The General Electric Company, PLC

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The General Electric Company, PLC

1 Stanhope Gate
London W1A EH
United Kingdom
(01) 493-8484

Public Company
Incorporated: 1900 as General Electric Co. Ltd.
Employees: 145,029
Sales: £6.45 billion (US$11.66 billion)
Stock Index: London Glasgow Birmingham Manchester

The General Electric Company, PLC (GEC) is entirely separate from the General Electric Company in the United States, although the companies do share several European joint ventures. Both companies, however, have played similar roles in the development of their respective countries electrical production and consumption. In fact, both were central to electrification programs and were ideally placed to supply the consumer electrical appliances that increased demand for their machines for generating electricity. GECs stature today as an industrial giant is due in large part to that ability to both create and supply a tremendous demand for electricity over the past 100 years.

GEC was formed in 1886, when two enterprising young men, Hugo Hirst and Gustav Byng, teamed up in London to form a company. They originally acted as wholesalers of electrical products made by other companies. GECs first catalog was issued that year and became a guide to popular uses of electricity. However, both men were so enamored of electricitys potential that they yearned to expand its applications beyond its early use as an alternative to gas illumination. (The lighting system in the House of Commons had been electrified in the early 1880s and the electrification of several other prominent London buildings soon followed.) Hirst had had experience with several other applications of electrical powerhe had driven an electrically powered boat on the River Thames, ridden on an electric cycle, and even developed an electric-powered dog cart for an Indian rajah. His ambition was to become a manufacturer of electric products, and so within three years of the founding of their company Hirst and Byng opened a factory in Manchester.

From the start GEC manufactured devices for both consumer and industrial customers: telephones, electrically activated bells, ceiling roses, switches, and fittings. One of GECs first successes in developing new electrification technology was the use of china as an insulating material in switches. Light bulbs were added to the product line in 1893. GEC catalogs began to include instructions for customers wanting to wire and equip their own homes for electricity.

Applications of the new technology abounded in industry. GEC installed its first commercial alternating-current (AC) motor in 1896 at a grain warehouse in Liverpool. Three years later the company won its first contract for a power-generating station, putting GEC in an enviable position as a provider to both consumers and producers of electricity. This first contract was for the Fulham Power Station and included the provision of arc lamps for surrounding streets.

GEC embarked on international expansion at the turn of the century. The company set up agencies throughout Europe and in Japan, Australia, South Africa, and India, and exported heavily to South Americaan additional factory had to be built in order to accommodate the export-stimulated increase in production.

Between 1907 and 1912 the number of factories using electricity in Britain doubled, and GEC was well positioned to take advantage of this tremendous increase in demand. The company provided the Portsmouth Dockyard and London subway system with over 300 electric motors each.

Along with this expansion of industrial electrical needs was a growth in the demand for telephone systems. GECs business in telephones and telephone equipment was so great that in 1910 a subsidiary operation devoted exclusively to this technology was created. Called the Peel-Conner Telephone Works, its first big job was the Central Telephone Exchange for the city of Glasgow. It was also during this period that GEC introduced its first metal-filament light bulb.

During World War I GECs consumer items took a back seat as the company concentrated on war productioncarbon filaments for arc lamps, wireless radios, signaling lamps, motors, and wiring. By the end of the war, more than 90% of GECs business was for the military and its work force had swollen to over 15,000.

The major change at GEC to come out of the war experience was the establishment in 1919 of a separate research center, headed by Sir J. J. Thompson, a Nobel Prize-winning physicist.

By 1920, electric lighting was universally accepted and the demand for electrical appliances was beginning to grow as new uses for electricity were being discovered constantly. During the 1920s work started on Britains National Grid, a network of power-generation stations built to meet the growing industrial and residential demand for electric power. GEC played a significant role in this project by supplying electrical equipment to the Central Electricity Board. GEC was also heavily involved in the expansion of radio in Britain since its research center was at the forefront of radio development. Two other triumphs during this period were the use of GEC transmitting valves in the transatlantic telephone system and in the BBC longwave transmitter at Droitwich.

