeded in creating large organizations capable of developing market power in entertainment and communication sectors, most notably in 2004 with the creation of NBC Universal, which combined NBC and Vivendi Universal to create a $43 billion media empire (CorpWatch 2006).

General Electric, along with other U.S. manufacturing multinationals, has utilized outsourcing and the establishment of maquila production systems along the U.S.Mexican border as a mechanism for cost reduction. The companys diversification into distribution and logistics through its Trailer Fleet Services division has been used to service U.S. companies in the linking of the maquila production centers to U.S. markets. The resultant low-wage and poor labor conditions within the maquila system of production and redundancies and reductions in living standards for U.S. workers has led to extensive criticism of the company from labor unions.

SEE ALSO Antitrust; Cold War; Corporate Social Responsibility; Corporate Strategies; Corporations; Defense, National; Maquiladoras; Military-Industrial Complex; Unions

BIBLIOGRAPHY

Barjot, Dominique. 1995. International Cartels Revisited, 18801980. Caen, France: Éditions-Diffusion du Lys.

CorpWatch. 2006. General Electric. http://www.corpwatch.org/article.php?list=type&type=16.

General Electric. 2006. Invest and Deliver: GE Annual Report 2006. http://www.ge.com/ar2006/?c_id=ar06IR.

Global Exchange. 2006. Sweatfree Campaigns. http://www.globalexchange.org/campaigns/sweatshops.

Mirow, Kurt Rudolf, and Harry Maurer. 1982. Webs of Power: International Cartels and the World Economy. Boston: Houghton Mifflin.

Carlo Morelli

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