International projects continued during the 1920s and 1930s, and included the installation of hydroelectric equipment in the palace of the Dalai Lama in Tibet. GEC undertook other major projects in countries such as Malaya, Canada, and Argentina to provide electric tramways, diesel-powered alternators, electric-propulsion units for ships, and of course lighting.

Perhaps the most important development at GEC in the 1930s was in television. In 1935, GEC opened a laboratory to study television technology, and production work on receivers started at the end of the decade.

War put another halt to the development of consumer devices. During World War II, GEC again contributed primarily in the fields of communication and electrical-power production. But its most important contribution to the war effort was the production of radar. The demand for radar was so great that part of the space in the research laboratory was converted to a pre-production area for the radars.

After the war, production on commercial projects resumed with an emphasis on several major lighting contracts. Notable among these was the illumination of the House of Commons and of the Grand Mosque in Mecca. GEC also began marketing fluorescent-tube lighting and airport-lighting equipment during the late 1940s, and its work in television also progressed rapidlyby 1949 the company had achieved a relay-link of television picture and sound. Throughout the postwar period, GEC was also involved in the production of nuclear energy, semiconductors, and computers.

GEC grew exponentially during the 1960s through several major acquisitions. The company was merged with Radio & Allied Industries, which had been created by Michael Sobell and Arnold Weinstock. The merger was intended to strengthen the electronics industry in Britain and was noteworthy in that Weinstock soon after became head of GEC. In 1967 GEC acquired the Associated Electrical Industries, Ltd. in a hostile bid. In the following year, GEC merged with English Electric which included Elliott-Automation and, most importantly, the Marconi Company, a major pioneer in the radio and electronics fields. Following these mergers and acquisitions, total employment at GEC surpassed 150,000 and GEC was manufacturing everything electricalfrom power generation (both nuclear and nonnuclear) to consumer appliances to satellites.

By the end of the decade, GEC was the top electronics and appliance company in the United Kingdom; revenues in 1978 were £2.3 billion. Even so, Weinstock hoped to double GECs size, primarily through expansion into U.S. markets. This led GEC into another series of acquisitions, this time of American companies, including White Industrial Power, AB Dick Company, Cincinnati Electronics Corporation, Picker International, and Cilbarco. However, this venture into American markets was mostly into industrial markets. By 1986 sales had surpassed £5 billion, with about 20% of that coming from the Americas; total income from the Americas was almost double that from Europe. GEC had become Britains largest manufacturing company and one of its leading exporters.

But Weinstock was still not content. In the mid-1980s, GEC attempted to take over Plessey, another major British aerospace and electronics firm. The GEC offer involved both cash and new GEC securities, but placed the value of Plessey shares at less than their stock market price. Plessey flatly rejected the offer, calling it unwelcome and palpably inadequate in form and substance. GEC was undeterred by this response, but at this point the Monopolies and Mergers Commission stepped in to investigate. Plessey waged a fierce public-relations campaign to bolster its image as a high-technology giant and argued the necessity for domestic competition. GEC argued that size was needed to compete internationally. Near the end of 1986, the government, stating that a combined Plessey-GEC firm would monopolize the defense-electronics and telecommunications-equipment markets in the United Kingdom, finally vetoed the merger. But, since both companies felt a need for greater size to compete in the international telephone-switching equipment market, the government did encourage the companies to combine their switching operations.

GEC was always heavily involved in defense projects during wartime, but production of military electronics did not end with World War II. Since then, in fact, GEC has won large contracts from all the NATO countries to provide equipment ranging from military satellites for NATO to air-data computers for United States Air Force and Navy aircraft. The company has also supplied electronic components for the American Minuteman, Titan, and MX missiles (all part of the nuclear arsenal) and was awarded three major contracts for the American Strategic Defense Initiative. However, GEC was recently set back in its defense business when the British government canceled an order for an airborne early-warning radar device. GEC claimed that the cancellation reduced profits by £24 million and necessitated the relocation of 1,000 employees within the company.

As research and development costs skyrocketed in the late 1980s, GEC sought joint ventures with a number of foreign electronics firms. In 1987, the company tried unsuccessfully to combine its medical electronics unit with that of the Dutch company Philips. In November, 1988, GEC joined forces with West Germanys Siemens to renew its takeover attempt of the Plessey Company. This deal was put on hold until mid-1989, when the government approved the proposed takeover as long as British national security secrets were not sent overseas. Shortly thereafter, GEC and Siemens gained control of Plessey.

In early 1989, GEC entered into an agreement with Frances Compagnie Generale dElectricite to combine their power-generating equipment into a £4 billion joint venture.

GEC is heavily involved in operations outside the United Kingdom, deriving only slightly less than half of its revenues from its overseas business. Not all of that revenue, of course, is derived from exporting products manufactured in the United Kingdom. For instance, only about 25% of GEC revenues from the United States come from United Kingdom-manufactured exports. GEC has won several major export contracts recently from the Soviet Union, including orders for car-painting robots, offshore oil technologies, ship-positioning systems, programmable-logic industrial controls, and railway signaling equipment.

Research and development continues apace at GEC. Its laboratories employ 2,500 people, of whom 1,400 are degree-holders, and GEC recently spent £12 million to update capital equipment at these labs. Current research focuses on superconducting materials, industrial applications of artificial intelligence, radar, satellites, integrated circuits, and optical telecommunications.

In general, electronics makes up more than a third of GECs business activities, while telecommunications and business systems together account for less than half of that amount. GE also produces automation and robotics, medical equipment, and power-generation equipment as well as consumer electric products. The company differs from its American counterpart not only in size, but also in its range of business. GEC is also more heavily involved outside its home country than GE.

GECs future looks very bright, since its high-tech products continue to see significant growth. More joint ventures are likely as they keep development costs low and build strength in the face of the relaxation of European trade barriers.

Principal Subsidiaries:

The English Electric Company, Ltd.; Associated Electrical Industries Ltd.; The Marconi Company Ltd.; GEC-Elliott Automation Ltd.; GEC-Marconi Ltd.; GEC Australia Ltd.; Marconi Electronic Devices Ltd.; EEV Inc. (US); EEV Canada Ltd.; Salford Electric Instruments Ltd.; AB Dick Company, USA GEC New Zealand Ltd.; GEC Electrical Projects Ltd. GEC Industrial Controls Ltd.; GEC Measurements Ltd. Satchwell Control Systems Ltd.; GEC Marine & Industrial Gears Ltd.; GEC Composants SA (France); Picker International Inc. (US); GEC Turbine Generators Ltd.; Ruston Gas Turbines Ltd.; The General Electric Company of India Ltd. (66.7%); The English Electric Company of India Ltd. (66.7%); Wire & Cables Group; GEC-General Signal Ltd. (50%); GEC Large Machines Ltd.; The Express Lift Co. Ltd.; Woods of Colchester Ltd.; GEC Engineering (Accrington) Ltd.; GEC Reinforced Plastics Ltd.; GEC Foundries Ltd.; A.G. Hackney & Co. Ltd.; Hotpoint Ltd.; OSRAM-GEC Ltd. (51%); Walsall Conduits Ltd.; The English Electric Corporation (US); The General Electric Company of Bangladesh Ltd. (60%); GEC Canada Ltd.; The General Electric Company of Hong Kong Ltd.; The General Electric Company of Singapore Private Ltd.; GEC Zambia Ltd.; GEC Zimbabwe (Pvt) Ltd.; GEC Power Systems Ltd.; GEC Energy Systems Ltd.; GEC Electro-motors Ltd.; Mechanical Engineering Laboratories; GEC Switchgear Ltd.; GEC Transformers Ltd.; GEC Transmission and Distribution Projects Ltd.; Vacuum Interrupters Ltd.; GEC Automation Projects Inc. (US); GEC Installation Equipment Ltd.; The Micanite & Insulators Co. Ltd.; Engineering Research Centre (Stafford); Vynckier NV (Belgium); NNC Ltd.; GEC Transportation Projects Ltd.; GEC Electronic Metrology Systems Ltd.; Marconi Circuit Technology Corporation (US); EEV Ltd.; Salplex Ltd. (60%).

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The General Electric Company, PLC

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